Q. My 13 year old son who is in year 7 at High School is keen to start earning his own money by getting a job. I am really excited by this proposition as it may stem the flow of funds leaving my wallet! What should he and we be aware of in terms of legal requirements. Also any tips on encouraging him to save for the future?
A. I share your excitement in your son wanting to express his financial independence! The fact that he wishes to earn his own money is a great start.
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. The entertainment industry and family business are nationally exempt from age restrictions.
There are limitations on what type of work he can do. Generally he will be restricted to light work, such as running errands, office work, gardening or shop assistant. If your child was 11, he could deliver newspapers and advertising material or make pharmaceutical deliveries.
As he is under 15 (for modeling its 16) 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 he will be employed and is older than 12, he is required to have a tax file number (TFN). The quickest way for him to get a TFN is via the Secondary Schools TFN program. Contact your school.
Be aware of any awards applicable to the industry he is working in and minimum pay rates.
The employer is obliged to issue an annual Group Certificate. If his income is high enough, tax should be withheld. Tax is levied at normal marginal tax rates as he is generating his own income. He is not obliged to submit a tax return if he is below the lowest tax threshold. However he can lodge an annual tax return and claim expenses as an adult tax payer.
As he is under 18, and working less than 30 hours a week, he is not entitled to receive Employer Superannuation support.
In terms of encouraging him to save for the future, goal setting for savings is important. It may be for holiday spending money or an iPhone or Games console. How much does he need to save and over what time frame?
Large longer term objectives like a car may be too hard for him to grasp at this age but great to get him into 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 savings he makes. For example, every $10 he saves match or part match into his bank account.
Demonstrate the basic 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 hour worked to earn that money. For longer term savings objectives, 3 years + consider looking at investment trusts with exposure to higher growth assets such as shares. As he is under 16 they will need to be held in trust.
For further information on financial literacy for Secondary School Students, visit www.moneysmart.gov.au.