Taxation - everyone pays

Introduction

Taxation – everyone certainly does pay! In Australia, the Federal Government collects income tax from most wage and salary earners, and GST from consumers of goods and services. Other types of taxes are collected by the Federal Government as well as State and Local Governments. Tax revenue is basically the spending money of governments.

Why is this important?

This is very important, because everyone pays tax! So, given that you’re paying it, you should understand what taxes you may be paying now, and in the future, and what actually happens to that money. 

Task

Your task in this WebQuest is to investigate the sources of taxation in Australia, find out how governments redistribute this money and then reflect on your personal viewpoint on tax.

Process

BEFORE YOU START

  • Watch Interactive – the story of tax. This is a short interactive video from the ATO (Australian Taxation Office) highlighting the direct link between the effectiveness of the tax system and the enrichment of the community. It will give you a quick overview of how tax has evolved over time in an Australian context.
  • You will need to create and log in to a free ATO TAX SUPER + YOU account account to view this resource. Alternatively, you can ask your teacher to play it for you.

 

TASK 1 – TAXATION IN AUSTRALIA

Download, complete and save the Task 1 worksheet – Taxation in Australia.

(Source: https://financialbasics.org.au/wp-content/uploads/2024/10/5_Task_1_Taxation_in_Australia_Worksheet.docx)

To find the answers for TASK 1 refer to the Interactive – the story of tax and other resources from www.taxsuperandyou.gov.au, as well as your own internet research.

 

TASK 2 – INCOME TAX SYSTEMS

It has been suggested that Australia should change its current progressive personal income tax system to a flat rate taxation system to make it fairer. Under this plan, all Australian workers would pay a personal income tax rate of 17%, regardless of how much money they make.

For example:

Under the proposed new 17% flat rate system:

  • If you earn $50,000 per year, you pay income tax of $8,500, leaving $41,500 as disposable income.
  • If you earn $200,000 per year, you pay income tax of $34,000, leaving $166,000 as disposable income.

Which system is better? In 1-2 paragraphs, discuss whether or not Australia should keep the current progressive income tax system OR why we should move to a 17% flat-rate income tax.

 

TASK 3 – GST (GOODS AND SERVICES TAX)

The rate charged to consumers for GST in Australia is 10%. The seller collects this tax for the government by adding 10% to their selling price. So if the selling price of an item is $100, the seller adds 10% for GST to that amount - $10 - and you pay $110 in total.

Provide two short statements of 1-2 paragraphs, one statement arguing for GST and one arguing against GST.

Evaluation

SUBMISSION

Submit your responses to TASKS 1, 2 & 3 to your teacher.

Your work will be reviewed by your teacher upon submission of the WebQuest

Conclusion

Finally, one of the best parts of income tax is that if you are paying it, then you are earning money!

Want to learn more about how taxation works in a real-life context? Ask your teacher to download the taxation resources from www.financialbasics.org.au & sign you up for the ESSI Money Game.

Credits

Credits

This work is adapted by the content owners from the Financial Basics Foundation OFL (Operation Financial Literacy) resource Module 6: Taxation - everyone pays. Check out the original resource for more teaching and learning activities in this content area.

Register your students for the ESSI Money Game to help them experience taxation in a real-life gamified personal finance educational simulation.

Financial Basics Foundation resources are provided free to all Australian educators. If you’re not already a member, access these and other resources at: https://financialbasics.org.au/join/  

Other

Financial Basics Foundation Contact information

Connect with Financial Basics Foundation for more great resources and ideas, and become part of the #FinLit community!

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Email: info@financialbasics.org.au

URL: www.financialbasics.org.au
 

Teacher Page

Why should your students do this WebQuest? Consumers, income earners and asset owners pay tax to federal, state and territory, and local governments in Australia. All of your students are consumers, some are already income earners, and most can expect to become asset owners in the future.

WebQuest Goal: This investigation into the Australian taxation system aims to deliver a basic understanding of the concept of income redistribution and how it affects the responsibilities and rights of your students both as contributors and beneficiaries.  

Time required to complete this WebQuest:  Approximately 70 minutes.

Solution: The solution for the TASK 1 worksheet  – Taxation in Australia – is available through the Financial Basics Foundation member portal.  Login to your account or sign up here if you’re not already a member. Once you’ve logged in, check out all of our other WebQuests and Resources by clicking on the Teacher Toolkit menu.  

FBF advice:

 

Standards

The content and tasks in this WebQuest have been mapped to the following Australian Curriculum elements:

  • Consumer and financial literacy - use critical thinking and problem-solving skills to make informed consumer and financial decisions.
  • Competence - the application of consumer and financial knowledge and skills in a range of changing contexts.
  • General Capabilities – Critical and creating thinking: Imagine, generate, develop and critically evaluate ideas (Technologies), generate and evaluate knowledge, ideas and possibilities, and use them when seeking solutions (Mathematics).
  • Economics and Business (K & U) - The ways that governments manage economic performance to improve living standards (ACHEK052). Elaboration: Identifying examples of government intervention that aim to redistribute income (for example, pensions, youth allowance and job search), and goods and services such as health care and education.