Income for Minors

A minor is a person who is under 18 years of age.

Special rules apply to the income of minors. Under these rules, certain types of income, such as a distribution from a family trust, may be taxed at higher rates.

These rules were introduced to discourage adults from splitting their income and diverting it to their children.

Minors who are excluded from the special rules

Some categories of minors are excluded from the special rules. These minors are called excepted persons.

A few examples of an excepted minor are:

  • A minor working full time, or had worked full time for three months or more in the 2014–15 income year), and
    • intending to work full time for most or all of the 2015–16 income year, and
    • not intending to study full time in the 2015–16 income year 
  • A minor entitled to a disability support pension or rehabilitation allowance
  • A minor permanently blind
  • A minor in which is disabled and was likely to suffer from that disability permanently or for an extended period

An excepted person pays ordinary rates of tax on all their income.


Income which is not covered by the special rules

Even though a minor may not be an excepted person, ordinary rates of tax still apply to certain types of income. Such income is called excepted income.

Excepted income includes:

  • employment income
  • taxable pensions or payments from Centrelink or the Department of Veterans’ Affairs
  • compensation, superannuation or pension fund benefits
  • income from a deceased person’s estate
  • income from property transferred to the minor as a result of the death of another person
  • income from their own business
  • income from a partnership in which they were an active partner
  • net capital gains from the disposal of any property or investments listed above
  • income from the investment of any of the amounts listed above.

Excepted net income (that is, excepted income minus deductions relating to that income) is taxed at ordinary rates. The low income tax offset will only reduce tax payable on excepted net income.

All other income of a minor who is not an excepted person will be taxed at higher rates. The low income tax offset will not reduce tax payable on this income.

If you would like any further information on the tax treatment of a minor, please don’t hesitate to contact the office for assistance. 

Kristina Brown – Accountant