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Taxability and tax deductions from payments 103-08000000

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This document provides an overview of the obligations of Services Australia in managing customer's taxation details and tax deductions (instalments) as per the Australian Taxation Office's rules.

Australian Taxation Office and Services Australia

Certain Centrelink payments delivered by Services Australia must be reported to the Australian Taxation Office (ATO) and require a Centrelink payment summary to be generated where a customer has received any of these payments within a financial year.

The ATO determines which payment information must be reported for these customers. Taxable payments are always reportable but the ATO requires some non-taxable/tax exempt payments (pensions/benefits/allowances) to be reported, as this information may impact a customer's entitlement to claim a tax offset (previously referred to as a tax rebate) in their tax return. For more information about which payments must be reported to the ATO, see Taxable and non-taxable (tax exempt) payments for Centrelink Payment Summary.

Customers in receipt of a taxable payment may elect to have tax deductions made from their payments each payday. For more information about which payments can have tax deducted, see Taxable and non-taxable (tax exempt) payments for Centrelink Payment Summary.

Managing taxation details

The Centrelink tax system is used to manage taxation matters for Centrelink customers. The main facility provided by this system is to create Centrelink payment summaries for customers that have received any ATO reportable payments. Any amounts of tax deducted from taxable payments are also included and reported to the ATO on a customer's payment summary. For more information about other features used to manage tax deductions, see Managing Australian Taxation Office (ATO) tax deductions.

At the close of business, on 30 June each year, Centrelink payment summaries are calculated and created for all customers who have received reportable payments within the financial year period (1 July to 30 June). This occurs irrespective of whether tax has been withheld from benefits/payments/allowances or not. Payment Summary details are then automatically transmitted to the ATO in the first week of July of the new financial year (for the financial year just ended).

When the Centrelink payment summaries have been generated, they can be requested by the customer through a range of self service options. For more information see Centrelink Payment Summaries.

Contents

Adjusting tax details for Bereavement Payments

Australian Taxation Office (ATO) tax deductions

Tax features within the Centrelink system

Centrelink Payment Summaries

General information on Manual Follow-up (MFU) tax activities

Managing Australian Taxation Office (ATO) tax deductions

Taxable and non-taxable (tax exempt) payments for Centrelink Payment Summary