Are NDIS Payments Taxable?

Are NDIS Payments Taxable?

It’s tax time. And you might be wondering what happens with NDIS payments and your tax. If you’re new to the NDIS, or unsure about how your NDIS payments interact with your tax obligations, this is for you.

How does the tax system integrate with NDIS?

As a government-initiated programme, the National Disability Insurance Scheme has a special place within Australia’s taxation system. Participants of the NDIS who receive payments and supports are doing so on a basis of the supports they need and have nothing to do with income or the amounts of payments received from elsewhere. 

Nevertheless, you should be aware of your tax obligations.

How do NDIS payments work?

The National Disability Insurance Agency (NDIA) has developed a unique payments scheme that aims to make the provision of disability support services simple and accessible for all who need them. The way it works is simple.

  • Funds are allocated to you based the needs identified in your NDIS plan
  • Using these NDIS funds, you engage providers to provide support.
  • Upon receipt of a tax invoice, a claim is made to the NDIS to release funds, and these funds are used to pay the provider. You can do this yourself, or through a plan management agency like Onboard Supports.
  • It’s important to keep any receipts and invoices for at least 5 years. If you think you might need assistance with this, scroll down and read about how a qualified plan manager can help.

Are NDIS payments taxable?

The good news is that all the payments you receive from NDIS are tax-free (Hooray). This system makes sure that you can receive your payments without any faffing around at the end of the financial year. It also ensures any participant living with a permanent or significant disability is not worse off come tax time.

Ok, but what about claiming deductions for expenses

claiming deductions for expenses

While any payments you do receive as part of your NDIS funding are exempt from income tax, it’s important to note that you cannot claim any deductions on expenses that arise along the way, or for any assets that are paid for by the NDIS. 

That being said, everyone’s situation is different. You’ll want to make sure that everything is above board, especially with the Australian Taxation Office cracking down harder these days.

Always make sure:

  • You take into account your personal, superannuation, and other tax obligations.
  • You’re meeting your obligations by consulting with a qualified accountant or registered plan management provider like Onboard Supports.

Can I claim net medical expenses tax offset?

The simple answer is: not if those medical expenses have been covered through your NDIS funding. However, if an NDIS participant has paid for medical expenses with their own funds, you can claim the net medical expenses tax offset (NMETO) in the event you have any claimable expenses.

Will my disability pension be affected by NDIS payments?

No, it won’t. All eligible participants’ pension and disability support pension will remain completely unaffected by your NDIS payments. This is also the case for other completely separate support payments like childcare, and carer supplements.

Hiring disability support providers

disability support provider

As an NDIS participant, hiring and paying for supports within the scope of your NDIS funds allows you to either fully or partially manage the services you receive. This also comes with important obligations, especially if you are hiring a support worker directly. This can vary depending on whether the person you’re hiring is a contractor or an employee:

  • Employee: you may be required to withhold tax and even pay superannuation.
  • Contractor: unless a voluntary agreement exists to withhold tax, you won’t need to withhold any tax.

Keeping up with payments, and budgeting can be tough. If you want more information about your obligations, or how to include a registered NDIS plan management provider in your plan, reach out to Onboard Supports. We’re here to help.

Why choose a plan manager?

If you’re finding the financial management side of your NDIS plan challenging, or simply don’t have the time, you may want to consider plan management. Without the stresses of monthly reporting, paying invoices, and staying on top of your budget, an NDIS plan management provider takes care of all this while you get on with the things that really matter. 

For the best NDIS plan manager whom you can trust, reach out to Onboard Supports today on 0405 139 143.