## How tax applies if you're under 18 years old

Special rules apply and you pay tax on certain income types at a higher rate on income you receive if you're under 18 years old. This rule was introduced to discourage adults from diverting income to their children.

If you aren't an [excepted person](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/income-you-must-declare/your-income-if-you-are-under-18-years-old#Workoutifyouareanexceptedperson) or receiving [excepted income](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/income-you-must-declare/your-income-if-you-are-under-18-years-old#Exceptedincome), you pay tax on that income as below depending on your residency.

You pay the same [individual income tax rates](https://www.ato.gov.au/tax-rates-and-codes/tax-rates-australian-residents) as an adult if you're an excepted person or on excepted income.

## If you are a resident

Table 1: Tax rates for residents who are under 18 for 2024–25

Income for the year

Tax rates

$0 – $416

Nil

$417 – $1,307

Nil plus 66% of the excess over $416 (see [Note](https://www.ato.gov.au/tax-rates-and-codes/tax-rates-if-you-re-under-18-years-old#Ifyouareanonresident))

Over $1,307

45% of the total amount of the income that is not excepted income

Table 2: Tax rates for residents who are under 18 for 2020–21 to 2023–24

Income for the year

Tax rates

$0 – $416

Nil

$417 – $1,307

Nil plus 66%of the excess over $416 (see [Note](https://www.ato.gov.au/tax-rates-and-codes/tax-rates-if-you-re-under-18-years-old#Ifyouareanonresident))

Over $1,307

45% of the total amount of the income that is not excepted income

**Note**: This rate, or if it is greater, the rate payable on eligible taxable income if it were the top slice of total taxable income and the general rates applied.

## If you are a non-resident

Table 3: Tax rates for non-residents who are under 18 for 2024–25

Income for the year

Tax rates

$0 – $416

30% of the entire amount

$417 – $713

$124.80 plus 66% of the excess over $416 (see [Note 1](https://www.ato.gov.au/tax-rates-and-codes/tax-rates-if-you-re-under-18-years-old#Howincomeistaxedifyouareunder18))

Over $713

45% of the entire amount

Table 4: Tax rates for non-residents who are under 18 for 2020–21 to 2023–24

Income for the year

Tax rates

$0 – $416

32.5% of the entire amount

$417 – $663

$135.20 plus 66% of the excess over $416(see [Note 1](https://www.ato.gov.au/tax-rates-and-codes/tax-rates-if-you-re-under-18-years-old#Howincomeistaxedifyouareunder18))

Over $663

45% of the entire amount

**Note 1**: This rate, or if it is greater, the rate payable on eligible taxable income if it were the top slice of total taxable income and the general rates applied.

## How income is taxed if you are under 18

Table 5: How income of a person under 18 years old is taxed

If you...

Then...

Are an excepted person

your net income is taxed at the same individual income tax rates as an adult

Only have excepted income, such as part-time employment income

your excepted net income is taxed at the same individual income tax rates as an adult

Have some excepted income (such as part-time employment income) and some other income (such as a family trust distribution)

- your excepted net income is taxed at the same individual income tax rates as an adult
- your other income (after taking away deductions claimed for that income) will be taxed at higher rates

Only have other income (such as a family trust distribution)

your other income (after taking away deductions claimed for that income) will be taxed at higher rates


Income Tax (International Agreements) Amendment Bill (No.2) 1989
Date Introduced: 2 November 1989
House: House of Representatives
Portfolio: Treasury
Digest of Bill
Q
Purpose
To give legislative backing to agreements for the prevention of double
taxation and tax avoidance with Thailand and Papua New Guinea. and to amend the
agreements with France and Singapore.
Background
Australia has agreements with a number of countries. including Francel
West Germany. New Zealandl the United States and the United Kingdom. Recently,
such an agreement was signed with China. The agreements all have a common aim,
the prevention of double taxation and avoidance, and this is reflected in the
content of the agreements which are substantially similar. The agreements work
be giVing the country of residence the exclusive right to tax certain catagories
of income and allowing the remaining income to be taxed by the country where it
was sourced. If the income is then taxed by the country of residence, it is to
allow a credit for tax paid in the country of origin. Examples of catagories
reserved for tax by the country of residence include:
"Industrial or commercial profits where the taxpayer has no permanent
establishment in the country where the profits are earned;
-Most pensions and purchased annuities;
"Civil servants renumeration; and
... Air transport pro'fits.
A recent feature of many agreements is the inclusion of provisions to
protect schemes designed to encourage "investment in certain countries. These
countries offer tax concessions or tax free treatment of profits where the body
establishes a permanent operation in the country. As a resultl where the body
returns profits to Australia, the full profit will be included in taxable income
and no credit, or a reduced credit, will be available for the tax paid in the
country of source. This largely cancels out the benefit available and reduces
any incentive offered by the concessional tax treatment. To remove this effect,
-1-
certain agreements contain a provision that the country of residence is to deem
that the tax has actually-been paid at the normal rate.
The treatment of foreign sourced income in Australia is further complicated
by the foreign tax credit rules. In announcing proposed changes to these rules,
future amendments to the agreements were foreshadowed.
Main Provisions
Clauses 5, 6 and 7 will give the Protocols with France and Singapore,
which amend existing agreements. and the agreements with Papua New Guinea and
Thailand force in Australian law. The text of the Protocols and agreements is
contained in the Schedules to the Bill and a brief discription of each follows.
Singapore
The changes to this agreement, entered into in 1969, will bring the tax
treatment of dividends received by Australians into line with the foreign tax
credits law. As well, the definition of permanent establishment will be expanded
to reflect current agreements. The right to tax shipping profits will be
clarified to give the country of residence the exclusive right to tax such
profits. A provision designed to help give effect to concessional tax treatment
in Singapore will also be included.
France
The main amendments will update an-d clarify this agreement. The main change will
provide that if Australia negotiates a lesser rate of tax on dividends with
another member of the OECD. negotiations are to be held to provide the same
treatment in respect of France.
Papua New Guinea and Thailand
The agreements with these two countries re'l:lect the current tax agreements
entered into with other countries. For example, income from land will be taxable
in the country where the land is situated. and business profits may only be
taxed in the source country if the entity has a permanent establishment in the
country. Dividends, interest and royalties may be taxed by either country but
there are limits on the tax charged by the source country, while pensions will
generally only be taxable in the country of residence. The measures to avoid
double taxation will be based on each country allowing a credit for tax paid in
the other country. The provision designed to assist schemes designed to attract
investment to these countries will be included in both agreements.
Anti - avoidance measures will be concentrated on the exchange of Infor,mation
between tax officials in Australia and the country concerned. However, no
country will be obliged to provide information that could not be obtained under
the laws of the country to which the information is to be supplied or to
disclose information that would be contrary to public policy.
An agreement may be terminated, five years after it commences to operate, by
giving one years notice.
-2-
---- --------- ------
For further information. if required, contact the Economics and Commerce
Group.
14 November 1989 Bills Digest service
Legislative Research Service
o
o
This Digest does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the Bill.
© Commonwealth of Australia 1989
Except to the extent of the uses permitted under the Copyright Act 1968. no
part of this publication may be reproduced or transmitted in any form or by any
means, including information storage and retrieval systeml without the prior
written consent of the Department of the Parliamentary Library. Reproduction is
permitted by Members of the Parliament of the Commonwealth in the course of
their official duties.


## Partnership

A partnership is a group or association of people who run a business together and share the income or losses from the business between themselves.

A written partnership agreement is not required for a partnership to exist but can help:

- prevent misunderstandings and disputes about what each partner brings to the partnership
- set out how business income and losses are to be shared between the partners (equally between partners or not)
- set out how the business is to be managed.

If there is no written agreement, income and losses are equally distributed between partners.

