The Income of Minors and Taxation - Part 1

Income of 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 received by minors may be taxed at higher rates.

However, minors who are residents of Australia do not have to lodge a tax return if they earn less than $1,334 in 2006-07. This is because the low income tax offset of $600 offsets the tax payable on income less than $1,334.

Why do special rules apply to income of minors?

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


Are all minors covered by the special rules?

No. Several categories of minors are excluded from the special rules. These minors are called excepted persons.

A minor is an excepted person if on 30 June 2007:

• they were working full-time, or had worked full-time for three months or more in 2006-07 (ignoring full-time work that was followed by full-time study)
• intending to work full-time for most or all of 2007-08, and
  not intending to study full-time in 2007-08.
• they were entitled to a disability support pension or rehabilitation allowance, or someone was entitled to a carer allowance to care for them
• they were permanently blind
• they were disabled and were likely to suffer from that disability permanently or for an extended period
• they were entitled to a double orphan pension and received little or no financial support from relatives, or
• they were unable to work full-time because of a permanent mental or physical disability and received little or no financial support from relatives.

Ordinary rates of tax apply to all the income of an excepted person.



Continued in Part 2

Source: Australian Tax Office