Tax-free pensions and benefits for family assistance and Paid Parental Leave scheme payments, and the Parental Income Test for Youth Allowance, ABSTUDY and Assistance for Isolated Children 007-07080060

The following payments are included for the purpose of calculating adjusted taxable income (ATI):

• Carer Payment (CP) where both the carer and the person being cared for are under Age Pension age
• Disability Support Pension (DSP), where the recipient is under Age Pension age (including youth disability supplement when paid with DSP)
• Disability Support Pension Blind (DSB)
• Age Pension (Blind) Pension
• Department of Veterans' Affairs (DVA) invalidity service pension where the recipient is below Age Pension age
• DVA Disability Compensation Payment, war widow's and war widower's pension
• DVA service pension and partner service pension where both partners are under Age Pension age and the veteran receives an invalidity service pension at the time of death
• DVA income support supplement paid on the grounds of invalidity if the person is under Age Pension age
• DVA Defence Force Income Support Allowance (DFISA), if the income support payment being received is not taxable, DFISA is not taxable. From 1 January 2022, DFISA ceased. Where a DFISA payment is made retrospectively for a period prior to 1 January 2022, it would be counted as adjusted taxable income against the income year for which it was received
• Special Rate Disability Pension safety net payment (SRDP) paid by DVA under the Military Rehabilitation and Compensation Act (MRCA)
• Compensation for permanent impairment paid under the MRCA by DVA
• Additional compensation for impairment from another service injury or disease paid under the MRCA
• Interim compensation paid under the MRCA by DVA while waiting for compensation payment for permanent impairment or additional compensation payment for impairment from another service injury or disease
• Wholly Dependent Partner compensation payments, including arrears and lump sums paid by DVA under 234(1)(b) of the MRCA, would be included in the widow's estimate of adjusted taxable income in the year in which it is paid. Compensation payments made under paragraph 234(1)(a) of the MRCA (the wholly dependent partner death benefit) to an eligible widow, will be disregarded for FTB income assessment and Parental Income Test purposes
• Compensation payments made under both sections 252 and 254 of the MRCA to children of a widow

These payments are made by the Department of Veterans’ Affairs (DVA) and can be paid as fortnightly instalments or as a lump sum. Arrears and lump sums are deemed to be income in the tax year they are received. The Military Rehabilitation and Compensation Commission can make payments under 2 Acts:

• Military Rehabilitation and Compensation Act (MRCA)
• Safety, Rehabilitation and Compensation Act 1988 (SRCA)

Only certain MRCA payments are included as part of the customer's ATI or the Parental Income Test.

If a widow receives the DVA Income Support Supplement, they would be completely exempt from the FTB Part A Income Test and the Parental Income Test.

The following tax-free income are not included for the purpose of calculating adjusted taxable income (ATI):

• bereavement period payments, excluding the amount of a Lump Sum Bereavement Payment (LBP) above the tax free amount paid to a partner or carer of a deceased customer (the difference is taxable income)
• Compensation payment made under paragraph 234(1)(a) of the MRCA (the wholly dependent partner death benefit) to an eligible widow
• Carer Allowance (includes saved rate Child Disability Allowance)
• Carer Supplement
• COVID-19 Disaster Payments
• Double Orphan Pension
• Energy Supplement payments
• Fares Allowance
• Incentive Allowance
• Language, Literacy and Numeracy Supplement
• Mobility Allowance
• Self-Employment Assistance Rental Assistance
• Pension Supplement - most components of the Pension Supplement are non-taxable, except for the Basic Amount if the customer's primary payment is taxable
• Note: the Basic Amount is not taxable if the customer is a JobSeeker Payment principal carer who has been granted an exemption from their mutual obligation requirements
• See Exempting a job seeker from mutual obligation requirements due to special circumstances. The exemption can be identified on the Activity and Exemption Summary (AEX) screen
• Loan payments made under the Home Equity Access Scheme
• Pharmaceutical Allowance
• Remote Area Allowance
• Rent Assistance
• Seniors Supplement paid to Commonwealth Seniors Health Card (CSHC) Holders
• Single Income Family Supplement (SIFS)
• Student Financial Supplement Scheme payments
• Telephone Allowance
• The $750 Economic Support Payment
• The $250 Cost of Living Payment
• Territories Stolen Generations Redress Scheme payments
• Native title benefits