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Tax-free government pensions or benefits

Last updated 31 May 2020

Things to know

Income tax is not paid on certain tax-free government pensions or benefits, however, those pensions or benefits are taken into account when working out your adjusted taxable income.

You must include at this section the part of the following pensions and benefits that are exempt from tax (in some cases, all of it could be exempt from tax, and in other cases, only part of it might be. Do not include any part of it that is a bereavement payment, pharmaceutical allowance, rent assistance or remote area allowance, or language, literacy and numeracy supplement):

  • Disability support pension paid by Centrelink to a person who is under age-pension age
  • Youth disability supplement if you receive disability support pension
  • Wife pension where either    
    • both the recipient and their partner are under age-pension age
    • the recipient is under the age-pension age and their partner has die
  • Carer payment under Part 2.5 of the Social Security Act 1991 (this is not the carer allowance under Part 2.19 of the Social Security Act 1991)
  • Pension for defence, peacekeeping or war-caused death or incapacity, or any other pension granted under Part II or Part IV of the Veterans' Entitlement Act 1986
  • Invalidity service pension where the veteran is under age-pension age
  • Partner service pension where either
    • the partner and the veteran are under the age-pension age and the veteran is receiving an invalidity service pension
    • the partner is under age-pension age, the veteran has died and was receiving an invalidity service pension at the time of death
  • Income support supplement paid under Part IIIA of the Veterans’ Entitlements Act 1986
  • Veteran payment under an instrument made under Part IIIAA of the Veterans' Entitlements Act 1986
  • Defence Force income support allowance payable to you on a day when the whole of your social security pension or benefit, which is also payable to you on that day, is exempt from income tax under section 52-10 of the Income Tax Assessment Act 1997
  • Special rate disability pension under Part 6 of Chapter 4 of the Military Rehabilitation and Compensation Act 2004
  • Payment of compensation under section 68, 71 or 75 of the Military Rehabilitation and Compensation Act 2004
  • Payment of the weekly amount mentioned in paragraph 234(1)(b) of the Military Rehabilitation and Compensation Act 2004 (including a reduced weekly amount because of a choice under section 236 of that Act) or of a lump sum mentioned in subsection 236(5) of that Act

If you are not sure, for the purpose of this section, whether a government pension or benefit you have received is tax-free, phone 13 28 61.

Do not show at this section

Do not include any amount at this section for the following:

  • family tax benefit
  • amounts that you have already shown in the Income statements and payment summaries section:
    • Australian Government payment such as JobSeeker, Newstart, Youth Allowance and Austudy
    • Australian Government payment such as pensions and carer payments
    • Super income stream
    • Australian annuity payments.

Completing this section

You will need details of your tax-free government pension or benefit from the agency that paid you. If you do not have this information, contact the agency that paid you.

We pre-fill your tax return with information provided to us. Check it, and add any tax-free government pensions or benefits you received that have not pre-filled.

At Personalise return, you don't need to make a selection to show Income tests, as it's always displayed at Prepare return.

At Prepare return, select 'Add/Edit' at the Income tests banner.

At the Income tests heading:

  1. Enter the total amount of tax-free pensions and benefits you received during 2019–20.
  2. Select Save and continue when you have completed the Income tests section.

Note: Information shown in myTax may be updated based on pre-fill data. Before you lodge, you should review this information again to ensure it is correct.