The partners in a partnership are not employees of the partnership, but they are able to employ other workers.

Partners are responsible for their own superannuation. However, the partnership is required to pay super for its employees.

### Key tax obligations

A partnership:

- has its own TFN
- must lodge an annual partnership return showing all business income and deductions and how its income or losses are distributed to the partners
- must apply for an [ABNExternal Link](https://abr.gov.au/business-super-funds-charities/applying-abn/abn-entitlement) and use it for all business activities
- must [register for GST](https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/registering-for-gst) if it

- has annual [GST turnover](https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/registering-for-gst#WorkingoutyourGSTturnover) of $75,000 ($150,000 for not-for-profit organisations) or more
- provides taxi, limousine or ride-sourcing services (regardless of GST turnover)
- wants to claim fuel tax credits
- may be required to lodge [business activity statements](https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/business-activity-statements-bas), for example if it is registered for GST, has employer obligations such as pay as you go withholding, or have pay as you go instalments
- does not pay tax

- each partner reports their share of the net partnership income or loss in their own tax return and is personally liable for any tax that may be due on that income.

A partnership and its partners cannot claim a deduction for money they withdraw from the business. Amounts you take from a partnership:

- are not wages for tax purposes
- may affect what your share of the partnership income is that you have to pay tax on.

You will need to be aware of the steps to take if you change the makeup of your [partnership](https://www.ato.gov.au/businesses-and-organisations/starting-registering-or-closing-a-business/changing-selling-or-closing-your-business/changing-the-makeup-of-a-partnership).


## How to vary your PAYG instalment amount (option 1)

You vary your PAYG instalment amount on your activity statement or instalment notice.

Use the following steps to calculate your varied instalment amount.

### 1. Check that you use the instalment amount option

Check that there is an instalment amount at **T7** on your activity statement or instalment notice.

If there is not, you need to [vary your instalment rate (option 2)](https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/payg-instalments/how-to-vary-your-payg-instalments#HowtovaryyourPAYGinstalmentrateoption2) instead.

If you varied your instalment amount in a previous quarter of the income year, the amount shown at **T7** will be your previously varied amount.

### 2. Estimate your instalment income for the year

Your [instalment income](https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/payg-instalments/calculate-your-payg-instalments/instalment-income) is your gross business and investment income, excluding GST.

### 3. Estimate the tax on your instalment income for the year

You need to estimate the tax on your instalment income for the full income year. This is the amount you will prepay in your instalments.

[PAYG instalments calculator](https://www.ato.gov.au/calculators-and-tools/payg-instalments-calculator)
You can use the calculator to:

- estimate your tax for the year
- work out your varied instalment amount
- work out your entitlement to credits for previous PAYG instalments.

If you prefer, you can [manually estimate the tax on your instalment income](https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/payg-instalments/how-to-vary-your-payg-instalments/estimating-tax-on-your-instalment-income).

If your estimated instalment income (step 2) is zero, you can vary your instalment amount to zero. You do not need to calculate your estimated tax.

### 4. Work out how much to pay for each instalment

The amount you pay depends on how much you have paid in previous instalments this year. After each instalment you should have paid a certain proportion of your total estimated tax.

Work out how much to pay in each instalment for:

- [quarterly instalments](https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/payg-instalments/how-to-vary-your-payg-instalments#Ifyoupayquarterlyinstalments)
- [2 instalments per year](https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/payg-instalments/how-to-vary-your-payg-instalments#Ifyoupaytwoinstalmentsperyear).

If you have already paid more than your total estimated tax for the year, you can claim a credit for the overpayment. You do not have to claim a credit. When you lodge your tax return, your PAYG instalments are credited against your income tax and any excess is refunded.

#### If you pay quarterly instalments

You can use the [PAYG instalments calculator](https://www.ato.gov.au/calculators-and-tools/payg-instalments-calculator) to work out your quarterly instalment amounts.

Or you can manually work out your quarterly instalment amounts as follows with the:

- first quarter

- 25% of your estimated tax for the income year
- second quarter

- 50% of your estimated tax for the income year
- *minus* the amount of your first quarter instalment
- third quarter

- 75% of your estimated tax for the income year
- *minus* the amount of your first and second quarter instalments
- *plus* any PAYG instalment credits you claimed for the second quarter
- fourth quarter

- 100% of your estimated tax for the income year
- *minus* the amount of your first, second and third quarter instalments
- *plus* any PAYG instalment credits you claimed for the second and third quarters.

#### If you start paying instalments in the second, third or fourth quarters

If you are new to PAYG instalments this year, you calculate your varied instalment amount as though the first quarter for which you pay instalments is the first quarter of the year.

For example, if you start paying instalments in the second quarter, you would treat this as your first quarter and pay 25% of your estimated tax in that quarter.

As you will not pay all 4 quarterly instalments in your first year, at the end of the year your total instalments will be less than 100% of your estimated tax.

**Example: varying the instalment amount**

Cari receives income from her investments. Her quarterly PAYG instalment amount is $5,000.

Cari pays this amount in her first quarter (1 July to 30 September) and second quarter (1 October to 31 December).

In January, Cari sells a portion of her investments and decides to vary her PAYG instalment amount on her third quarterly activity statement (1 January – 31 March) to take account of her new situation.

Cari uses the PAYG instalment calculator and estimates the tax on her instalment income for the financial year will be $14,000. Cari works out her varied PAYG instalment as follows:

- Estimated tax:

$14,000
- Multiplied by 75% (how much to pay for the third quarter):

$14,000 × 75% = $10,500
- Minus amounts paid for the first and second quarters:

$10,500 − ($5,000 + $5,000) = $500

The varied amount Cari needs to pay in the third quarter is $500.

In the fourth quarter Cari will pay her total estimated tax minus the amounts paid in the first 3 quarters:

- $14,000 − ($5,000 + $5,000 + $500) = $3,500

In the second half of the year, Cari's investment income increases. After she lodges her tax return at the end of the year, her notice of assessment shows her income tax is $15,500.

As Cari has paid $14,000 in PAYG instalments, she will pay the income tax shortfall of $1,500 (income tax of $15,500 − $14,000 instalments already paid.)

Cari's varied instalments were more than 85% of her actual tax liability, so the ATO does not charge any interest on the shortfall.

End of example
#### If you pay 2 instalments per year

Your instalments are due in April and July. You pay:

- April

- 75% of your estimated tax for the income year
- July

- 100% of your estimated tax for the income year
- *minus* the amount of the instalment you paid in April.

### 5. Complete your activity statement or instalment notice

On your activity statement or instalment notice, enter:

- your estimated tax for the year (from step 3) at **T8** – if this is nil, enter 0
- your varied instalment amount for the period (from step 4) at **T9**. – if the amount is nil or negative, enter 0
- the [reason you have varied](https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/payg-instalments/how-to-vary-your-payg-instalments#Variationreasoncodes) your instalment at **T4**
- your varied instalment amount at **5A** – if you are filling in a paper form, enter the amount from **T9**.

If the varied instalment amount that you worked out at step 4 is negative, you can claim a credit for your earlier PAYG instalments made within the same financial year.

To claim a credit, enter your varied instalment amount at **5B** (credit from PAYG income tax instalment variation). Enter the amount as a positive number (do not show the minus sign).

You do not have to claim a credit. When you lodge your tax return, your PAYG instalments are credited against your income tax and any excess is refunded.

### 6. Lodge and pay

[Lodge and pay](https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/payg-instalments/lodging-and-paying-payg-instalments) by the due date on your activity statement or instalment notice.


A sleepover is when an employee is required to sleep overnight at their client’s premises. It’s different to a [24 hour care shift](https://library.fairwork.gov.au/viewer/?krn=K600557). The span for a sleepover is a continuous period of 8 hours.

