Your income if you are under 18 years old

How tax rates apply for minors

Income of minors is subject to special rules and they may pay tax on certain types of income at a higher rate. These rules were introduced to discourage adults from diverting income to their children.

For tax purposes you're a minor if you are under 18 years old at, 30 June in the income year.

Minors pays the same individual income tax rates as an adult if they're either:

• an excepted person
• receive excepted income.

If you're an excepted person, or only earn excepted income and you're an Australian resident, the first $18,200 you earn is tax free.

If you're a minor and not an excepted person, you pay a higher rate of tax for income that is not excepted income.

Declaring interest and dividend income

If a parent, relative or guardian has set up a savings account or bought shares in the name of a minor, the following needs to be considered.

• If a minor earns interest on income from a savings account, they need to consider who declares the interest as income. The tax treatment of interest income of a minor is different to income from a child's share investments.
• If a minor earns income from shares, they may need to consider who declares the dividends and any capital gain or loss.

Work out if you're an excepted person

You may be an excepted person if you're a minor and a:

• Full time worker
• Person with a disability
• Person with a double orphan pension

If you're an excepted person, you pay tax at the same individual income tax rates as an adult, on all the income you earn.

If you aren't an excepted person, you need to work out if you receive any excepted income. You pay tax at the same individual income tax rates as an adult on this income.

Full time worker

You're an excepted person if all of the following apply at, 30 June of the relevant income year:

• You were working full time, or had worked full time for a total of 3 months or more in the income year
• You are, in the following income year, both
  • intending to work full time for most or all of it
  • not intending to study full time.
   

When you work out how long you have worked full time, ignore any period of full-time work you did before starting full-time study.

Person with a disability

You're an excepted person for the relevant income year if you were one of the following:

• The main beneficiary of a special disability trust.
• At 30 June of the relevant income year you were
  • entitled to a disability support pension or someone was entitled to a carer allowance to care for you
  • certified permanently blind
  • disabled and likely to suffer from that disability permanently or for an extended period
  • unable to work full time because of a permanent mental or physical disability and you received little or no financial support from relatives.
   

Person with a double orphan pension

You're an excepted person for the income year if at, 30 June of the relevant income year, you were both:

• entitled to a double orphan pension
• received little or no financial support from relatives.

Work out if you receive excepted income

Even if you aren't an excepted person, some of your income as a minor may be excepted income.

If you have excepted income, your excepted net income is taxed at the same individual income tax rates as an adult's net income.

Excepted income − Deductions relating to that income = Excepted net income

If you don't have any excepted income, for any other income you receive:

• you're taxed at the higher tax rates
• any tax payable is not reduced by the low income tax offset or low and middle income tax offset.

Excepted income

Your excepted income includes:

• employment income
• taxable pensions or payments from Centrelink or the Department of Veterans’ Affairs
• compensation, superannuation or pension fund benefits
• income from a deceased person's estate, including income derived by a testamentary trust from property of the deceased person's estate
• income from property transferred to you because of the death of another person or family breakdown, or income in the form of damages for an injury you suffer
• income from your own business
• income from a partnership in which you were an active partner
• net capital gains from the disposal of any property or investments listed above
• income from the investment of any of the amounts listed above.

Income derived by a testamentary trust

Your income from a testamentary trust that was generated from property of a deceased estate, such as a deceased person's mortgaged property, remains excepted income.

Property of a deceased estate includes real property and money from the deceased estate. It can include accumulations of income or capital from property of that deceased estate, and conversions of such property from one asset type to another. For example, if a trustee of a testamentary trust sells a rental property transferred to the trust from a deceased estate and invests those proceeds in shares, the income from those shares is income from property of the deceased estate.

Your income from a testamentary trust is not excepted income if it is generated from assets:

• acquired by or transferred to the trustee of the trust on or after 1 July 2019
• that were unrelated to property of the deceased estate.

 

 

If you're under 18 years old (a minor), special rules apply to income you earn and you may pay tax at a higher rate.