Are Centrelink payments taxable in Australia?

Some are and some are not. Income-support payments like JobSeeker, Youth Allowance, Austudy, the Age Pension, Carer Payment, Parenting Payment and Parental Leave Pay are generally taxable and must be declared. Family assistance like Family Tax Benefit and Child Care Subsidy, and payments like Carer Allowance and Rent Assistance, are generally tax-free.

Is JobSeeker Payment taxable?

Yes. JobSeeker Payment is taxable income and must be included in your tax return. Centrelink does not always withhold tax from it automatically, so if it is your only income you may still owe little or nothing thanks to the tax-free threshold and offsets — but if you also worked, it can push up the tax on your combined income.

Is the Age Pension taxable?

The Age Pension is technically taxable, but many pensioners pay no tax because of the seniors and pensioners tax offset (SAPTO) and the tax-free threshold. If the Age Pension is your only income you will usually owe nothing, but it should still be declared, and other income on top can change the result.

Is Family Tax Benefit taxable?

No. Family Tax Benefit (Parts A and B) is a tax-free payment and is not included as income on your tax return. The same applies to Child Care Subsidy. However, these payments are income-tested, so your taxable income still affects how much you receive.

Is Parental Leave Pay taxable?

Yes. Government Parental Leave Pay is taxable income and is included in your return. This is different from Family Tax Benefit, which is tax-free. If your employer pays it on the government's behalf, they generally withhold tax like normal wages.

Will I get a tax bill from my Centrelink payments?

You can, if tax was not withheld and your total income for the year is high enough to owe tax. This catches people who received a taxable payment and also worked. You can ask Centrelink to withhold tax from your payments to avoid a surprise, and offsets like the beneficiary tax offset can reduce or remove the tax on the payment itself.

What is the beneficiary tax offset?

It is an offset that can reduce or eliminate the tax on certain Centrelink allowances like JobSeeker and Youth Allowance, so that if those payments are your only income you generally pay no tax on them. It applies automatically when you lodge. If you have other income as well, the offset may only partly reduce your tax.

Centrelink & Government Payments: Are They Taxable? (2025-26)

Q: Do I have to declare Centrelink payments if tax wasn't taken out?

Yes. Whether or not tax was withheld during the year, taxable Centrelink payments must be declared. Services Australia reports your taxable payments to the ATO and they pre-fill into your return, usually from late July. If no tax was withheld, declaring them simply settles the correct amount at lodgment.

Centrelink payments confuse a lot of people at tax time: some are taxable, some are completely tax-free, and the difference matters. Here is a clear breakdown for 2025-26 of what to declare and what to leave off.

Quick answer

Income-support payments — JobSeeker, Youth Allowance, Austudy, the Age Pension, Carer and Parenting Payments, and Parental Leave Pay — are taxable and must be declared. Family assistance — Family Tax Benefit, Child Care Subsidy, Carer Allowance, Rent Assistance — is generally tax-free. Offsets often mean little or no tax if a payment is your only income.

The simple rule: support is taxable, family help usually isn't

Most Centrelink payments fall into one of two buckets. Income-support payments that replace wages are generally taxable. Payments designed to help with the costs of children or specific situations are generally tax-free. Here is how the common ones split:

Generally taxable — declare it	Generally tax-free — leave it off
JobSeeker Payment	Family Tax Benefit (A & B)
Youth Allowance & Austudy	Child Care Subsidy
Age Pension	Carer Allowance
Carer Payment*	Rent Assistance
Parenting Payment	Disability Support Pension (under age-pension age)
Parental Leave Pay	Most one-off crisis & emergency payments

*Some payments depend on circumstances — for example, Carer Payment can be tax-free where both the carer and the person cared for are under age-pension age. Always check your own payment's status with Services Australia.

Why taxable payments can still mean no tax

“Taxable” does not always mean you will pay tax. If a taxable payment is your only income, the $18,200 tax-free threshold, plus offsets like the beneficiary tax offset (for allowances such as JobSeeker and Youth Allowance) or SAPTO (for pensioners), often reduce the tax to nil.

The catch is when you have other income too. A taxable Centrelink payment stacks on top of wages or other income, and because tax is often not withheld from Centrelink payments, the combination can leave you with a bill at tax time.

Tax often isn't withheld — so plan ahead

Unlike a salary, Centrelink does not automatically take tax out of most payments. If you expect to owe tax — for example because you also worked during the year — you can ask Centrelink to withhold tax from your payments through myGov, which spreads the cost and avoids a lump-sum surprise.

How it appears in your return

Services Australia reports your taxable payments to the ATO, and they pre-fill into your tax return, usually from late July. Check the pre-filled amounts against your Centrelink payment summary in myGov before you lodge. Tax-free payments do not appear as income — but some are still used in income tests for other entitlements, so they are not entirely invisible.

A quick worked example

Say you received $12,000 of JobSeeker early in the year, then started a job paying $40,000. Your taxable income is $52,000. The JobSeeker had little or no tax withheld, but it is taxed as part of that $52,000 — so unless enough was withheld from your wage, you may owe some tax. Declaring both is essential; leaving the JobSeeker off would understate your income and the ATO would flag it.

Frequently asked questions

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Related guides

This guide is general information only and not personal tax advice. Always confirm with the ATO at ato.gov.au or a registered tax agent before lodging.

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