Employees must be rostered or paid for a minimum of 4 hours’ work before or after the sleepover period.

See [ Hours of work in the Social, Community, Home Care and Disability Services Industry Award](https://www.fairwork.gov.au/find-help-for/disability-support-and-aged-care-services/understanding-schads/hours-of-work-in-the-schads-award#sleepovers) for more information.

## Is it considered one shift?

Yes. The sleepover and the hours worked or paid for before and/or after the sleepover are counted as one continuous shift.

>
> ### Example: Work before or after a sleepover
>
>
>
> Andrea works in disability support services.
>
>
>
> She is rostered to work 4pm-11pm on a Wednesday with a sleepover from 11pm to 7am.
>
>
>
> As the sleepover and the period of work is considered one shift, Andrea's shift starts at 4pm on Wednesday and finishes at 7am on Thursday.
>
>
>
> Andrea's shift is a night shift, because it finishes after midnight. She'll be paid the night shift penalty rate for the hours worked on Wednesday.
>
>
>

## Is a sleepover a break?

No. A sleepover can’t count as a break between rostered work periods, or as a break in a broken shift.

See [Broken shifts in the Social, Community, Home Care and Disability Services Award](https://library.fairwork.gov.au/viewer/?krn=K600303) for more information.

## Does a sleepover count as ordinary hours of work?

No. Only work before and/or after the sleepover counts as ordinary hours.

## What is an employee paid during a sleepover?

See [Pay for sleepovers in the Social, Community Services, Home Care and Disability Services Award](https://library.fairwork.gov.au/viewer/?krn=K600726) for more information.

## Do shift penalty rates apply?

Shift penalty rates will apply when a shift meets the definition of an afternoon, night or public holiday shift.

They’re only paid for the hours the employee works before and/or after a sleepover.

>
> ### Example: Sleepover and shift allowances not on a weekend
>
>
>
> Orla works from 5pm until 10pm Monday, does a sleepover from 10pm until 6am then works from 6am to 9am on Tuesday.
>
>
>
> A night shift is a shift finishing after midnight or starting before 6am Monday to Friday.
>
>
>
> As Orla’s shift finishes at 9am, she gets paid the 15% night shift penalty rate for the hours worked from 5pm to 10pm on Monday and 6am to 9am on Tuesday.
>
>
>

>
> ### Example
>
>
>
> Gerry works at a youth crisis centre.
>
>
>
> He is rostered to do a sleepover on a Tuesday night from 11pm to 7am and then work from 7am to 12pm on Wednesday.
>
>
>
> The sleepover period is considered a period of duty but doesn't count as ordinary hours.
>
>
>
> This means that Gerry's shift starts at 11pm and finishes at 12pm the following day.
>
>
>
> The shift is a night shift because it finishes after midnight.
>
>
>
> Gerry is paid the 15% night shift penalty rate for the hours worked from 7am to 12pm on Wednesday.
>
>
>

## Are shift penalty rates paid for hours worked on weekends before or after a sleepover?

No. Shift penalty rates don’t apply to hours worked on Saturdays or Sundays. Employees working before or after a sleepover on a Saturday or Sunday get paid:

- 150% of their ordinary rate of pay for work performed between midnight Friday and midnight Saturday
- 200% of their ordinary rate of pay for work performed between midnight Saturday and midnight Sunday.

Where work is performed on a Monday after a Sunday sleepover, the employee is paid the 15% night shift penalty rate for the morning shift.

Casual employees also get their casual loading.

>
> ## Example: Sleepover and shift allowances on weekends
>
>
>
> Bernie has a shift on Sunday afternoon from 3pm to 10pm, does a sleepover from 10pm to 6am, and then works from 6am to 9am on Monday. Bernie has agreed to work 10 ordinary hours per shift.
>
>
>
> Bernie gets paid:
>
>
>
> - 200% of his ordinary hourly rate from 3pm to 10pm on Sunday
> - 4.9% of the standard rate as a sleepover allowance
> - 15% night shift penalty from 6am to 9am on Monday.
>
>


## Staking and the role of forgers

Staking involves locking your existing crypto asset tokens to validate transactions on the blockchain and create new blocks. The users who create new blocks in this system are known as forgers.

Proof of stake is a consensus mechanism, where forgers hold units of a crypto asset to validate transactions (like a miner on a proof of work blockchain) and create new blocks. When a transaction is verified on the network as valid there is a consensus.

### Example: staking existing crypto assets

Anastasia holds 50,000 Coin A tokens, which she stakes to a Coin A pool as a premium staker.

Anastasia receives additional Coin A tokens when her pool participates in consensus. Anastasia also receives a small payment of Coin A tokens from the node leader for supporting their node.

The money value of the additional Coin A tokens that Anastasia receives is included in her ordinary assessable income at the time she receives the tokens.

The cost base of Anastasia’s additional Coin A tokens is their market value at the time she receives them.

End of example## Staking rewards and income tax treatment

As a forger who creates a new block, you'll usually receive a reward in the form of additional tokens from holding the original tokens. The money value of additional tokens is **ordinary income** at the time you receive the tokens. You need to declare the income in your tax return as [other income](https://www.ato.gov.au/individuals-and-families/your-tax-return/instructions-to-complete-your-tax-return/mytax-instructions/2025/income/other-income/other-income).

Other consensus mechanisms that reward existing token holders for their role in maintaining the network have the same tax outcome. This includes rewards you receive through:

- proof of authority and proof of credit mechanisms by validators
- agent nodes and guardian nodes
- premium stakers and other entities performing comparable roles.

You also receive **ordinary income** equal to the money value of the tokens if you receive as a reward for either:

- participating in 'proxy staking'
- voting your tokens in a consensus mechanism.

You also need to declare this income in your tax return as [other income](https://www.ato.gov.au/individuals-and-families/your-tax-return/instructions-to-complete-your-tax-return/mytax-instructions/2025/income/other-income/other-income).

When you dispose of crypto assets you earn through staking, you will need to [work out if you make a capital gain or loss](https://www.ato.gov.au/individuals-and-families/investments-and-assets/crypto-asset-investments/how-to-work-out-and-report-cgt-on-crypto).

## Airdrops and income tax treatment

Airdrops are a marketing tool that distribute crypto assets through a group of people to build their use and popularity. Some projects 'airdrop' new tokens to existing token holders as a way of increasing the supply of tokens.

The money value of an established token you receive by airdrop is **ordinary income** at the time you receive it. You need to declare this in your tax return as [other income](https://www.ato.gov.au/individuals-and-families/your-tax-return/instructions-to-complete-your-tax-return/mytax-instructions/2025/income/other-income/other-income).

### Example: airdrop tokens and market value

Merindah has held Coin A tokens since December 2024, entitling her to receive monthly BTT airdrops from February 2025.

The money value of the Coin B tokens that Merindah receives for holding her Coin A tokens is ordinary assessable income.

The cost base of Coin B tokens that Merindah receives by airdrop is their market value at the time she receives them.

End of example## Initial allocation airdrops

A crypto project may make an initial airdrop of tokens that is the very first distribution of its tokens. These tokens are the initial allocation, if there has been no trading in the project's tokens prior to the airdrop.

If you receive tokens distributed in an initial airdrop you do not derive ordinary income or make a capital gain at the time you receive them.

Where the project issues these tokens for free (without any payment made for the tokens), they have a cost base of zero ($0). These tokens don't have a market value at the time of the initial airdrop because they have not previously been traded.

Where these tokens are not free, that is you have made a payment in return for receiving the token, the cost base of the tokens will be amount that you pay to acquire them.

A [CGT event](https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/cgt-events) happens when you dispose of the tokens. If you hold your tokens for 12 months or more, you may be entitled to the CGT discount.

### Example: capital gain and CGT discount on initial airdrop token

Cswap launched its own native protocol token, CX, through a community airdrop.

