Why am I getting far less back on tax than co-workers?

krampster2 on 28/11/2016 - 12:53

Alright so I'm a 19yo student who works 16h a week and last month filed my first tax return. Needless to say the tax system has got me thoroughly confused.

So I grossed just under the $18k mark from work, about $17.5k and my end of year PayG summary stated I'm to get back $400. I spoke to other co-workers who work the exact same shifts every week (I know tax is calculated on a weekly basis) and they were all set to get back about $1.5k for the same gross.

I spoke with payroll and the only thing they said was that I ticked 'yes' to claiming the tax free threshold when I was employed. Is this what has done it? If so, what is the tax free threshold and is there any way I can reverse this decision?

Financial

Comments

  • retiredfeline on 28/11/2016 - 12:55

    The tax free threshold is $18,200 this year. You pay no tax on this amount. It makes no difference to your final tax liability or refund whether or not you tick this box, only to your PAYG deductions, it will work out the same in the end.

    Without knowing your co-workers' tax situation, one cannot say why the difference. It could be that they will end up with a tax liability.

  • [Deactivated] on 28/11/2016 - 13:00
    +9

    If others didn't tick it, they have paid more tax along the way. Hence received larger refund. It all balances at tax time.

  • MattyAu on 28/11/2016 - 13:05
    +3

    Lol, you want to claim the Tax Free Threshold, it currently sits at $18,200, this means you DON'T pay tax on anything you earn under that amount. If your colleges are taxed more than you, with the same Gross wage, this would tell me he/she received less in their pocket throughout the year.
    example:
    Gross - Tax = Net
    Therefore
    You: 18,000 - 400 = $17,600 (roughly $338 per week)

    Your colleges: 18,000 - 1,500 = $16,500 (roughly $317 per week)

    So for you to have the same refund as your mate, your employer would need to withhold an additional $21, per week, from your net wage to pay on your behalf to the ATO. Bare in mind this is a pretty basic calculation, circumstances can vary.

    You may not have received a substantial refund, but you're in a better position than your colleges as you received that money throughout the year as disposable income.

    If you would prefer a bigger refund, you can simply ask your payroll officer to withhold more from your weekly wage, but you'll just receive less in your pocket weekly.

  • ESEMCE on 28/11/2016 - 13:18
    +4

    Yeah as explained above.
    You should tell your colleagues to fill out another tax form and tick the Tax Free Threshold Box, they're the ones getting "ripped off", not you!

  • macrocephalic on 28/11/2016 - 13:21

    It's basically as others have mentioned. There is another thing to consider as well, if you work regular hours then the tax withheld may be less than those who work irregular hours. If you earn a stable $340 each week then pay payroll will know how much tax to withhold (not much). If you earn nothing one week (pay 0 tax) but earn $680 the next week then payroll will calculate that week's pay and conclude that you are earning $35k/year (52x680) - so they will take more tax out that week. At the end of the year you have earned the same amount either way, but in the latter situation much more tax has been withheld - so a bigger tax return.

  • krampster2 on 28/11/2016 - 13:52

    Thanks for the help guys, I understand it now. It sucks that I've left that job and now earn much less and have an $800 ATO debt now because of the medicare levy and Centrelink though.
    Wish I had known before I left but at least I learnt the lesson early.

    • scrambledeggs on 28/11/2016 - 13:57
      +4

      Leaving your job has nothing to do with the medicare levy and your tax liability. On the gross income you reported in the OP you don't pay the medicare levy at all.

      • krampster2 on 28/11/2016 - 14:11
        -1

        I wasn't implying that it did. I was stating that I'm in a bad spot financially because I left my job.
        As pointed out in the OP I recieve Centrelink, my yearly gross with that was about $27k.

        • scrambledeggs on 28/11/2016 - 14:14
          +4

          You probably should have mentioned income from centrelink in your original post at the top. Your gross income being 27k rather than below the tax free threshold has a pretty major impact on your tax return as you have discovered.

        • humdogg on 28/11/2016 - 14:35
          +3

          No, you did not point this out in your OP.

        • krampster2 on 28/11/2016 - 15:01

          @humdogg: My mistake, it was edited. I did not point it out because the question I was asking only related to my work income.

        • cheapisgood on 28/11/2016 - 20:41
          +1

          @krampster2: Well you have to factor in all sources of income to calculate your tax payable.

  • bemybubble on 28/11/2016 - 13:56

    Just remember, if it isn't sitting at the tax department it's come directly into your hands (assuming all else equal).

  • spackbace on 28/11/2016 - 14:06
    +2

    If only schools actually taught these things. Year 10, have 1 class which is life essentials (like tax, etc etc). You'd have a lot more smarter kids coming out of the school system.

    • scrambledeggs on 28/11/2016 - 14:16
      +3

      "More smarter"…..

      Tax isn't difficult to understand, a few ATO fact sheets and you're up to speed. Basic English and mathematical skills are more important IMO.

      • spackbace on 28/11/2016 - 14:20

        Basic English and mathematical skills

        Which are taught prior to year 9.

        And meh, my fingers type quicker than my brain thinks sometimes.

    • mskeggs on 29/11/2016 - 07:58

      The ASIC website https://www.moneysmart.gov.au/ is basically what you are talking about.
      They have a big program to accredit schools and teachers to raise financial literacy across the curriculum.
      One of my kids high schools sent two teachers off to do in-service and they have trained up other staff on the available resources. They were quite excited about it.

      Have a chat to your local school if they aren't doing this.

  • amkssg on 28/11/2016 - 14:22

    The other possibility is, you are being employed as a "part-time" staff, while your colleagues are on "Casual".

    • krampster2 on 28/11/2016 - 15:06

      Can confirm it was definitely casual employment.

  • mskeggs on 29/11/2016 - 08:00

    If you all did the same shifts, your extra Centrelink income is what is generating a tax liability. They will receive back all the tax they paid as they earned under the tax free threshold of $18k. Your income above that mark is taxable, so you will not receive as much back.

    • krampster2 on 29/11/2016 - 18:07

      Almost everyone I work with is a student too who receives Centrelink. I've spoken to them and they got around the same amount.
      It's okay though I understand now it was because I ticked yes to claiming the tax free threshold.

  • WT on 29/11/2016 - 12:06

    the person you go to can make a difference too

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