Paying tax on a Centrelink payment

You may have to pay tax on your payments.

Paying tax on your payment

You can choose to pay tax on your payment if you get a taxable Centrelink payment.

We don’t automatically take tax from most of our taxable payments, but you can ask us to do this for you. We call this a tax deduction.

Use the Australian Taxation Office (ATO) tax withheld for individuals calculator to work out the amount of tax that we should deduct from your payment.

If we deduct tax from your payment, you must lodge a tax return with the ATO.

Payment summary

If you ask us to deduct tax from your payment, you’ll be able to see it on your payment summary. Your payment summary shows:

  • the total payment amounts you got from us for the financial year
  • any tax we deducted from these payments

Deducting tax from your payment

You can ask us to make regular tax deductions from taxable Centrelink payments.

This means you pay tax in smaller amounts throughout the year, instead of a lump sum after the end of the financial year.

You can do this when you submit a claim for payment. You just need to make sure you tick the option to have tax taken out of your payment.

You can choose for us to deduct the tax as a percentage of your total taxable payments or a dollar amount.

For Dad and Partner Pay and Parental Leave Pay customers, a 15% tax deduction is automatically applied when the payment is granted. If you don’t want to pay this it can be changed at any time on request.

How you set up a tax deduction

If you get you can set up your tax deduction
  • ABSTUDY - Living allowance for students and Australian Apprentices if you’re 16 years or older
  • Age Pension
  • Austudy
  • Bereavement Allowance
  • Carer Payment – if you or the care receiver is of age pension age
  • Newstart Allowance
  • Parenting Payment
  • Partner Allowance
  • Sickness Allowance
  • Special Benefit
  • Widow Allowance
  • Wife Pension – if you or your partner is of age pension age
  • Youth Allowance – if you’re 16 years or older
  • Disability Support Pension – if you’re age pension age
  • Disaster Recovery Allowance
  • Ex-gratia Income Support Allowance – where the payment has been deemed taxable
  • Farm Household Allowance
  • Income Recovery Subsidy
  • Widow B Pension
  • Parental Leave Pay – Department of Human Services delivered payment only
  • Dad and Partner Pay
  • automatically during the claim process

The amount we can deduct your tax from includes the taxable Centrelink payment and any of these add on payments you may get:

  • Additional Assistance - regular
  • Basic Pension Supplement
  • Bereavement lump sum above the tax exempt amount
  • Green Army Supplement
  • Living Allowance, Term or School Boarder
  • National Work Experience Programme
  • PaTH Internship Incentive
  • Remote Jobs and Communities Programme Supplement
  • School Fees Allowance Group 2 or Board
  • Work for the Dole

You can also set-up, change or cease your tax deduction at any time using the Tax Deduction Authority form.

More information

Read more about personal taxation advice on the ATO website.

Page last updated: 21 November 2017