Josh is an eligible account holder of the Cswap protocol and received an initial allocation of 800 CX tokens on 16 September 2023.

Josh does not derive ordinary income or make a capital gain as a result of the receipt of the 800 CX.

On 25 May 2025, Josh sold the 800 CX for $4,000. Because the cost base of the CX tokens was zero, Josh makes a total capital gain of $4,000 in the 2024–25 income year from the sale of the CX.

Josh is also eligible to reduce his total capital gain using the CGT discount, as he held his CX for more than 12 months.

End of example

### Example: capital gain on an initial airdrop token that requires payment

TXP launched its own native protocol token, HXP, through an initial airdrop.

TXP distributed the new HXP to participants who paid an amount for the new token.

Calista pays $1 for each token and receives an initial allocation of 1,000 HXP tokens.

Calista does not derive ordinary income or make a capital gain as a result of receiving the 1,000 HXP.

Calista later sells the 1,000 HXP for $4,000. Because the cost base of the CX was $1,000, Calista makes a capital gain of $3,000 from the sale of the HXP.


# ABN entitlement

Not everyone is entitled to an ABN.

You're entitled to an ABN if you're:

- [carrying on](https://www.abr.gov.au/business-super-funds-charities/applying-abn/abn-entitlement#Whatcarryingonanenterprisemeans) or [starting](https://www.abr.gov.au/business-super-funds-charities/applying-abn/abn-entitlement#Startupactivities) an enterprise in Australia
- making supplies connected with Australia's [indirect tax zone](https://www.abr.gov.au/business-super-funds-charities/applying-abn/abn-entitlement#BusinessslocatedoutsideAustralia)
- a [Corporations Act company](https://www.abr.gov.au/business-super-funds-charities/applying-abn/abn-entitlement/companies-and-other-entities).

**You may face prosecution or criminal charges if you apply for an ABN, register for GST and claim GST refunds when you’re not entitled.**

When you apply for an ABN, you will be asked questions to help us determine whether you are carrying on an enterprise.

You may be subject to an [ABN entitlement review](https://www.abr.gov.au/who-we-are/our-work/abr-integrity#ABNentitlementreviews) at any time. If we conduct a review, you'll be asked to provide evidence that you commenced, or took steps to commence, your business or enterprise from the start date provided in your ABN application.

[Apply for an ABNExternal link](https://abr.gov.au/ABRWeb/AbnApply.abr?pid=71)

## Carrying on an enterprise

An enterprise includes activities done in the form of a business, as well as some other activities, including:

- acting as the trustee of a super fund
- operating a charity
- renting or leasing property.

There is no single test to determine if you're carrying on a business. Features of a business include:

- the activity is a significant commercial activity, involving commercial sales of products or services, and is of a reasonable size and scale
- there is an intention to make a profit from the activity as demonstrated by a business plan – unlike with a hobby
- the activity is repeated
- the activity is systematic, organised and carried on in a business-like way and records are kept
- the activity is carried on in a similar way to that of other businesses in the same or similar industry
- the entity has relevant knowledge or skill.

For more information, see** **[Section 9-20External link](https://www.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/antsasta1999402/s9.20.html) *A New Tax System (Goods And Services Tax) Act 1999.*

## Commencement activities

If your business or other enterprise isn't yet underway, you'll need to have undertaken commencement activities such as:

- advertising, setting up a social media account or a website for the business
- purchasing business cards or stationery for the business
- obtaining business licences or insurance to operate (such as public liability and professional indemnity)
- leasing or purchasing premises, equipment or stock for the business
- issuing quotes or bidding for work
- consulting with financial, business or tax advisors
- applying for finance
- buying a business.

While you don't need to have undertaken all of these commencement activities, you would be expected to have undertaken at least some of them and be able to provide evidence if we request it.

## Employee or contractor

You're not entitled to an ABN for work that you carry out as an employee – including as an apprentice, trade assistant or labourer – even if you or your employer calls it contracting. An employer shouldn't ask you to get an ABN as a condition of employment.

For more information, see [Employee or contractorExternal link](https://www.ato.gov.au/business/employee-or-contractor/) on the ATO website.

## Renting out a residential property

While renting out an investment property may constitute an enterprise, renting out a **residential** property doesn't generally give rise to GST or pay as you go withholding obligations, so residential property investors may not need an ABN.

## Foreign businesses operating in Australia

If your business or organisation is located outside Australia, you may be entitled to an ABN if you are carrying on an enterprise:

- in Australia
- that involves making supplies connected with Australia's indirect tax zone – defined as including Australia but not its external territories or certain offshore areas.

## Registering your superannuation entity

Before applying for an ABN, a superannuation entity (for example [APRA regulated fundsExternal link](https://www.ato.gov.au/Super/APRA-regulated-funds/Services-and-support/APRA-regulated-fund-support/), ATO regulated self-managed super funds) must be set up correctly. You can apply for an ABN as part of the [registration processExternal link](https://www.ato.gov.au/Super/Self-managed-super-funds/Setting-up/Register-your-fund/).


## When to provide a tax invoice

If a customer asks for a tax invoice, you must provide one within 28 days, unless it is for a sale of $82.50 (including GST) or less.

The information a tax invoice must include depends on:

- the sale amount
- the sale type (for example, a sale that includes both taxable and non-taxable items)
- who issues the tax invoice.

## Sales under $1,000

Tax invoices for taxable sales of less than $1,000 must include enough information to clearly determine the following 7 details:

1. Document is intended to be a tax invoice.
2. Seller's identity.
3. Seller's Australian business number (ABN).
4. Date the invoice was issued.
5. Brief description of the items sold, including the quantity (if applicable) and the price.
6. GST amount (if any) payable – this can be shown separately or, if the GST amount is exactly 1/11 of the total price, as a statement which says, 'Total price includes GST.'
7. Extent to which each sale on the invoice is a taxable sale.

### Example 1: tax invoice for a sale under $1,000

End of example
## Sales of $1,000 or more

Tax invoices for sales of $1,000 or more also need to show the buyer's identity or ABN.

If your tax invoices meet the requirements for sales of $1,000 or more, you can also use them for sales of lesser amounts.

Example 2 shows:

- GST included in each line item
- the sale is clearly identified as being fully taxable by the words 'Total price includes GST'
- the buyer's identity for sales of $1,000 or more.

### Example 2: tax invoice for a sale of $1,000 or more

End of example
If you supply or receive an invoice that only has a figure at a [wine equalisation tax-goods services tax (WEG) label](https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/in-detail/managing-gst-in-your-business/tax-invoices/invoices-with-a-weg-label), you need further information to claim GST credits and for it to be considered a valid tax invoice.

[GSTR 2013/1](https://www.ato.gov.au/law/view/document?docid=GST/GSTR20131/NAT/ATO/00001) *Goods and services tax: tax invoices* sets out the information requirements for a tax invoice in more detail.

## Taxable and non-taxable sales

A tax invoice that includes taxable and non-taxable items, must clearly show which items are taxable. Items are non-taxable if they are [GST-free](https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/when-to-charge-gst-and-when-not-to/gst-free-sales) or [input-taxed](https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/when-to-charge-gst-and-when-not-to/input-taxed-sales). The tax invoice must also show:

- each taxable sale
- the amount of GST to be paid
- the total amount to be paid.

Use ASIC's MoneySmart [GST calculatorExternal Link](https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/gst-calculator) to calculate the amount of GST you will pay or should charge customers.

[GST 2001/8](https://www.ato.gov.au/law/view/document?docid=GST/GSTR20018/NAT/ATO/00001) *Goods and services tax: Apportioning the consideration for a supply that includes taxable and non-taxable parts* provides more detail about apportioning.

