Children’s Tax Rates

The income tax on children (under 18 years old) is settled according to both the type of income and the status of the child who earned it.

Resident Minors Tax Rates

on income which is not ‘Excepted‘ income

2017-18, 2018-19, 2019-20, 2020-21, 2021-22, 2022-23, 2023-24 and 2024-25

Eligible income	Resident tax rate
$0 to $416	Nil
$417 to $1,307	66% of excess over $416 (1)
Over $1,307	45% of the entire amount of eligible income (2)

In general, children are taxed at higher rates on ‘unearned’ income under rules which were introduced to discourage income splitting via trusts and other means.

Special rates apply to unearned income in excess of $416 of children who are aged under 18 years at the end of the financial year.

The higher taxing rates applicable to unearned income are set out in the tables below, excluding medicare levy.

Excepted income (such as from employment) is not taxed under the tables set out below. It is taxed at the normal adult rates of tax.

A child, or “minor”, for income tax purposes is a person who is under the age of 18 years on the last day of the income year (30 June).

* subject to future government action, these tax rates continue to apply from 1 July 2023.

2014-15, 2015-16, 2016-17 – Resident

Eligible income	Resident tax rate
$0 to $416	Nil
$417 to $1,307	68% of excess over $416 (1)
Over $1,307	47% of the entire amount of eligible income (2)

Temporary Budget Repair Levy: Following from the Federal Budget 2014-15 the top marginal tax rates were increased by 2% for a period of 3 years commencing 1 July 2014 and ending on 30 June 2017.

Resident tax rates for minors on eligible income 2013-14

Eligible income	Resident tax rate
$0 to $416	Nil
$417 to $1,307	66% of excess over $416 (1)
Over $1,307	45% of the entire amount of eligible income (2)

Non-resident Minors Tax Rates

NON-Resident tax rates for minors on eligible income 2024-25

Eligible income	NON-Resident tax rate
$0 to $416	30%
$417 to $663	$124.80 + 66% of excess over $416 (1)
Over $663	45% of the entire amount of eligible income (2)

NON-Resident tax rates for minors on eligible income 2017-18, 2018-19, 2019-20, 2020-21, 2021-22, 2022-23 and 2023-24

Eligible income	NON-Resident tax rate
$0 to $416	32.5%
$417 to $663	$135.20 + 66% of excess over $416 (1)
Over $663	45% of the entire amount of eligible income (2)

Non-residents do not pay the medicare levy.

NON-Resident tax rates for minors on eligible income 2014-15,  2015-16, 2016-17

Eligible income	NON-Resident tax rate
$0 to $416	34.5%
$417 to $663	$143.52 + 68% of excess over $416 (1)
Over $663	47% of the entire amount of eligible income (2)

Non-Resident tax rates for minors on eligible income 2013-14

Eligible income	NON-Resident tax rate
$0 to $416	32.5%
$417 to $663	$135.20 + 66% of excess over $416 (1)
Over $663	45% of the entire amount of eligible income (2)

⁽¹⁾ If the marginal tax amount on the eligible income slice according to the ordinary tax scale would be higher, then the higher amount is used. (Rates Act s 13).

⁽²⁾ When the highest tax rate is triggered it is applied to the entire amount of eligible income, not just the top slice.

Application of Medicare Levy

The above tax rates do not include Medicare Levy which should normally be taken into account for resident individuals unless exempt or eligible for a reduction.

Medicare Levy does not apply to non-residents.

Effect of children’s tax scales

The above scales result in higher tax on eligible income than would be the case if the ordinary tax scale applied.

This is due to:

• the lower tax free threshold amount
• the higher marginal tax rates (second tier 66%, third tier 45%)
• since 1 July 2011 – the low income tax offsets (“LITO” and LMITO) are not available on eligible income.

Minors who are Australian residents do not ordinarily have to lodge a tax return if they earn less than $416 within the financial year, unless requested, or if tax has been withheld.

Excepted Income of Minors

Children who are not excepted persons, will have the higher tax rates applied to income which is not excepted income. For a more detailed summary of definitions see excepted persons and excepted income.

The tax for a minor whose taxable income consists of both eligible income and excepted income will need to be calculated in two parts. The total tax liability is then the sum of the normal tax on the excepted income slice and the higher tax on the eligible income remainder.

Income of each component of the calculation is “net income” – i.e. deductions relevant to each type of income should be attributed before calculating the tax.  Deductions which are “apportionable” are allocated to the income segments on an ratio of gross income amounts.

S 102AD(c)

See Also

• Tax rates if you’re under 18 years old
• Trust tax Return 2023-24 Appendix 10: Rates of tax payable by trustees on behalf of beneficiaries under 18 years old
• Taxation Determination TD 2017/11 Income tax: who should be assessed to interest on bank accounts?
• Trust tax rates
• Trust Tax Return Appendix 10 (2020-21) – Beneficiaries under 18 years old
• Medicare levy
• Medicare levy surcharge
• Getting a tax file number

This page was last modified 2024-06-18