What Income do I need to Declare?

Your income is declared on your tax return each year.

Most of this information is provided to the ATO from employers and financial institutions, but there is also some that you will need to provide additionally. It is your responsibility to ensure that all amounts are accurate and complete regardless of who has provided the information.

The types of Income that you are required to declare include:

• Employment income

• Super pensions, annuities and government payments

• Investment income (including interest, dividends, rent and capital gains tax)

• Business, partnership and trust income

• Foreign income

• Crowdfunding

• Other income - including compensation and insurance payments, discounted shares under employee share schemes, and prizes and awards.

Employment Income

Employment income is money you receive from working. You may be paid cash-in-hand, directly into your bank account, or in another way.

Regardless of whether you have one job or more, are full time, part-time or casual you need to make sure all of your employment income is included on your tax return.

Salary and Wages

The most common type of employment income is salary and wages.

Salary and wages includes:

• your normal weekly, fortnightly or monthly pay

• commissions

• bonuses

• money for part-time or casual work

• parental leave pay

• dad-and-partner pay

• payments from

• an income protection policy

• a sickness or accident insurance policy

• a workers compensation scheme.

• foreign employment income. If you are an Australian Government agency employee (and not a member of a disciplined force), your income earned from delivering Australian official development assistance needs to be declared with Salary and Wages

Allowances and Other Employment Income

You may receive other payments in connection with your employment such as:

• allowances, such as car, travel, clothing and laundry

• tips, gratuities and payments for your services

• consultation fees and payments for voluntary services

• jury attendance fees.

The Sharing Economy

The sharing economy is a way of connecting buyers and sellers, usually via an app or website. If you are engaged in the sharing economy, the income and deductions from those enterprises needs to be included on your tax return.

Examples include services such as:

• providing taxi travel services through 'ride-sourcing'

• renting out a room or house for accommodation

• renting out parking spaces

• providing skilled services – web or trade services, etc

• supplying equipment, tools, etc

• completing odd jobs, errands, deliveries, etc.

Lump Sum Payments

There are two common types of lump sum payments:

• When you leave a job, you may receive a lump sum payment for unused annual, long service leave or special leave you may have been entitled to had you not left your job.

• The second is a lump sum payment in arrears for money owed to you from an earlier income year.

Both of these lump sum payments are assessable in the year you receive them

Reportable Fringe Benefits and Super Contributions

Other employment-related income includes:

• reportable fringe benefits given to you by your employer, such as a work car for private purposes, a cheap loan or free private health insurance

• reportable super contributions made on your behalf by your employer.

You don't have to pay tax on these items but they are used to work out whether you are eligible to receive a range of government benefits and tax offsets.

Super Pensions, Annuities & Government Payments

You must declare income you received from pensions paid to you as a super income stream, annuities and some government payments.

Pensions

A pension is a series of regular payments made as a super income stream (this does not include government payments such as the age pension).

These payments may be made by:

• an Australian super fund, life assurance company or retirement savings account (RSA) provider

• a fund established for the benefit of Commonwealth, state or territory employees and their dependants (such as the Commonwealth Superannuation Scheme and the Public Sector Superannuation Scheme)

• as a result of another person's death (death benefit income stream).

What you need to declare

Your super income stream payments will have different components. You need to include the following components on your tax return:

• a taxed element − the part of your benefit on which tax has already been paid in the fund

• an untaxed element − the part of your benefit that is still taxable because tax has not been paid in the fund.

You do not need to declare the tax-free component on your tax return.

Annuities

An annuity is usually a series of regular payments to you by a life insurance company in return for a lump sum payment.

Most annuities have both taxable and tax-free components.

Taxable annuity payments will be included in your assessable income when received. This includes annuities received by you as a reversionary beneficiary.

Government Payments

You must declare Government payments such as the age pension, carer payments, Austudy, Newstart and Youth Allowance on your tax return.

Some government payments are exempt from income tax but you still need to declare them on your tax return. This information is used to work out whether you are eligible to receive a range of government benefits and tax offsets.

The payments are:

• disability support pension (if you are below the pension age)

• child disability allowance

• carer adjustment payment

• Veterans' Affairs disability pensions and allowances.

Investment Income - Including Interest, Dividends, Rent & Capital Gains Tax

You generally need to declare investment income whether or not it's paid directly to you or through distributions from a partnership (such as a share club) or a trust.

Interest

If you're an Australian resident and you receive interest, you must declare it as income. Interest income includes:

• interest earned from financial institution accounts and term deposits

• interest earned from any other source including penalty interest received on an investment

• interest earned from children's savings accounts if you opened or operated an account for a child and the funds in the account belonged to you, or you spent or used the funds in the account

• interest the ATO paid or credited to you

• life insurance bonuses (you may be entitled to a tax offset equal to 30% of any bonus amounts included in your income)

• interest from foreign sources (you may be entitled to a tax offset for any tax paid on this income).

Dividends

A dividend can be paid to you as money or other property, including shares. If you are paid or credited with bonus shares, the company issuing the shares should provide you with a statement indicating whether the bonus shares qualify as a dividend.

