Q. My 13-year-old son who is in year 8 at High School is keen to start earning his own money in the Christmas holidays to fund his lifestyle, well at least some of it! What should we be aware of in terms of legal requirements of employment to protect him? There are employers offering cash jobs but we worry about the risks associated. Any tips on encouraging him to save at least a part of his earnings?

A. The minimum age for employment varies from state to state. The minimum age is usually 13 but in NSW and ACT, this doesn’t apply.

There are limitations on what type of work your son can do. Generally, he will be restricted to light work, such as running errands, office work, gardening or shop assistant. If your son was 11, he would be limited to delivering newspapers and advertising material or making pharmaceutical deliveries.

As he is under 15, it is against the law for an employer to require him to work on a school day more than 1 shift a day, more than a 4-hour shift and no work after 9 pm.

As your son is older than 12, he is required to have a tax file number (TFN) to be employed. The quickest way for him to get a TFN is via the Secondary Schools TFN program. Contact your school for details. Alternatively, you can apply for a Tax File Number via Australia Post, Department of Human Services (Centrelink) or by mail from the Australian Taxation Office (ATO). He can apply online via the ATO website but he will be required to attend an interview at an Australia Post Office with proof of identification documents.

Whatever work he intends on doing it is important to be aware of any industrial awards applicable to the industry he is working in and minimum pay rates.

Given your son is under age 18 and legally unable to enter into a contract, he should not be registering for work via Airtasker as it would breach their terms and conditions.

For tax purposes, an employer is obliged to issue an annual Group Certificate. If your son’s income is high enough, tax should be withheld. Tax is levied at normal personal marginal tax rates as he is generating his own income. Your son is not obliged to submit a tax return if he is below the lowest tax threshold of $18,200. However, he is eligible to lodge an annual tax return and claim expenses as an adult taxpayer.

As he is under 18, and working less than 30 hours a week, he is not entitled to receive Employer Superannuation support unless this is specified in an Award.

In terms of encouraging good savings habits, goal setting is vital. Balancing short term and long term objectives will always be a challenge. Large longer-term objectives like a car may be hard for him to contemplate. Encourage your son to form the habit of prioritizing spending now away from instant gratification.
If you are looking to encourage him to save for a larger purchase, consider matching the savings he makes. For example, every $50 he saves match or part match into his bank account.

Demonstrate the basics of compound interest and he will get a greater appreciation of the value of saving. Open a high-interest savings account, demonstrate how interest works and equate it back to the hour worked to earn that money. If he earns $15 per hour and he earns $150 in investment earnings, that is the equivalent of working 10 hours!

For longer-term savings objectives, 3 years + consider looking at investment trusts with exposure to growth assets such as shares. As he is under 16 the investments will need to be held in trust via a parent or guardian.

For further information on financial literacy for Secondary School Students, visit www.moneysmart.gov.au.