Incomes Exempt For Taxation Purpose In Australia

Income earned from the lottery is exempt from taxation but the series of periodic payments are not exempt and will be treated as income for the tax purpose. Here it should also be noted that recognition criteria of income is not likely to be the same for the taxation purpose because of the taxation rules being different from the accounting rules.

Accounting rules mainly known as the international financial reporting standards are almost the same in every country but there may be the different tax consequences for any particular transaction in different tax territories. In the same way lottery winnings are also taxed differently and if a person win lottery lump sum than it will be treated as income for the tax authorities and will be taxed as per tax rules applicable in Australia. But if someone receive monthly installments as a result of lottery winnings than it will be treated as income in that particular period in the eyes of tax authorities and tax will be charged on these monthly income. It will be the like you have invested somewhere and monthly payments are being received by you in the form of interest which will be accrued monthly in your account and hence will be treated as your income. So in the same way if you will receive money monthly through winning lottery it will also be the income of you and tax authorities also treat it as income.

Payments of outstanding amount to the legal owners of deceased person can also be the paid to him and will have the same tax consequences as it was paid to the original taxpayer. It is not a different thing regarding this payment but deceased estate is under obligation to pay tax on the amount received on behalf of deceased person. It also to be noted that a person in writing has the right to claim exemption for taxability from the commissioner and after considering the application on the reasonable grounds, commissioner has the legal power to direct the taxpayer to pay tax at lower or higher rate whichever he considered appropriate in that special circumstance.

Further referring towards the Australian taxation office for this exemption claim than following incomes are stated as exempt for taxation purpose:

  • Disability support pensions sponsored and paid by the Australian government pension’s scheme.
  • Career allowances and child care allowances provided by the Australian government in the public interest.
  • Overseas pay and special allowances being paid to federal police and personals of defense forces.
  • Scholarship grants and educational payments made by the Australian government are also exempt from taxation and not included in the income of that particular recipient.
  • Receiving amount in aggregate for surrendering any insurance policy through illness or permanent injury is also exempt from the definition of income and will also not be included in the calculation of taxable income.
  • However the decision of exemption will be on the discretion of commissioner and upon scrutiny of record if not satisfied he/she may direct to pay tax at certain amount to the government authorities within the stipulated time given in the rules.
13 January 2020
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