Deduct tax from your payment

You can ask us to deduct tax from most taxable Centrelink payments. This can help reduce how much tax you may have to pay at the end of the tax year.

If you get other taxable income and a Centrelink payment, your income may be more than the tax-free threshold. Other taxable income may include income from employment or self employment.

If your income is more, you may have to pay tax and the Medicare levy at tax time. You’ll find out how much tax you need to pay after you lodge your tax return.

If this happens you could get a tax debt. A voluntary deduction for tax can help you avoid this.

Any tax you asked us to deduct from your eligible taxable payment, will show on your payment summary.

How to set up a deduction

You can set up a deduction if you get one of the following eligible taxable Centrelink payments:

  • ABSTUDY Living Allowance, if you’re 16 or older
  • Age Pension
  • Austudy
  • Carer Payment, if you or the care receiver is of Age Pension age
  • Disability Support Pension, if you’re Age Pension age
  • JobSeeker Payment
  • Parenting Payment
  • Special Benefit
  • Youth Allowance, if you’re 16 or older.

If you submit a claim

You can ask us to deduct tax from your eligible taxable payment when you submit a claim. You need to make sure you tick the option to have tax deducted from your payment.

You can ask us to deduct the tax as either:

  • a percentage of your total taxable payments
  • a set dollar amount.

We automatically take a 15% deduction for tax when we approve you for either:

You can ask us to change how we deduct tax from your payment at any time.

You can also set up a voluntary deduction for tax when you claim an eligible taxable emergency payment such as Disaster Recovery Allowance. Not all emergency events are taxable or reportable. Please check your natural disaster event to see if it’s taxable.

If you get a payment

If your Centrelink online account is linked to myGov, sign in now to set up deductions from your eligible taxable payment online.

Sign in to myGov

You can also set up a deduction by:

If you get Farm Household Allowance, you can also call the Farmer Assistance Hotline.

If you get add-on payments

Sometimes you’ll get extra payments as part of your main taxable Centrelink payment. You can’t set up a deduction for tax on these add-on payments, but they are taxable.

We’ll deduct the amount or percentage you nominated from the combined total of your taxable Centrelink payment and add-ons.

Add-on payments include:

  • ABSTUDY Living Allowance Additional Assistance
  • ABSTUDY School Fees Allowance for students 16 or older when getting the higher rate
  • Basic Pension Supplement
  • Community Development Programme Supplement
  • National Work Experience Programme
  • Partner Bereavement Payment above the tax exempt amount
  • PaTH Internship Incentive
  • Transitional Basic Pension Supplement
  • Work for the Dole Supplement
  • Youth Disability Supplement when paid with Youth Allowance or ABSTUDY Living Allowance.

How to change or stop a deduction

You can change or stop the amount of tax you want us to deduct at any time.

If your Centrelink online account is linked to myGov, sign in now to change or stop your deduction.

Sign in to myGov

Use our online guide to help you manage tax deductions online.

If you can’t access a self-service option, fill in the Tax Deduction Authority form for your main payment.

If you get Parental Leave Pay or Dad and Partner Pay

If your employer pays your Parental Leave Pay, they will withhold Pay As You Go tax (PAYG) at the usual rate.

If we pay your Parental Leave Pay or Dad and Partner Pay to you directly, we’ll deduct tax from your payment at the rate of 15%. Depending on your total taxable income, this rate might not be enough to meet your tax obligations. If it’s not enough, you’ll need to pay additional tax at tax time. You can check the tax rate for your income on the ATO website.

Once your Centrelink online account is linked to myGov, you can change or stop the tax amount online.

Sign in to myGov

You can also do this by:

Page last updated: 4 June 2024.
QC 62457