Beneficiary Tax Offset

The beneficiary tax offset is available to taxpayers who receive certain taxable Centrelink benefits and Commonwealth education allowances. (Income Tax Assessment Act 1936 – Sect 160AAA)

If the ONLY income you receive is from eligible allowances, the beneficiary tax offset will ensure that you pay no tax.

Not refundable

If the tax offset is greater than the tax calculated, the balance is not refundable, nor can it be used to pay Medicare Levy.

How to claim Beneficiary Tax Offset

The beneficiary tax offset doesn’t have to be specifically claimed in your tax return, because it is automatically calculated from your tax return data.

But to trigger the calculation and receive the rebate, it is crucial  to enter the eligible income in the correct item number of your tax return so that it is correctly identified by the Tax Office and included in your tax assessment.

Relevant income is entered at Income Item numbers 5 or 6 of the income tax form – which are the amounts referred to in the formula below as the “rebatable benefits”.  The relevant information should be displayed on the annual summary statement.

beneficiary-tax-offset

Notice also that if Item 6 is completed, Item T2 must also, as well as spouse details if applicable:

beneficiary-tax-offset-codes

If you have already lodged your tax return and didn’t get your beneficiary tax offset tax entitlement, you can request that your tax assessment be amended. For information about getting an amendment, start here: Tax Return Amendments.

Beneficiary Rebate Amount (Tax Offset) – Calculation

The basic formula is:

Rebatable benefitsOffset calculation
$0 to $37,00015% of [Rebatable benefits – $6,000]
Over $37,00015% of [Rebatable benefits – $6,000] + 15% of [Rebatable benefits – $37,000]

Income Tax Regulations 1936 – Reg 152

Calculator

Calculations can be checked online using the Tax Office Calculator here

Income which qualifies for the beneficiary offset

Those payments include:

  • Newstart Allowance
  • Youth Allowance
  • Austudy payment
  • parenting payment (partnered)
  • partner allowance
  • sickness allowance
  • special benefit
  • widow allowance
  • exceptional circumstances relief payment
  • interim income support payment
  • an education payment of any of the following when you were 16 years old or older:
    • ABSTUDY living allowance
    • payment under the Veterans’ Children Education Scheme
    • payment under the Military Rehabilitation and Compensation Act Education and Training Scheme 2004, shown as ‘MRCA Education Allowance’ on your PAYG payment summary – individual non-business
  • other taxable Commonwealth education or training payments
  • an income support component from a Community Development Employment Project (CDEP) shown as ‘Community Development Employment Projects (CDEP) payments’ on your PAYG payment summary – individual non-business
  • a CDEP scheme participant supplement.

Note that there are quite a number of Federal government allowances and benefits which are not taxable, and are not eligible for the beneficiary offset.

A list of items on which you don’t pay tax is here: Income on which you don’t pay tax

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This page was last modified o2018-12-26

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