Welcome to Mind the Gap. Tax is weird. Most people agree we need some level of it, so I’m gonna make this as easy as I can, so you don’t waste time, money and brainpower.
The first thing, as you probably know: taxes pay for all that cool stuff we take for granted (roads, hospitals, schools, police, fireman, ambulance emergency services, national defence, public infrastructure like libraries and parks and beaches, and all that stuff).
Tax is where people give their money to the government.
The government doesn’t make taxation simple. You might know that the government usually takes a portion of what a person earns.
But they also take a portion of what you spend,
And sometimes there are even taxes on what you own or use.
I know, it’s not cool. But like many things in life, it’s kind of unavoidable. There are many different types and forms of tax, and thousands of rules, and you don’t need to know them all.
But it’s best to know the basics so you’re not in the dark about this stuff, especially when it comes to filing your own tax return. There are many types of tax, including the GST, Stamp Duty, Capital Gains, etc. But there is one type of tax, the most well-known tax, that matters most for you right now. It’s called income tax.
It’s sometimes called “Pay as you Go”, or “PayG” tax. When they say “PayG”, they’re talking about how often you pay it. The idea is that as you earn money, you owe the government a portion of that money, and you pay it as you earn it. Each time you get paid, you pay the tax at the same time. A lot of the time, your boss will do all the paper work for you, so you’ll barely even notice.
Income tax is the main form of tax for an employee, and the most important for an employee to understand. It’s money taken from what a person earns, as they earn it.