## Digital invoices

A tax invoice doesn't need to be issued in paper form.

For example, you can issue a tax invoice to a customer by emailing an invoice in portable document format (PDF) or other digital formats.

Any digital record or document transmitted to the customer needs to contain all the required information to be a valid tax invoice.

## eInvoicing

Australia has adopted the [Peppol](https://www.ato.gov.au/businesses-and-organisations/einvoicing/peppol) framework as the common standard and network for eInvoicing. eInvoicing (Peppol Invoice) is an automated direct exchange of invoices between a supplier's and buyer's software.

Some eInvoices may not include words such as ‘Tax Invoice’ or’ GST invoice’. However, we consider that an eInvoice satisfies the requirement that the ‘document is intended to be a tax invoice’ if the eInvoice is issued by a supplier in accordance with the A-NZ Invoice Specification under the Peppol framework, and it contains all the mandatory data.

Find out more about [eInvoice data requirements](https://www.ato.gov.au/businesses-and-organisations/einvoicing/einvoicing-for-government/guide-to-receiving-and-processing-einvoices/einvoice-data-requirements).

## Rounding of GST

Where an amount of GST includes a fraction of a cent, special rounding rules apply.

Where there is only one taxable sale on a tax invoice, the amount of GST should be rounded to the nearest cent (rounding 0.5 cents upwards).

Where there is more than one taxable sale on a tax invoice, there are 2 rules known as the total invoice rule and the taxable supply rule.

**Total invoice rule** – total and then round GST for each taxable sale to the nearest cent (rounding 0.5 cents upwards).

Or if all taxable sales on a tax invoice include an amount of GST exactly 1/11 of the price, add up the GST-exclusive value of each taxable sale, calculate GST on that amount and then round to the nearest cent (rounding 0.5 cents upwards).

**Taxable sale rule** – work out the amount of GST for each individual taxable sale. Where the unrounded amount of GST has more decimal places than your accounting system can record, round up or down as appropriate. Then add the individual amounts and round this total to the nearest cent (rounding 0.5 cents upwards).

You and your customers don't need to use the same rounding rules.

## Agency relationships

Special rules apply to tax invoices for transactions carried out through agents. For more information see [GSTR 2000/37](https://www.ato.gov.au/law/view/document?docid=GST/GSTR200037/NAT/ATO/00001) *Goods and services tax: agency relationships and the application of the law*.

## Recipient-created tax invoices

In most cases, tax invoices are issued by a supplier. However, in special cases, you, as the purchaser or recipient of the goods or services, may issue a tax invoice for your purchases. This is known as a recipient-created tax invoice (RCTI).

### When you can issue an RCTI

You can issue an RCTI if:

- you and the supplier are both registered for GST at the time the RCTI is issued
- you and the supplier agree in writing that you may issue an RCTI and they won't issue a tax invoice
- the agreement is current and effective when you issue the RCTI
- the Commissioner has determined that the type of goods or services sold under the agreement can be invoiced using an RCTI.

Use the [Recipient Created Tax Invoice Determination 2023](https://www.ato.gov.au/law/view/view.htm?docid=%22ops%2Fli202320%2F00001%22) to find out what goods and services you can issue an RCTI for.

The determination also outlines requirements that you must include in the written agreement between you and the supplier.

Your written agreement can either be a separate document specifying the sales, or you can embed this information or specific terms in the tax invoice.

Use the [Recipient-created tax invoices](https://www.ato.gov.au/forms-and-instructions/recipient-created-tax-invoices) form as a template for creating RCTIs, or as a reference for information you need to create your own RCTI.

See [GSTR 2000/10](https://www.ato.gov.au/law/view/document?DocID=GST/GSTR200010/NAT/ATO/00001) *Goods and services tax: recipient created tax invoices* for more information about RCTIs.

### When an RCTI is valid

To be valid, an RCTI must:

- contain enough information to clearly determine the [requirements of tax invoices](https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/tax-invoices#RequirementsOFTIs) and show the document is intended to be a recipient-created tax invoice, not a standard tax invoice
- show the suppliers and purchaser's ABN and both must be GST registered at the time the RCTI is issued
- if GST is payable, an RCTI must also show that it's payable by the supplier.

As the recipient, you must:

- issue the original or a copy of your RCTI to the supplier within 28 days of one of the following dates

- date of the sale
- date the value of the sale is determined by you
- retain the original or a copy of the RCTI
- reasonably comply with your obligations under the tax laws
- stop issuing RCTIs if any of the requirements for issuing RCTIs are no longer met. For example, the supplier is no longer GST registered.

### RCTI issuer responsibilities

When you issue RCTIs, you need to take reasonable care to ensure you meet all the requirements for [when you can issue an RCTI](https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/tax-invoices#WhenyoucanissueanRCTI) and your GST credit claims are correct.

It's expected that you:

- have strong systems and checks in place to ensure you meet the requirements to issue RCTIs
- check that the supplier is GST-registered before issuing your first RCTI to them
- undertake periodic checks to ensure your supplier remains GST-registered if you issue RCTIs to them on an ongoing basis.

The [ABN LookupExternal Link](https://www.abr.business.gov.au) has a variety of tools and resources to help you check whether an entity is registered for GST.

A best practice governance approach is to use automated validation checks at the time of issuing the RCTI. You can integrate ABN Lookup validation data into your own software using [ABN Lookup web servicesExternal Link](https://abr.business.gov.au/Tools/WebServices).

If a supplier is no longer registered for GST, you cannot issue RCTIs to that supplier. This can lead to you incorrectly claiming GST credits.

If you've incorrectly claimed GST credits because you've relied on a document that is not a valid RCTI, you should make a [voluntary disclosure](https://www.ato.gov.au/forms-and-instructions/voluntary-disclosures-approved-form). We encourage you to review your governance frameworks to reduce the risk of future errors.

## GST groups

If a member of a [GST group](https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/in-detail/managing-gst-in-your-business/gst-groups-and-branches/gst-groups) makes a taxable sale, their identity must be clear on the tax invoice.

If the recipient is a member of a GST group, the buyer's identity must be clearly shown to satisfy the requirement. Include one of the following in the tax invoice:

- the recipient
- the GST group
- the representative member
- another member of the GST group (where there would still be a creditable acquisition if the supply been made to that member).

## Multiple recipients or co-owners

On a single tax invoice for a taxable sale (for $1,000 or more) to more than one recipient, you must clearly show either:

- the identity of each recipient
- the ABN of each recipient.

On a single tax invoice for a taxable sale made by more than one entity (for example, co-owners of property), you must clearly show either:

- the identity and ABN of each co-owner
- the identity and ABN of one co-owner acting as 'agent co-owner' for the other.

When co-owners receive a tax invoice for a sale (for $1,000 or more), the tax invoice must clearly show either:

- the identity of each co-owner
- the ABN of each co-owner.


## Why it's important

To help avoid an unexpected bill at tax time, tell your employer you have a [study loan](https://www.ato.gov.au/individuals-and-families/study-and-training-support-loans/types-of-loans). In the same way your employer withholds tax throughout the year to cover your end of year tax liability, they can also withhold extra amounts to cover your study or training support loan [compulsory repayment](https://www.ato.gov.au/individuals-and-families/study-and-training-support-loans/compulsory-repayments). This amount is calculated when you lodge your tax return.

Your employer will determine how much extra to withhold based on the income you earn with them. If you receive income from other sources, your employer’s withholding may not cover the total compulsory repayment amount. For more information, see [multiple income sources](https://www.ato.gov.au/individuals-and-families/study-and-training-support-loans/tell-your-employer-about-your-study-or-training-loan#Differentincomesources).

### If you don't tell your employer

If you don't tell your employer about your study or training support loan, they won't know to withhold extra amounts for your compulsory repayment. This will likely result in you getting a tax bill when you lodge your tax return. You’ll need to pay your tax bill in full and on time to avoid general interest charge being applied.