Dividend income is usually paid from a:

• listed investment company

• public trading trust

• corporate unit trust

• corporate limited partnership (in the form of a distribution).

Some dividends have an imputation or franking credit attached, which you must also declare on your tax return. If a company pays or credits you with dividends that have been franked, you'll generally be entitled to a franking tax offset.

Rent

You must declare the full amount of any rent and rent-related payments that you receive, or become entitled to, on your tax return.

Such payments include:

• rental bond money if you become entitled to retain it - for example, because a tenant defaulted on the rent or because of damage to your rental property requiring repairs

• an insurance payout to compensate you for lost rent

• a letting or booking fee

• a reimbursement or recoupment for deductible expenditure, such as an amount from a tenant to cover the cost of repairing damage to your rental property (where you would include the whole amount you receive from the tenant in your income and claim a deduction for the cost of the repairs)

• rent you receive from renting out a room or a whole house or unit for a short time basis, through a website or app.

If you receive goods and services in lieu of rent, you must work out and declare the monetary value.

Co-Ownership

If you own a rental property jointly or in common with another person, or if you have an interest in a partnership that carries on a rental property business, include only your share of rent and expenses on your tax return.

Managed Investment trusts

You must show any income or credits you receive from any trust investment product on your tax return. This includes income or credits from a:

• cash management trust

• money market trust

• mortgage trust

• unit trust

• managed fund, such as a property trust, share trust, equity trust, growth trust, imputation trust or balanced trust.

Capital Gains

Generally, your capital gain is the difference between your asset's cost base (what you paid for it) and your capital proceeds (what you received for it).

You can also make a capital gain if a managed fund or other unit trust distributes a capital gain to you.

A capital gain is treated as part of your total income and not taxed separately.

Business, Partnership & Trust Income

The net income you receive from carrying on a business is assessable income and you need to declare it on your tax return.

Income includes cash and other forms of payment for goods or services you supply.

Income you receive as an individual running a Business

If you're an individual running a business, you must declare the income you earn from your business on your own tax return, using a separate business schedule. You don't need to lodge a separate tax return for your business.

Income from a Partnership

While a business partnership doesn't pay tax on its income, it must lodge a partnership tax return declaring all income earned and all deductible expenses. It will also show how the net income or loss was distributed between the partners.

Each partner must declare their individual share of the partnership's net income or loss in their individual tax return, whether or not they actually received the income.

Income from a Trust

Like a partnership, a trust is not a separate taxable entity, but the trustee is required to lodge a tax return for the trust.

Generally, the beneficiaries of the trust declare the amount of the trust's income to which they are entitled in their own tax return and pay tax on it – even if they didn't actually receive the income.

Foreign Income

If you're an Australian resident for tax purposes, you are taxed on your worldwide income, so you must declare any foreign income in your income tax return.

Foreign income includes:

• foreign pensions and annuities

• foreign employment income

• foreign investment income

• foreign business income

• capital gains on overseas assets.

As your foreign income may also be taxed in the source country, it is potentially subject to double taxation. To overcome this, Australia has a system of credits and exemptions and has signed tax treaties with more than 40 countries, including all our major trade and investment partners.

If you're not an Australian resident for tax purposes, you are only taxed on your Australian-sourced income, so you generally don't need to declare income you receive from outside Australia in your Australian tax return.

Crowd Funding

Crowdfunding is the practice of using internet platforms, mail-order subscriptions, benefit events and other methods to find supporters and raise funds for a project or venture.

If you're involved in crowdfunding – regardless of your role – you need to be aware of the tax consequences.

These vary depending on the nature of the arrangement, your role in it and your circumstances.

Other Income

Compensation and Insurance Payments for lost salary or wages

You must declare any amounts you received for lost salary or wages under an income protection, sickness or accident insurance policy or workers compensation scheme.

If you've made a personal injury claim and you agree to a settlement, or a court orders in your favour, you may receive compensation in the form of a lump sum payment or structural (periodic) payments (or both).

Such payments are tax-free, provided certain conditions are met.

Any payments made to you under an income protection, sickness or accident insurance policy (where the premiums are deductible and the payments replaced income) are included in Salary and Wages

Discounted Shares or rights to shares under Employee Share Schemes

If you participate in an employee share scheme (ESS) to receive discounted shares or rights to acquire shares, you must declare the discount you received on your tax return.

The type of scheme you participate in, and in some cases your personal circumstances, will determine how any discount you receive is treated for tax purposes.

Prizes and Awards

If you've won something in a prize draw or lottery run by your bank, building society, credit union or other investment body, you must declare on your tax return the value of any benefits or prizes you received. Prizes may include cash, low-interest or interest-free loans, holidays or cars.

However, you don't need to declare prizes won in ordinary lotteries such as lotto draws and raffles.

If you've been a game show contestant, you only declare prizes you won if you regularly receive appearance fees or game-show winnings.

If you sell or otherwise dispose of an asset that was a prize from a lottery, you may make a capital gain, which must be declared on your tax return.