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Len Jaffit

Senior Technical Specialist, Social Security Law, Victoria Legal Aid

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Oympia Sarrinikolaou

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Income tax and Centrelink payments

Last updated

1 July 2021

Some Centrelink payments form part of the recipient’s taxable income.

These include:

  • ABSTUDY Living Allowance, if the person is over 16 years old;
  • Age Pension;
  • Austudy Allowance;
  • Bereavement Lump-sum Benefit;
  • Carer Payment, if the carer or person being cared for is of Age Pension age;
  • Dad and Partner Pay;
  • Disability Support Pension, if the person is of Age Pension age;
  • Education Entry Payment;
  • JobSeeker Payment;
  • Parental Leave Pay;
  • Parenting Payment;
  • Pension Supplement (basic amount);
  • Sickness Allowance;
  • Special Benefit;
  • Youth Allowance, if the person is over 16 years old.

Family Tax Benefit Part A, Family Tax Benefit Part B, and Rent Assistance are generally not included in taxable income.

Amounts of the Newstart Allowance, Wife Pension (where the person’s partner is of Age Pension age), Bereavement Allowance, Sickness Allowance, Widow B Pension, and Widow Allowance that were paid before the introduction of the JobSeeker Payment also form part of the recipient’s taxable income.

Although some pension payments are included in taxable income, a special income tax offset for beneficiaries ensures that people whose only income comes from certain qualifying social security payments and allowances pay no income tax. A special income tax offset for seniors and pensioners reduces the chance of a person paying income tax who only receives benefits, unless they have income in addition to the benefit.

More information is available from the Australian Taxation Office.

Advice from a lawyer or accountant should be obtained on this complex area if any problems arise.

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