You may receive money that you don’t need to include as assessable income in your tax return. You may still need to report these amounts so we can work out your tax losses or eligibility for tax offsets or benefits.
Amounts you don’t include as assessable income fall into 3 categories:
exempt income
non-assessable, non-exempt income
other non-taxable amounts.
Exempt income
Exempt income is income you don’t pay tax on (that is, it’s tax-free). However, you may still need to report these in your tax return as we use certain exempt income amounts to work out other calculations such as:
tax losses of earlier income years that you can deduct
adjusted taxable income of your dependants.
Exempt income includes:
certain Australian Government pensions, such as the
disability support pension paid by Centrelink to a person who is under age-pension age
invalidity service pension paid under the Veterans’ Entitlements Act 1986 where the veteran is under age-pension age
certain Australian Government allowances and payments, such as the
carer allowance
child care subsidy
certain overseas pay and allowances for Australian Defence Force and Federal Police personnel
Australian Government education payments, such as
allowances for students under 16 years old
Commonwealth secondary education assistance
some scholarships, bursaries, grants and awards
a lump sum payment you received on surrender of an insurance policy where you are the original beneficial owner of the policy – generally you do not earn, expect, rely on or regularly receive these payments – examples include
mortgage protection
terminal illness
a permanent injury occurring at work.
Non-assessable, non-exempt income
Non-assessable, non-exempt income is income that we don’t assess and you don’t pay tax on. It doesn’t affect your tax losses.
Non-assessable, non-exempt income includes:
the tax-free component of an employment termination payment
genuine redundancy payments and early retirement scheme payments shown as ‘Lump sum D’ amounts on your income statement
super co-contributions
certain disaster payments and grants.
Other non-taxable amounts
Generally, you don’t declare amounts you receive for:
rewards or gifts on special occasions, such as cash birthday presents and gifts from relatives given out of love (however, gifts may be taxable if you receive them as part of a business-like activity or for your income-earning activities as an employee or contractor)
prizes you won in ordinary lotteries, such as lotto draws and raffles
prizes you won in game shows, unless you receive regular appearance fees or game-show winnings
child support and spouse maintenance payments you receive.
Last modified: 26 Apr 2023
QC 72118
https://www.ato.gov.au/individuals/income-deductions-offsets-and-records/income-you-must-declare/amounts-you-do-not-include-as-income/