## Understanding compulsory repayments

You need to start making compulsory repayments when your repayment income is more than the [minimum repayment threshold](https://www.ato.gov.au/tax-rates-and-codes/study-and-training-support-loans-rates-and-repayment-thresholds). This applies even if you're still studying or in an apprenticeship.

Your compulsory repayment amount is calculated as a percentage of [your repayment income](https://www.ato.gov.au/individuals-and-families/study-and-training-support-loans/when-must-you-repay-your-loan#ato-Yourrepaymentincome). This means the more income you earn, the higher your compulsory repayment will be.

Your compulsory repayment amount is calculated when you lodge your tax return. Any [voluntary repayments](https://www.ato.gov.au/individuals-and-families/study-and-training-support-loans/voluntary-repayments) made towards your loan will not reduce the compulsory repayment amount.

### Work out your compulsory repayment

To estimate your compulsory repayment, use our [Study and training support loans repayment calculator](https://www.ato.gov.au/single-page-applications/calculatorsandtools#STLoanRepay/questions).

For current and historical thresholds and rates, see [Study and training loan repayment thresholds and rates](https://www.ato.gov.au/tax-rates-and-codes/study-and-training-support-loans-rates-and-repayment-thresholds).

### Withholding amounts for your compulsory repayment

When you tell your employer you have a study or training support loan, they will start withholding extra amounts from your income if your annual income is expected to be over the minimum repayment threshold.

The additional amounts withheld are not applied to your loan balance until:

- you lodge your tax return, and
- a compulsory repayment has been calculated based on your repayment income.

This means the amount withheld by your employer won't reduce your loan after each pay cycle. The compulsory repayment amount will reduce your loan as a lump sum once your tax return is processed.

The withholding amount for your loan compulsory repayment may not be listed separately on your payslip. It will be included in the total pay-as-you-go (PAYG) withholding amount.

If too much is withheld during the year, and you don’t have any outstanding tax or other government debts, you will receive a refund of the overpaid amounts at tax time.

## How to tell your employer

To tell your employer about your study or training support loan:

- when starting a new job, complete a [Tax file number declaration](https://www.ato.gov.au/forms-and-instructions/tfn-declaration) (NAT 3092) and answer 'Yes' at Question 10, or
- if you’re already working, and you're not sure if your employer knows you have a loan, complete a [Withholding declaration](https://www.ato.gov.au/forms-and-instructions/withholding-declaration) (NAT 3093) and answer 'Yes' at Question 6.

Give the completed form to your employer so they can work out how much extra to withhold. If you have more than one employer, provide a completed form to each employer.

When you pay off your loan in full, complete a new *Withholding Declaration* (NAT 3093) to inform your employer that you no longer need extra amounts withheld.

## Multiple income sources

If you earn [business or investment income](https://www.ato.gov.au/individuals-and-families/study-and-training-support-loans/compulsory-repayments#ato-Ifyouearnbusinessorinvestmentincome), you may be registered for [pay as you go (PAYG) instalments](https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/payg-instalments). This is where you make regular payments throughout the year towards your tax liability. If you are making PAYG instalments, we take your study or training support loan into account when calculating your instalment amount and rate.

If you earn income from multiple sources, you may need to adjust how much is withheld during the year. This is because your employer doesn't know how much you earn outside of your employment with them. Therefore, the amount they withhold may not be enough to cover your total compulsory repayment amount.

You can adjust your withholding amounts by:

- asking your employer to increase the amount of tax they withhold from your pay, or
- voluntarily registering for PAYG instalments and varying the instalment amount to suit your personal circumstances.

Stay informed and proactive about your loan repayments to avoid financial surprises and manage your loan effectively. For more information, see [Study and training support loans](https://www.ato.gov.au/individuals-and-families/study-and-training-support-loans).

*Authorised by the Australia Government, Canberra.*


# Deductions for work expenses

Deductions you can and can't claim for expenses you incur to earn your income.

**Last updated **15 May 2025

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For a summary of common expenses, see [Police officer deductions (PDF, 426KB)This link will download a file](https://www.ato.gov.au/api/public/content/caeed2c9-a664-4f71-a865-7924ac04f9c9_TaxTimeToolkit_Policeofficer_pdf).

To claim a deduction for a work-related expense you must meet the 3 golden rules:

1. You must have spent the money and you weren't reimbursed.
2. The expense must directly relate to earning your income.
3. You must have a [record](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/records-you-need-to-keep) to prove it (usually a receipt).

If the expense was incurred for both work and private purposes, you only claim a deduction for the work-related portion of the expense.

You can’t claim a deduction if:

- you don't keep records of your work-related expenses
- someone else (such as an employer) pays for the expense or reimburses you for it.

Find out which expenses you can and can't claim as a police officer:

- [Police officer expenses A–F](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/guides-for-occupations-and-industries/l-q/police-income-and-work-related-deductions/deductions-for-work-expenses/police-officer-expenses-af)
- [Police officer expenses G–O](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/guides-for-occupations-and-industries/l-q/police-income-and-work-related-deductions/deductions-for-work-expenses/police-officer-expenses-go)
- [Police officer expenses P–S](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/guides-for-occupations-and-industries/l-q/police-income-and-work-related-deductions/deductions-for-work-expenses/police-officer-expenses-ps)
- [Police officer expenses T–W](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/guides-for-occupations-and-industries/l-q/police-income-and-work-related-deductions/deductions-for-work-expenses/police-officer-expenses-tw)

To help you work out if you can or can't claim a deduction for other expenses, and the records you need, see [Employees guide for work expenses](https://www.ato.gov.au/law/view/document?DocID=SAV/EGWE/00004&PiT=99991231235958).

You can use the [myDeductions](https://www.ato.gov.au/online-services/online-services-for-individuals-and-sole-traders/ato-app/mydeductions) tool in the ATO app to store records and help keep track of your:

- work-related expenses (such as vehicle trips)
- general expenses (such as gifts and donations).

You can upload these records or share them with a tax agent at tax time to make lodging your tax return easier.

We have information in languages other than English. A summary of common work-related expenses may be available in your language:

1. Select your language from the [other languages' homepage](https://www.ato.gov.au/other-languages).
2. Select the heading **Individuals**.
3. Check the list to see if a summary is available.


## How it works

Your main residence (your home) is generally exempt from capital gains tax (CGT).

Usually, a property stops being your main residence when you stop living in it. However, for CGT purposes you can continue treating a property as your main residence:

- for up to 6 years if you used it to produce income, such as rent (sometimes called the '6-year rule')
- indefinitely if you didn't use it to produce income.

During the time that you treat the property as your main residence after you stop living in it:

- It continues to be exempt from CGT (the same as if you were still living in it, even if you start renting it out after you leave).
- You can't treat any other property as your main residence (except for up to 6 months if you are [moving house](https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax/your-main-residence-home/moving-to-a-new-main-residence)).

##
[
]()Eligibility

If the property was continuously your [main residence](https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax/your-main-residence-home/eligibility-for-main-residence-exemption), the usual rules for the main residence exemption apply. The property must have:

- been your main residence first – you can't apply the main residence exemption to a period before a property first becomes your main residence (for example, if you rented out your home before you lived in it)
-
[stopped being your actual main residence](https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax/your-main-residence-home/treating-former-home-as-main-residence/when-does-a-property-stop-being-your-main-residence) and not used for income – that is, you stopped living in it.

### Partial main residence exemption

If you use the property to produce income, you may be entitled to a partial main residence exemption from CGT. Examples include when you:

- run a business
- rent the property out (and the main residence exemption doesn't apply to the period you rent out your home)
-
['flip' the property](https://www.ato.gov.au/businesses-and-organisations/assets-and-property/property/property-development-building-and-renovating/renovating-properties) (buy it to renovate and sell at a profit).

