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.
Any tax you asked us to deduct from your eligible taxable payment, will show on your payment summary.
How to set up a deduction
How you set up a voluntary tax deduction to cover tax depends on the payment you get. You can only set up a deduction if both of these apply:
- you get an eligible taxable Centrelink payment
- you must report your payment to the Australian Taxation Office (ATO) as income at tax time.
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:
If you don’t want to pay this, you can ask us to change it at any time.
The amount of tax you ask us to deduct will depend on your circumstances. You can check the tax rates and find out about tax offsets on the ATO website.
You can set up a voluntary tax deduction when you claim a 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 payment.
If you get one of these payments, you can set up a deduction online:
- 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.
You can also set up a deduction by:
- using the Express Plus Centrelink mobile app
- using a self service terminal in a service centre
- asking for help at a service centre.
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.
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 Dad and Partner Pay or Parental Leave Pay
We deduct tax from Dad and Partner Pay. If we pay your Parental Leave Pay to you directly we will deduct tax from your payment. But if your Centrelink online account is linked to myGov, you can change or stop the tax amount online.
You can also do this by:
- using your Express Plus Centrelink mobile app
- visiting a service centre.
If your employer pays your Parental Leave Pay, they will withhold Pay As You Go tax (PAYG) at the usual rate.