Things you need to know
You might receive amounts that you don't need to include as income in your tax return. We classify them into 3 categories:
- exempt income
- non-assessable non-exempt income
- other amounts that aren't taxable and don't affect any calculation in your tax return.
We list the most common types of exempt income, non-assessable non-exempt income and other amounts that generally aren't taxable. If you're not sure whether a payment you receive is exempt income, non-assessable non-exempt income or other non-taxable amount, contact us.
Exempt income
The most common types of exempt income that you generally don't pay tax on.
Exempt Australian Government pensions, allowances and payments
These include:
- Carer adjustment payment (CAP).
- Carer payment where either
- both the carer and the care receiver are under age-pension age
- the carer is under age-pension age and any of the care receivers has died.
- Disability support pension Centrelink pays to a person who is under age-pension age.
- Double orphan pension.
- Invalidity service pension under the Veterans' Entitlements Act 1986 where the veteran is under age-pension age.
- Partner service pension where either
- the partner (excluding the non-illness separated spouse of a veteran) and the veteran are under age-pension age and the veteran receives an invalidity service pension
- the partner is under age-pension age and the veteran has died and was receiving an invalidity service pension at the time of death.
- Veterans' Affairs disability pension and allowances, war widows and war widowers pension.
Lump sum bereavement payments you receive as part of any of the payments in this list are exempt only up to the tax-free amount. To find out how much of your payment is exempt, contact us.
Exempt Australian Government education payments
These include:
- Allowances for students under 16 years old, including those allowances you receive under ABSTUDY, the Assistance for Isolated Children Scheme and the Veterans' Children Education Scheme.
- Australian-American Educational Foundation (Fulbright Commission) grant.
- Commonwealth scholarships or bursaries for foreign students.
- Commonwealth secondary education assistance.
- Endeavour awards research fellowships or an Endeavour Executive Award.
- Language, literacy and numeracy supplement.
- Payments under the Military Rehabilitation and Compensation Act Education and Training Scheme (MRCAETS) for eligible young persons where you determine eligibility under either
- paragraph 258(1)(a) of the Military Rehabilitation and Compensation Act 2004 and the eligible young person was under 16 years old
- paragraph 258(1)(b) of the Military Rehabilitation and Compensation Act 2004.
- Pensioner education supplement and fares allowance Centrelink pays.
- Rent assistance Austudy recipients receive.
- Some scholarships and bursaries full-time students receive.
- Supplementary allowances for students under the Assistance for Isolated Children Scheme.
- The first $1,000 of an apprenticeship early completion bonus you receive under a specified state or territory scheme for occupations with skill shortages.
Other exempt Australian Government payments
These include:
- Acute support packages for veterans and their families.
- Amounts you receive directly, or which a person receives on your behalf, under the National Disability Insurance Scheme for approved reasonable and necessary supports your plan funds.
- Australian Government Disaster Recovery Payment.
- Back to school bonus and single income family bonus under the A New Tax System (Family Assistance) (Administration) Act 1999.
- Carer allowance under the Social Security Act 1991.
- Child care subsidy.
- Additional child care subsidy.
- Child disability assistance under Part 2.19AA of the Social Security Act 1991.
- Education entry payment supplement under the Social Security Act 1991.
- Energy supplement paid under Part 2.25B of the Social Security Act 1991 or Part VIIAD of the Veterans' Entitlements Act 1986.
- Family tax benefit.
- Household Assistance Package payments which include
- Clean Energy Advance
- Energy Supplement payments
- Essential Medical Equipment payment
- Single Income Family Supplement.
- Loss of earnings allowance under the Veterans' Entitlements Act 1986.
- Lump sum payment under section 198N of the Veterans' Entitlements Act 1986.
- Mobility allowance under the Social Security Act 1991.
- Outer Regional and Remote (OR&R) payment under the Better Start for Children with Disability initiative.
- Outer Regional and Remote (OR&R) payment under the Helping Children with Autism package.
- Payment from the Thalidomide Australia Fixed Trust.
- Payment for travelling expenses under Part 3 of the Treatment Benefits (Special Access) Act 2019.
- Payment of pharmaceutical supplement under Part 4 of the Treatment Benefits (Special Access) Act 2019.
- Payments from the Commonwealth to Thalidomide survivors under the Support for Australia’s Thalidomide Survivors program.
- Payments from the National Indigenous Australians Agency under the Territories Stolen Generations Redress Scheme.
- Pension bonus and pension bonus bereavement payments under Part 2.2A of the Social Security Act 1991 or Part IIIAB of the Veterans' Entitlements Act 1986.
