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How Tax rates apply if you're under 18 years old

Kids and teenagers who earn money have special rules for paying taxes. Some types of income they get might have higher tax rates. These rules were made to stop adults from giving their money to kids to avoid paying taxes.

To be considered a "minor" for tax purposes, you have to be under 18 years old on June 30th of the income year.

Minors pay the same tax rates as adults if they are either:

- An "excepted person," which means they meet certain criteria.

- Receive "excepted income," which is specific types of income.

If you are an "excepted person" or only earn "excepted income," and you are an Australian resident, you won't have to pay taxes on the first $18,200 you earn.

But if you're a minor and not an "excepted person," you'll pay a higher tax rate for income that is not considered "excepted income."

Reporting Interest and Dividend Income

If a parent, relative, or guardian has opened a savings account or invested in shares for a child, there are important things to keep in mind:

🟠 Interest on savings:

If the child earns interest from their savings account, they need to think about who should report that income for tax purposes. The tax treatment for interest income is different from the income generated by a child's share investments.

🟠 Income from shares:

If the child earns money from shares they own, they should consider who is responsible for reporting the dividends and any profit or loss from selling those shares."

Do you qualify as an 'excepted person'

You might be considered an 'excepted person' if you are a minor and fall into one of these categories:

- A full-time worker

- A person with a disability

- A person receiving a double orphan pension

If you qualify as an 'excepted person,' you will pay taxes at the same rates as adults on all the money you earn.

But if you don't qualify as an 'excepted person,' you need to check if you receive any 'excepted income.' Taxes on this income will be at the same rates as adults."

🟠 1. Full time worker

You're considered an 'excepted person' if all of these apply to you:

You were working full time, or had worked full time for a total of 3 months or more during the income year.
In the next income year, you plan to work full time for most or all of it and do not intend to study full time.

When calculating the time you have worked full time, don't count any period of full-time work you did before starting full-time study."

🟠 2. Person with disability

You qualify as an 'excepted person' for the relevant income year if you were in one of these situations:

You were the main beneficiary of a special disability trust.
On June 30 of the relevant income year, you met one of the following conditions:
- You were entitled to a disability support pension or someone received a carer allowance to care for you.
- You were certified as permanently blind.
- You had a disability that was expected to last permanently or for a long time.
- You couldn't work full time due to a permanent mental or physical disability, and you received little or no financial support from your relatives.

🟠 3. Person with a double orphan pension

You're an excepted person for the income year if at, 30 June of the relevant income year, you were both:

entitled to a double orphan pension
received little or no financial support from relatives.

Find out if you have any 'excepted income.

Even if you're not considered an 'excepted person,' some of the money you earn as a minor can still be treated as 'excepted income.'

If you have 'excepted income,' it will be taxed at the same rates as an adult's income after deducting any related expenses.

But if you don't have any 'excepted income,' the money you earn from other sources will be taxed at higher rates, and you won't receive the benefits of low income tax offset or low and middle income tax offset.

Excepted income

Your 'excepted income' includes various types of money you may receive:

Money earned from a job (employment income).
Payments from the government or pension schemes that are taxable, like pensions from Centrelink or the Department of Veterans’ Affairs.
Compensation, retirement fund benefits, or superannuation payments.
Money you get from the estate of a deceased person, such as income from a trust set up by the deceased person or property transferred to you after their death.
Income received due to the death of another person or family breakdown, or money received as damages for an injury you suffered.
Profits from your own business.
Income earned from a partnership in which you actively participate.
Net gains from selling property or investments listed above.
Money you make from investing any of the amounts mentioned above."

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