How to Report Your Self-Employment Income to Centrelink

If you’re self-employed and receiving payments from Centrelink, it’s essential to understand how to report your income accurately. This ensures you receive the correct entitlements while complying with Centrelink’s requirements. Reporting self-employment income can seem complex, but with the right guidance, it becomes a manageable process.

This article will walk you through how to report your self-employment income to Centrelink, step by step.

Why Reporting Self-Employment Income Is Important

Centrelink uses the income information you provide to calculate your payment rates. If your income changes and you don’t report it, you may be overpaid or underpaid, which could result in financial penalties or repayment obligations. Accurate reporting ensures you receive the right support while avoiding issues later.

How Centrelink Assesses Self-Employment Income

Centrelink assesses your self-employment income differently from traditional employment income. Instead of fortnightly reporting, they calculate an annual income amount based on the information you provide about your business. This annual figure is then used to determine your fortnightly payment rate.

Assessable Income

Centrelink considers your gross business income minus allowable deductions as assessable income. If you’re a sole trader, all business income is assessed after deductions. For partnerships, only your share of the business income is assessed.

Allowable Deductions

Centrelink allows certain deductions when calculating assessable income, such as:

• Costs directly related to earning business income
• Depreciation of business assets (under Division 40 of the Income Tax Assessment Act 1997)
• Employee superannuation contributions

However, some expenses cannot be deducted, including:

• Donations
• Borrowing costs
• Entertainment expenses
• Private health or life insurance premiums

Step-by-Step Guide to Reporting Self-Employment Income

1. Gather Necessary Documents

Before reporting your income, ensure you have the following documents ready:

• Profit and loss statements
• Balance sheets
• Depreciation schedules
• Personal and/or partnership tax returns
• Livestock trading accounts (if applicable for primary production businesses)

You’ll also need to complete a Business Details Form (MOD F form) when first declaring your business.

2. Notify Centrelink About Your Business

When starting or becoming involved in a business, inform Centrelink immediately. You must also notify them within 14 days if there are significant changes in your business income or assets, such as gaining or losing a major contract.

3. Provide Annual Updates

Each year, submit updated financial statements and tax returns within 14 days of their preparation. This helps Centrelink reassess your payment rate accurately.

How to Report Changes in Business Income

While Centrelink knows that businesses can have fluctuating incomes, it’s crucial to report any significant changes that might affect your annual income estimate. For example:

• If you take on a new contract that substantially increases earnings
• If you lose a major client or experience a downturn in revenue

In such cases, provide an updated profit and loss statement to reflect these changes.

Tools for Reporting Your Income

Centrelink offers several ways to report self-employment income:

1. Online via myGov: Link your Centrelink account to myGov for easy reporting.
2. Express Plus Centrelink Mobile App: Use this app for quick updates.
3. Phone: Call Centrelink’s employment services line if online options are unavailable.
4. In-Person: Visit a service center if needed.

Common Mistakes to Avoid

To ensure smooth processing of your payments:

• Always report gross income (before tax and deductions).
• Avoid including personal expenses as business deductions.
• Submit all required documents on time.
• Notify Centrelink promptly about any changes in circumstances.

FAQs