Are Centrelink benefits taxable income?

It's important to note that if you are receiving Centrelink payments, that they may be TAXABLE. This means, you need to pay tax on the payments and if you don't pay tax or have tax withheld during the year, you may end up with a tax bill. We discuss this further below...

Many Centrelink payments are considered taxable income, although most of the time if you are on Centrelink benefits, you will not have earned enough income to pay tax. Currently, if you are under pension age and earn taxable income under $18,200 you won’t need to pay tax.

If, however, you earn income from other sources during the financial year that puts you over this limit (for instance when you get a new job part of the way through the tax year), you may need to pay tax on the amount you received from Centrelink.

These taxable benefits include (but are not limited to)

• Newstart

• Austudy

• Abstudy (over 16)

• Age Pension

• Age Service Pension

• Carers Service Pension

• Youth Allowance 

• Sickness Allowance

• Parenting Payment (Partnered)

• Parenting Payment (Single)

• Partner & Widow Allowance

• Disaster recovery allowance

• Widow B Pension

Some payments that are exempt from income tax are

• Family tax benefit part A & part B

• Disability Support Pension (Under pension age)

• Education Entry Supplement

• Pensioner Education Supplement & fares

• Carer Payment (where both the carer and receiver are under pension age)

• Rent assistance

• Double Orphan Pension

• War Widows & War Widowers Pension

• NDIS payments

• Abstudy (under 16)

• Back to School Bonus

• Child Care Benefit & Child Care Rebate

• Household Assistance Package Payments

Please note that although you may not need to pay tax, you still need to notify the ATO that you don’t need to do a tax return, by lodging a non-lodgement notice or letting Centrelink know that you don't need to do a tax return.

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Note that the information provided is general in nature and subject to change, please contact one of our professionals who can evaluate your circumstances and provide more accurate advice to your current situation.