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.
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.
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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.
Read more about personal taxation advice on the ATO website.