- Pharmaceutical allowances under the Social Security Act 1991.
- Prisoner of War Recognition Supplement payment under Part VIB of the Veterans' Entitlements Act 1986.
- Quarterly pension supplement paid under the Social Security Act 1991 or the Veterans' Entitlements Act 1986.
- Remote area allowance.
- Rent assistance.
- Stillborn baby payment Centrelink pays.
- Telephone allowance under the Social Security Act 1991.
- The ex-gratia payment from the Australian Government, known as the Disaster Recovery Allowance for special category visa (subclass 444) holders for a disaster
- that occurred in Australia during 2014–15 and future years, and
- for which a determination under section 1061L of the Social Security Act 1991 has been made.
- Utilities allowance under the Social Security Act 1991
- Veteran's supplement paid the Veterans' Entitlements Act 1986
Exempt Australian Defence Force and United Nations payments
This includes:
- Certain pay and allowances for Australian Defence Force personnel (your employer will advise you if an amount is exempt).
- Compensation payments under the Safety, Rehabilitation and Compensation Act 1988 for impairment or incapacity resulting from service with a United Nations armed force in an operation area described in Schedule 2 of the Veterans' Entitlement Act 1986.
- Compensation payments under the Military Rehabilitation and Compensation Act 2004, except those that are income-related payments.
- F-111 deseal/reseal ex-gratia lump sum payments.
- Pay and allowances for part-time service in the Australian Naval, Army or Air Force Reserve.
- Payments in relation to a recommendation by the Defence Force Ombudsman for abuse by a member of Defence.
- Some allowances to Australian Defence Force personnel who serve in prescribed overseas areas (your employer will advise you if an allowance is exempt).
Other exempt payments
These include:
- Certain amounts of interest from the Commonwealth on unclaimed money and property.
- Certain annuities and lump sums for an injured person under a structured settlement
- Certain distributions from a pooled development fund.
- Certain distributions from an early-stage venture capital limited partnership.
- Certain payments relating to persecution during the Second World War.
- Certain profits or gains from disposal of shares in a pooled development fund.
- Japanese internment compensation payments made under the Compensation (Japanese Internment) Act 2001 or the Veterans' Entitlements Act 1986.
- Your share of certain profits or gains arising from disposal of investments by a venture capital limited partnership (VCLP), an early-stage venture capital limited partnership (ESVCLP) or an Australian venture capital fund of funds (AFOF).
Non-assessable non-exempt income
The most common types of non-assessable non-exempt income are:
- superannuation lump sum death benefits payments to
- a dependant
- someone who isn't a dependant but receives the benefit because of the death of a member of the Australian Defence Force or an Australian police force (including Australian Protective Services) who died in the line of duty
- tax-free superannuation lump sum benefits a person with a terminal medical condition existing at the time they receive the lump sum, or within 90 days of its receipt
- amounts on which family trust distribution tax has been paid (see question A5)
- genuine redundancy payments and early retirement scheme payments that shows as ‘Lump sum D’ amounts on your income statement or payment summary
- National Rental Affordability Scheme (NRAS) payments or non-cash benefits (whether directly or indirectly, such as through an NRAS consortium of which you're a member) from a state or territory government or a relevant body established under a state or territory law
- that part of the taxable component of a death benefit employment termination payment (ETP) below the 2024–25 cap of $245,000 a dependant receives
- the taxed element of a death benefit superannuation income stream paid from an account-based pension to a death benefit dependant where either
- the deceased was 60 years old or older at the time of their death
- the recipient was 60 years old or older when they receive the benefit
- the taxed element of a superannuation income stream or lump sum from an account-based pension a person 60 years old or older receives
- the tax-free component of a superannuation benefit paid from an account-based pension
- the tax-free component of an ETP.
Tax-free income for temporary residents
If you're a temporary resident, your foreign income is non-assessable non-exempt income except for income you earn from your employment overseas while you're a temporary resident which may be taxable.
You're a temporary resident if:
- you hold a temporary visa granted under the Migration Act 1958
- you and your spouse (if you have one) aren't an Australian resident within the meaning of the Social Security Act 1991.
If on 6 April 2006, or at any time after, you're an Australian resident for tax purposes but not a temporary resident, you're not entitled to the temporary resident exemptions from that time, even if you later hold a temporary visa.
Other amounts that you don't pay tax on
You don't pay tax on:
- most child support and spouse maintenance payments
- allowances you receive as a volunteer in the Australian government funded Australian Volunteers Program
- government super contributions.
There are other amounts that you generally don't pay tax on, such as lottery winnings and inheritances.
For more information, see Amounts you don't include as income.
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