For more detail, see [Using your home for rental or business](https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax/your-main-residence-home/using-your-home-for-rental-or-business).

##
[
]()Former home not used for income

If you don't use your former home to produce income (for example, you leave it vacant or use it as your holiday house) you can treat it as your main residence for an unlimited period after you stop living in it. This only applies if you aren't treating another property at the same time as your main residence.

### Example: former home not used to produce income

Bill bought a unit and lived in it for 3 years. He then moved out to live with a friend while his son occupied the unit rent free.

Bill didn't treat any other property as his main residence.

He sold the unit 12 years later and claimed the main residence exemption from CGT.

End of example

##
[
]()Former home used for income

If you use your former home to produce income (for example, you rent it out or make it available for rent), you can choose to treat it as your main residence for up to 6 years after you stop living in it. This is sometimes called the '6-year rule'.

You can choose when to stop the period covered by your choice. For example, if you rented it out for 5 years, you can choose to treat the property as your main residence for 3 years.

If you're absent more than once when owning the property, the 6-year period applies to each period of absence. A period of absence stops when you either stop renting your home and:

- move back in
- leave it vacant.

**Watch:** Selling a rental property that was your home

**Media:** Selling a rental property that was your home

[https://tv.ato.gov.au/ato-tv/media?v=bd1bdiubfs6pgqExternal Link](https://tv.ato.gov.au/ato-tv/media?v=bd1bdiubfs6pgq) (**Duration:** 03:17)

### Example: ending the period before the 6-year limit

James:

- signed a contract to buy a house in Brisbane on 15 September 2013 and moved in as soon as the contract settled.
- moved to Perth on 10 October 2015 and rented out his Brisbane house
- signed a contract to buy a new house in Perth on 3 October 2020 and moved in as soon as the contract settled
- signed a contract to sell the house in Brisbane on 1 March 2025.

When he completed his 2024–25 tax return, James decided to treat the Brisbane house as his main residence for the period after he moved out in October 2015 until he purchased his new main residence in Perth in October 2020. This is a period of less than 6 years. This means James is entitled to claim a partial main residence exemption under the '6-year rule'.

As James decided not to treat the Brisbane house as his main residence after he bought the Perth house, he is subject to CGT for that period. This means James must include a capital gain or loss in the period not covered by the main residence exemption in his 2025 tax return (from October 2020 until March 2025).

End of example

### Example: dwelling used to produce income for up to 6 years

Lisa:

- signed a contract to buy a house in 2003 and moved in as soon as the contract settled
- stopped living in the house in 2014
- signed a contract to sell the house in 2024.

While she lived in the house, she didn't use it to produce income.

During the 10-year period after she moved out, Lisa:

- rented the house out for 3 years
- left it vacant for 2 years
- rented it out again for 3 years
- left it vacant again for 2 years.

The total period Lisa used the house to produce income was 6 years, which meets the 6-year limit for treating it as her main residence. It doesn't matter if the 6 years is broken. While the house is vacant, the period is unlimited because the house is not being used to produce income.

Lisa can choose to treat the house as her main residence for the entire 10-year period after she stopped living in it and disregard her capital gain or loss on the sale of the house.

Lisa must include the CGT event in her tax return in the year of the contract sale date, even if she chooses to treat the house as her main residence for the period she stopped living in it. Lisa can claim the 'Main residence exemption' in her tax return.

End of example

### Example: dwelling used to produce income during multiple absences

Jez signed a contract to purchase a house in 2005 and moved in as soon as the contract settled. Jez:

- Stopped living in the house in 2014 because he had to move for work, so he rented it out for the next 5 years.
- Moved back into the house in 2019 and treated it as his main residence for 2 years.
- Moved out again in 2021 and rented the house out, this time for 3 years.
- Entered into a contract to sell the house in 2024.

While Jez lived in the house, he didn't use it to produce income.

The 6-year limit applies separately to each period of absence immediately following a period Jez lived in the property. This means Jez can choose to treat the house as his main residence for both rental periods and disregard his capital gain or loss on the sale of the house.

Jez must include the CGT event in his tax return in the year of the contract sale date and claim the 'Main residence exemption' in his tax return.

End of example

### What happens if the 6-year limit is exceeded

If you use your former home to produce income for more than 6 years in one absence, it is subject to CGT for the period after the 6-year limit.

To work out your CGT when you dispose of your home:

- you need to work out your cost base, which is the market value of your home at the time you first used it to produce income, plus any allowable costs since then (this is the [home first used to produce income](https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax/your-main-residence-home/using-your-home-for-rental-or-business#ato-Valueofhomewhenfirstusedtoproduceincome) rule)
- your capital gain or loss is based on the portion of time after first using your home to produce income; that is, over the 6-year limit.

#### Example: former home used to produce income for more than 6 years

Roya bought an apartment for $180,000. She immediately started living in the apartment as her main residence:

- On 29 September 1999, Roya moved interstate and rented out the apartment and at that time the market value of the apartment was $220,000.
- During her time interstate she didn't acquire another property.
- In July 2024, she returned to her home state and continued to rent out the apartment.
- She sold the apartment for $555,000 under a contract that settled on 29 September 2024.
- She incurred $15,000 in agent’s and solicitor’s fees when she sold.
- She had no other capital gains or losses.

As Roya rented out the apartment, she can treat it as her main residence during her absence for a maximum of 6 years. This is the period 29 September 1999 to 29 September 2005.

Roya must treat the apartment as though she acquired it:

- on the date she first used it produce income (29 September 1999)
- at the market value at that time ($220,000).

Roya works out her CGT as follows:

- Capital proceeds − cost base = capital gain

$555,000 − ($220,000 + $15,000) = $320,000
- Non-main residence days (days over 6-year limit)

30 September 2005 to 29 September 2024 = 6,940 days
- Ownership period days (from deemed acquisition date)

29 September 1999 to 29 September 2024 = 9,133 days
- Assessable capital gain

$320,000 × (6,940 days ÷ 9,133 days) = $243,162

She is eligible to use the 50% CGT discount to reduce her capital gain:

- $243,162 × 50% = $121,581

Roya is not entitled to a full main residence exemption. She must also report a net capital gain of $121,581 on her 2025 tax return for the period the main residence exemption wasn't applied.

End of example

##
[
]()Former home used for income before you move out

If you use any part of your home to produce income before you stop living in it, you can't apply the continuing main residence exemption to that part.

This means you can't get the main residence exemption for that part of your home either before or after you stop living in it.

### Example: home used for income before ceasing to live in it

Helen signed a contract to buy a house in 2007 and moved in as soon as possible after settlement. Helen:

- used 75% of the house as her main residence and the remaining 25% as a doctor's surgery
- moved out and rented out the house in 2019
- signed a contract to sell the house in 2025, making a capital gain of $400,000.

Helen chooses to treat the house as her main residence for the 6 years it was rented out.

As 25% of the house was used to produce income during the period before Helen stopped living in it, the same proportion of the capital gain is assessable:

$400,000 × 25% = $100,000

End of example

##
[
]()Foreign residents

If you are a foreign resident when a CGT event happens to your residential property in Australia (for example, you sell it), you generally aren't entitled to claim the main residence exemption. See [Main residence exemption for foreign residents](https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/foreign-residents-and-capital-gains-tax/main-residence-exemption-for-foreign-residents).

## Completing your tax return

If you signed a sale contract during the income year, you can choose to use the 6-year rule to treat the property as your main residence. When you prepare your tax return, include the main residence exemption if you decide to make this choice.

When you sell a property that you rented out, it's important to include:

- if you elect to use the main residence exemption or not
- your capital gain or loss.

