Taxable income for family assistance and Paid Parental Leave scheme payments 007-07080010

Taxable income is income as assessed by the Australian Taxation Office (ATO). Families should visit the ATO website for more information If they:

• Are unsure if income is taxable, or
• need to lodge a tax return, or
• need advice about other income, for example, reportable fringe benefits (including any exempt reportable fringe benefit amounts)

Generally, taxable income includes assessable pre-tax income received by the person, less any expenses incurred in receiving that income. The ATO allows deductions for total net investment losses, but for family assistance purposes, the loss amount is recorded separately and is added to their adjusted taxable income (ATI). Also included separately in their ATI are:

• tax-free pensions and benefits
• reportable fringe benefits (including exempt reportable fringe benefits)
• reportable superannuation contributions
• tax exempt foreign income, and
• income earned overseas that is not taxable in Australia

Taxable income is a component of ATI and can include:

• taxable Government payments and components
• Coronavirus Supplement
• Pandemic Leave Disaster Payment
• Consumer Travel Support Program (CTSP) payments
• certain Department of Veterans' Affairs (DVA) payments including Defence Force Income Support Allowance (DFISA) and DVA payments that are not treated as tax-free pensions and benefits (for example, invalidity and service pensions paid to those who have reached Age Pension age, are taxable)
• wages and salary
• taxable components of back paid wages
• Workforce Retention Bonus Grant
• Self-Employment Assistance payment
• JobKeeper payments (paid from 30 March 2020 - 28 March 2021 inclusive)
• earnings from a business
• capital gains (profit from the sale of assets)
• reportable fringe benefit (not adjusted rate)
• compensation payments
• Parental Leave Pay (PPL)
• Farm Household Allowance
• Farm Household Allowance (FHA) Supplement (lump sums)
• foreign income that is taxable in Australia
• income from real estate
• interest on savings and investments
• insurance payouts
• superannuation death benefits
• superannuation withdrawals, excluding the following, which are not taxable and not assessable income for family assistance:
• withdrawals made under the First Home Super Saver (FHSS) Scheme
• amounts rolled over in full from one superannuation fund to another
• superannuation accessed under Coronavirus (COVID-19) early release of super
• scholarship income (if the scholarship is taxable)
• termination payments from employers (an amount rolled over into a superannuation fund is not taxable income)
• withdrawals from the Farm Management Deposits (FMD) Scheme

• Family assistance payments
• Rent Assistance
• Pharmaceutical Allowance
• Energy Supplement
• Carer Allowance
• Remote Area Allowance
• the $750 and $250 Economic Support Payments
• the $250 Cost of Living Payment
• Child support or spousal maintenance
• tax-free pensions and benefits
• other non-taxable payments including Energy Supplement payments
• adjusted fringe benefits (that is, have been adjusted to the non-taxed rate)
• allowances and salary of Australian Defence Force (ADF) personnel while serving in a designated war zone, for example, Afghanistan, Iraq, this is exempt income and not assessed for family assistance purposes
• Defence Force Reserve allowances paid to cover costs while training and are not taxable
• Disaster Income Recovery Subsidy and Recovery Grant for the 2010-11 floods and Cyclone Yasi
• foreign income that is not taxable in Australia
• Foster Care Allowance
• non-taxable compensation
• non-taxable scholarship payments
• Native title benefits
• reportable superannuation contributions (from 1 July 2009)
• the individual's tax-free allocated pensions received in that income year
• superannuation withdrawals for individuals aged 60 or over (1 July 2007 change)
• withdrawals of voluntary superannuation contributions under the First Home Super Saver (FHSS) Scheme. See the Resources page for a link to the ATO website and further information about the scheme
• superannuation accessed under COVID-19 early release of super
• total net investment losses (from 1 July 2009) which includes net rental property loss and net investment losses
• Thalidomide Australia Fixed Trust payments and Commonwealth ex gratia payments made to beneficiaries of the trust
• Status Resolution Support Services (SRSS) payments
• loan payments received through the Home Equity Access Scheme
• Territories Stolen Generations Redress Scheme payments

For individuals required to lodge an income tax return, the ATO transfers actual ATI details to Centrelink for FTB/CCS reconciliation and lump sum claims after the end of the relevant financial year, with the exception of tax-free pensions and benefits, foreign income and deductable child maintenance expenditure.

A person's actual taxable income is the amount written on their Notice of Assessment (NoA) sent by the ATO after the person's income tax return has been assessed. Note: income details reported by the ATO will automatically have amounts released under the First Home Super Saver (FHSS) Scheme or COVID-19 early release of super excluded, as these do not form part of a customer's ATI. However, for these customers the taxable income amount on their NoA may be higher than the amount reported by the ATO via the data link on our system as the ATO does regard a portion of the released funds as taxable.

If they are not required to lodge an income tax return, for example, their income is below the tax threshold and they have not had tax withheld, they must tell Services Australia and provide an estimate of their ATI. This must include all taxable income they will receive in the financial year. A loss is treated as zero taxable income.

Single Touch Payroll (STP) is an Australian Taxation Office (ATO) initiative where employers submit payroll data to the ATO with each pay event. Where a customer is a mutual client of Centrelink and the ATO, the ATO will share the customer’s STP data with Services Australia.

STP data helps identify customers at risk of underestimating their annual income. Electronic reminders (SMS or email) are sent to identified customers prompting them to check the accuracy of their family income estimate. This reduces the likelihood of a Family Tax Benefit (FTB) overpayment at reconciliation time.

Customers who are confident their estimate is accurate do not need to do anything. The messages are a prompt only.

A document will show on the customer's record if they received an electronic message and detail the reason it was sent. A customer can be selected for multiple reasons. Staff can view this document:

• Customer First
• CRN/BP link > Supercase for business partner > Notes
• Process Direct
• Notes icon > Notes

Helping families provide a reasonable annual income estimate for family assistance payments contains customer scenarios and electronic messaging examples.

For more information, see Single Touch Payroll Programme.