A few things happen in July: we are halfway through winter and we love a bit of Christmas in July, but less fun is tax returns with the start of the new financial year.
If you’re on a Centrelink payment, you will need to lodge a tax return so the government can check your level of payment is correct and tax you if you are in work as well.
If you are on any of the following payments, you will need to lodge a tax return
- Age Pension
- Carer Payment if you or the care receiver is of Age Pension age (67-plus),
- Disability Support Pension if you are of Age Pension age
- Disaster Recovery Allowance
- Farm Household Allowance
- Jobseeker Payment
Deduct tax
If you think you will be paying tax and may have trouble meeting your obligations, you can ask Centrelink to deduct tax from your payments.
It’s probably not a worry if you rely on Centrelink payments alone for income, but if you work part time or casually, having tax deducted could help you ‘smooth’ out your tax obligations when you submit your return.
You can ask for this service when you submit your initial claim for payment, as there is an option on the Centrelink paperwork.
Centrelink will deduct tax as either:
- a percentage of your total taxable payments
- a set dollar amount.
You can change your preferences at any time and change them through your myGov account, by using the Express Plus Centrelink mobile app, by using a self-service terminal in a service centre or asking for help at a service centre.
According to Centrelink, sometimes you will be eligible for ‘extra’ payments and supplements. You cannot set up tax deductions for these payments, but they are taxable.
Add-on payments for Australian seniors can include:
- Basic Pension Supplement
- Partner Bereavement Payment
- Transitional Basic Pension Supplement
- Disaster payments
When you need to lodge
If you are receiving a Centrelink payment, Centrelink advises it’s best to lodge your return online.
You will need to link the ATO to your myGov account. If you do not have a myGov account, follow the link here to set one up.
The best time to lodge your return is from late July. By this time your online Centrelink account should be marked as ‘tax ready’ and the relevant Centrelink information will be pre-filled. This avoids you having to calculate and add the financial information yourself.
If you received another payment from Centrelink that doesn’t appear on your payment summary, for example an emergency payment, you will need to add those yourself.
Even though much of the information is pre-filled, it’s a good idea to check the figures are correct before you officially lodge your return, otherwise you may have to amend the return and lodge it again.
If you owe a debt to Centrelink, but receive a tax return, the debt will be deducted from the return.
If you need support filling out your tax return, you can contact Services Australia. Find out the best support service for your particular issue here.
When you don’t need to lodge
If you are not on a Centrelink payment, your income is below the tax-free threshold of $18,200 and no tax has been withheld from that income, you don’t need to lodge a tax return.
Find out if you are eligible here.
Of course, you have to let the tax office know you don’t need to lodge a return, which is known as a non-lodgement advice or ‘return not necessary’.
You can do this through your myGov account if you have it linked to the ATO or download and print the form and send it by mail. Find more information and the form here.
How do you feel about your Centrelink payments being taxed? Why not share your thoughts in the comments section below?
Also read: Tax implications of giving money to your grandchildren
