Centrelink to update income reporting rules in December

Low-income earners who receive additional financial support from the government will soon have to declare the gross income they’ve been paid (before tax and other deductions) instead of the amount they’ve earned.

From 7 December, welfare recipients will need to report to Centrelink the gross income reflected in their pay slip, rather than manually calculating their earnings based on their hourly rate and their total number of hours worked.

The new method aims to improve reporting accuracy in a bid to save the government $2.1bn in a span of four years, said Social Services Minister Anne Ruston.

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The reporting changes are expected to impact more than half a million Australians who depend on government support, such as JobSeeker, Disability Support Pension, Parenting Payment and Carer Payment, and other similar benefits.

“We want to make sure that Australians who need financial support are able to get the support that they are eligible for – no less and no more,” Ruston said when the changes were unveiled in January.

“The current system of calculating earnings can be confusing and lead to misreporting, especially when accounting for overtime or penalty rates. These changes will make accurate reporting much easier,” she said.

Payments that fall outside a welfare recipient’s reporting period, however, do not need to be recorded then. “This means we’ll adjust your payment based on the amount paid during your reporting period,” Services Australia said.

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Recipients can report their income through their Centrelink online account or the Express Plus Centrelink mobile app, or by calling the self-service hotline or visiting a service centre.

Changes to the reporting rules were scheduled to begin on 1 July but were postponed because of the pandemic. They are part of the new Single Touch Payroll system in which employers are required to report their payroll data to the Australian Tax Office (ATO).

“The idea behind providing this information from the ATO is to help you check that the employment income you report is the correct amount,” the advocacy group Economic Justice Australia said.

“However, it is important to note that you will still be responsible for reporting your income to Centrelink and ensuring the amount you report is correct.”