Income of minors is subject to special rules and they may pay tax on certain types of income at a higher rate.
Learn more from the ATO -
Your income if you are under 18 years old
According to the ATO, for individuals under 18 years of age, 'excepted net income' includes the following types of income:
1. Employment or business income.
2. Centrelink payments.
3. Pensions, annuities, and superannuation income streams.
4. Compensation, superannuation, and insurance payouts.
5. Income from a deceased person's estate.
6. Income from property transferred because of a family breakdown or death.
7. Income from their own investments or property if the ATO agrees there was no intention to reduce tax by shifting income from someone else to the child.
8. Income from a partnership or trust, if earned from their effort or property and not from distributions from discretionary or family trusts.
If a person under 18 has excepted net income, it is taxed at ordinary rates rather than the higher rates that apply to unearned income of minors. If applicable, the Low and Middle Income Tax Offset (LMITO) can also be considered for individuals with excepted net income.
Please note that the definition of excepted net income can change, so for the most current information, you should consult the latest available resources or legislation.
Note:
- Different tax rates are applied to excepted income, hence tax on taxable income is dependent on amount in A1J. Tax is paid on excepted income. Learn more from the ATO here
- In rare cases excepted income can be higher than taxable income, Learn more