- Is your pension taxable?
- Medicare levy reduction or exemption
- Taxation Withholdings (deductions)
- Tax file numbers
This chapter is about:
- pensions subject to income tax
- lodging an income tax return
- Medicare levy
- payment summary
- taxation withholdings (deductions)
Certain Australian Government pensions are taxable. If you receive one of these pensions, the amounts you receive may be taxed, depending on whether you have other taxable income. You should refer to the Australian Tax Office (ATO) website or contact the ATO or a financial advisor for advice.
Use the following guides to work out if your payment is taxable.
- Age service pension (service pension granted to a veteran on the basis of age)
- Invalidity service pension where the person has reached age pension age
- Social security age pension (paid by DVA)
- Partner service pension where the person has reached age pension age
- Partner service pension where the partner is separated from the veteran for reasons other than illness
- Income support supplement other than income support supplement paid for under the circumstances set out in the following list of Tax exempt payments
- Education allowance for people over 16 years
- Defence Force Income Support Allowance (DFISA) paid in respect of a social security income support payment that is taxable (for example, if you are receiving DFISA in respect of the age pension)
- DFISA paid in respect of an income support payment which is not a social security income support payment where the payment is taxable
Payments that are not taxable
- Disability pension and allowances
- War widow(er)s' and orphans' pensions
- Invalidity service pension if the person has not reached age pension age
- Partner service pension where the person and their partner are under age pension age and the partner is an invalidity service pensioner
- Income support supplement paid on the grounds of invalidity if the person has not reached age pension age
- Income support supplement where the person and their partner are under age pension age and the partner is an invalidity service pensioner or disability support pensioner
- Remote area allowance
- Rent assistance
- Energy Supplement
- Bereavement payments
- Defence Force Income Support Allowance (DFISA) paid in respect of a social security income support payment that is tax exempt (for example, if you are under pension age and receiving DFISA in respect of the disability support pension)
Note: If the veteran’s income support payment becomes taxable so does the partner’s regardless of the partner’s age. Age pension age for is currently 65 years for both males and females. For more information on pension age refer to Chapter 3 Which pension do you get? or contact your nearest DVA office.
Pay As You Go (PAYG) Payment Summary
The information previously reported on a Group Certificate is now reported on a PAYG payment summary. DVA will send you a payment summary at the end of each Financial Year which will separately show both taxable payments and non-taxable payments. If applicable the payment summary will also:
- include the total amount of any tax instalments you have asked to be deducted (refer to Taxation Deduction (Instalments) later in this chapter).
- refer to Medicare Levy Exemption (see Medicare levy reduction or exemption later in this chapter).
Note: If you are lodging a final income tax return for a deceased estate you will need to contact your nearest DVA office for a payment summary.
If you are not sure whether you need to lodge a tax return you should contact the ATO for advice.
Your Medicare levy is reduced if your taxable income is below a certain threshold and, in some cases, you may not have to pay the levy at all. The ATO will work out the amount of any levy you need to pay after you lodge your income tax return. You may qualify for a Medicare levy exemption if you receive a pension because you are blind or if you are entitled to a Gold Card. If you have a Gold Card but you don't receive a payment from DVA and are exempt from paying the levy for either all or part of the Financial Year, DVA will send you a Medicare Levy Exemption Certificate. If you are required to lodge an income tax return you will need to record the number of days stated on your Medicare Levy Exemption Certificate. You do not need to attach your Medicare Levy Exemption Certificate to your income tax return, however, you should retain the certificate for your records.
You can arrange for tax withholdings to be made from certain DVA pensions, and paid to the ATO to assist you in meeting a tax liability. Payments that can have tax withheld include:
Simply write and tell us how much you want deducted each fortnight. You may first need to talk to the ATO to find out what your tax liability will be.
If you have amounts deducted, you will need to lodge a tax return each year. If the amounts you have paid exceed your tax liability, you will need to lodge a tax return to claim your refund.
To help ensure that pensions are only paid to eligible persons, we compare our records with those of other government agencies. Your tax file number is used for this purpose.
All matching programs are monitored by the Privacy Commissioner who ensures that they are conducted in accordance with the Data-matching Program (Assistance and Tax) Act 1990 and Guidelines.
Access to your tax file number is restricted. If you lose or forget your number you will need to contact the ATO.
For more information about tax and your pension contact your nearest ATO or DVA office.