You must report the capital gain, loss or exemption in the same year as the date you signed the sale contract. Remember, this is based on the **contract date**, not the settlement date.

To see how to complete myTax when you've sold a rental property, watch our video [How to complete myTax when you've sold a rental propertyExternal Link](https://tv.ato.gov.au/ato-tv/media?v=bi9or7odtggh5r).

For full instructions on how to complete your tax return, see:

-
[myTax 2025 CGT events and applying an exemption or rollover](https://www.ato.gov.au/individuals-and-families/your-tax-return/instructions-to-complete-your-tax-return/mytax-instructions/2025/income/australian-income-or-losses-from-investments-or-property/capital-gains#CGTeventsandapplyinganexemptionorrollove)

-
[18 Capital gains 2025 – Completing your supplementary tax return](https://www.ato.gov.au/forms-and-instructions/individual-supplementary-tax-return-2025-instructions/income-questions-13-24-supplementary-tax-return-2025/18-capital-gains-2025#ato-Completingyoursupplementarytaxreturn) (paper).


## How GST applies to exports

GST is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia (the indirect tax zone) and on most imports of goods.

Exports of goods and services from Australia are generally GST-free. If you're registered for GST, this means you:

- don't include GST in the price of your GST-free exports
- can still claim credits for the GST included in the price of purchases you use to make your exported goods and services.

See the [definitions for GST terms](https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/in-detail/definitions).

## Export of goods

Exported goods are GST-free if they are exported from Australia by the supplier within 60 days of one of the following, whichever occurs first:

- the supplier receives any payment for the goods
- the supplier issues an invoice for the goods.

If the goods are paid for by instalments, the payment or invoice referred to is for the final instalment.

Suppliers can contact us via [Online services for business](https://www.ato.gov.au/online-services/businesses-and-organisations-online-services/communication-in-online-services-for-business) to request an extension of the 60-day period.

The 60-day period does not apply for [new boats sold for private recreational use](https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/in-detail/rules-for-specific-transactions/international-transactions/gst-free-sales-and-purchases-of-new-recreational-boats) if the boat is exported from Australia within 12 months.

Australia includes all land territory except external territories (such as [Norfolk Island](https://www.ato.gov.au/norfolk-island/tax-for-businesses/gst-transactions-with-mainland-australia), Christmas Island and the Cocos (Keeling) Islands). Under the export rules outlined above, sales of goods to residents of Australia's external territories may also be treated as GST-free export sales by the supplier.

For more information on the external territories, see Law Companion Ruling [LCR 2016/1](https://www.ato.gov.au/law/view/document?src=dr&pit=99991231235958&arc=false&start=1&pageSize=10&total=1&num=0&docid=COG%2FLCR20161%2FNAT%2FATO%2F00001&dc=false&stype=find&tm=phrase-basic-LCR%202016%2F1) *GST and carrying on an enterprise in the indirect tax zone (Australia)*.

## Exports of services and other exports

Other exports can include the sale of things other than goods or real property for consumption outside Australia, such as:

- services
- various rights
- financial supplies
- other professional services.

A supply of a service is GST-free if the:

- recipient of the service is outside Australia, and
- use of the service is outside of Australia.

There are specific rules that determine if the sale of things other than goods or real property for consumption outside Australia, are GST-free or excluded from being treated GST-free.

Start of exampleExample: payments from overseas social media platforms

Liz is located in Australia and registered for GST.

She posts content to a social media platform. Under Liz’s agreement with the platform, subscribers from around the world can purchase and view her content.

The platform facilitates transactions between Liz and her subscribers. Through the platform, she receives payments for subscriptions and purchases of her content, messages and tips.

The platform provides Liz with the location of each subscriber and the value of her sales. She works out her GST-free sales by determining which sales are made to offshore subscribers. She works out which sales are taxable by determining if they are made to subscribers in Australia.

Liz collects GST on her taxable sales and pays it to the ATO. She also [claims GST credits](https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/claiming-gst-credits) for the GST included in the price of any goods and services she buys for her business.

If she can't obtain the location of each subscriber, all her sales will be taxable.

End of example
## When services are used outside Australia

The supply of service is GST-free if the supply is used or enjoyed outside Australia or the supply is made to a non-resident who is not in Australia when the supply is made.

Start of exampleExample: service used outside Australia

Tom, a GST registered Australian freelance writer, is engaged by an English company to write a chapter of a book that will be published in England.

He writes the chapter in Australia and sends it to the non-resident publisher based in England. His service has been exported to the non-resident publisher who is not in Australia when the supply is made, so he does not include GST in his invoice to the publisher.

End of example
## When services are used in Australia

The supply of service is not GST-free if the service is provided in Australia even if the recipient is not in Australia.

Start of exampleExample: service used in Australia

A GST registered school in Australia provides tuition to overseas students currently studying in Australia. However, it bills the overseas parents of the students directly.

The supply may be under an agreement entered into between the Australian school and the overseas parents. However, as it is provided to the students in Australia, the supply is not GST-free.

End of example
For rulings on GST and the exports of services and other exports, see Goods and Services Tax Ruling [GSTR 2002/6](https://www.ato.gov.au/law/view/document?docid=GST/GSTR20026/NAT/ATO/00001) *Exports of goods, items 1 to 4A of the table in subsection 38-185(1) of the A New Tax System (Goods and Services Tax) Act 1999.*

## Tourist refund scheme

Foreign or Australian tourists travelling from Australia are considered to be exporting if they take goods out of Australia as accompanied luggage, which means the goods are:

- carried or worn by the traveller
- checked into the hold of the aircraft or ship that the traveller is using.

Conditions for such supplies are included in either the GST-free [sealed bag method or tourist refund scheme](https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/in-detail/rules-for-specific-transactions/international-transactions/gst-free-sales-to-travellers-departing-australia).

Goods must be declared to Australian Customs and Border Protection Services and the GST refund will have to be repaid if:

- a traveller brings goods back into Australia for which they have made a claim for a GST refund under the tourist refund scheme
- the value of those goods (combined with any other overseas purchases) exceeds A$900.

GST is payable on the entire value of the items, not just the amount that is over the A$900 limit. Penalties may apply to undeclared taxable goods.

Residents of Australia's external territories can claim refunds of GST and wine equalisation tax where applicable under the tourist refund scheme for unaccompanied goods exported from Australia back to their home territory.

## Registering for GST

You must [register for GST](https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/registering-for-gst) in Australia if **both** of the following apply:

- you are carrying on a business or enterprise
- your GST turnover from sales that are connected with Australia from your enterprise is equal to, or greater than the registration turnover threshold of A$75,000 (or A$150,000 if you are a non-profit organisation).

If you're a [non-resident business](https://www.ato.gov.au/businesses-and-organisations/international-tax-for-business/non-resident-businesses-and-gst) you will need to register for GST to ensure you meet your GST obligations.

When you [calculate your GST turnover](https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/registering-for-gst#WorkingoutyourGSTturnover), you need to include export sales connected with Australia, even though they are GST-free.

Start of exampleExample: sales connected with Australia

Alex runs an internet business selling mobile phone parts through his website. About half his sales are to Australian customers and half to overseas customers. He is not registered for GST.

Recently Alex took on a new line of accessories and his sales have increased. His total sales for the past 12 months are now $50,000 for his Australian customers and another $50,000 for his overseas customers.

Alex's sales to Australian customers are included in his GST turnover.

His sales to overseas customers are also included in his GST turnover because they are 'connected with Australia'. It doesn't matter that these sales, as exports, are GST-free.

Alex's GST turnover is his total sales of $100,000 so he must register for GST.

Once registered, Alex must include GST in his sales to Australian customers, but his sales to overseas customers are GST-free. He can claim GST credits for any of his business purchases that include GST.