Landed a sweet new job? Boom, go you. Once you’re done grooving to the good news, here are seven things worth doing before you gleefully (or smugly) update your LinkedIn.
1. Check your super has been paid by your old employer
Log into your superfund and check that your payments have made it to your account, and follow up anything that’s missing. Just because your superannuation payment appears on your payslip, doesn’t mean it’s being paid into your fund. It could just be that your employer pays your super quarterly, or it could be a missing payment.
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2. Check your leave balances
Check that your leave balances at your current job are up to date and correct, and then establish how much leave will be paid out to you in your final pay.
If your employer allowed you to dip into a negative leave balance – i.e. you took more leave than you’d accrued – you can expect to have the difference deducted from your final pay.
Knowing what to expect in your final pay can help you budget for the transition period into your new job – and help you identify any money you’re owed.
3. Check your new take home pay
There’s nothing worse than discovering your juicy pay rise only equates to an extra $18 per week by the time you’ve paid tax and HECS/HELP.
If you’ve snagged a pay rise in your new role, plug your new salary into paycalculator.com.au and get clear on how much extra you’ll be bringing home each pay.
This helps manage expectations and establish how much extra you’ve got to work with, or what your new pay cycle might look like if it’s different to what you’re used to.
While you’re there, make sure you’re clear on whether your salary is inclusive or exclusive of superannuation. It should be stated in your employment contract. Incorrectly assuming your super is paid on top of the salary you’re expecting can cause a painful sting when you get paid.
4. Decide how you’ll spend any increases in pay
On the shoulder of every pay rise is a devil called lifestyle creep.
It’s a phenomenon where our lifestyles naturally adjust to a higher rate of pay without us really noticing.
This can happen when we experience small increases in pay over time, and let the extra income absorb into our existing lifestyle. Gradually our perceptions of what things cost adjusts and we end up spending the same percentage of our income with little extra to show for it.
Whenever you get an increase in pay, decide how you’re going to use that money before it hits your bank account.
If you know you’re bringing home an extra $500 a month, audit your lifestyle and establish where that money will add the most value.
Could it go to savings or investments?
Or maybe you want to split it between savings and a new gym membership?
5. Select whether you want to claim the tax-free threshold
With a new employer, you’ll generally fill out a TFN (Tax File Number) declaration form. Part of this form asks you to tick whether you want to claim the tax free threshold from that employer – and this sends a lot of people into a tailspin.
The tax free threshold is the portion of your annual income that you’re allowed to earn before you start paying tax. You can generally only claim the tax free threshold from one employer at a time.
If you have more than one employer, you need to decide whether you want to claim the tax free threshold in your new job. If you accidentally tick to claim it from more than one employer at a time, your tax will be calculated incorrectly and you could wind up with a bill.
Yikes. No thanks.
6. Select the correct tax residency status
Another common trap on payroll forms is the question about tax residency: “Are you an Australian resident for tax purposes?” Failing to correctly classify your tax residency can also lead to tax miscalculations.
7. Check your tax and HECS payments in your first payslip
When you get your first payslip from your new job, check that your reserved tax and any HECS or HELP debt repayments are correct. Sometimes mistakes get made. But your tax obligations are still your responsibility when it comes to tax time.
Not sure how much tax you should be paying? Go back to paycalculator.com.au, plug in your salary and whether you have HECS/HELP debt, and look at the tax column for your pay frequency. It should display the amount of tax that should be reserved for your salary*.
*This calculates deductions and other categories of income, but it gives you a baseline idea of how much you should be paying from that employer.