For educational purposes only. Not tax, legal, or financial advice. Tax laws change frequently. Consult a registered tax agent or CPA for your specific situation.
Australian self-employed carers receiving Carer Payment can work up to 100 hours across any rolling four-week period (from March 2025) while continuing to receive the payment. Carer Allowance is not taxable and has no assets test, with a combined income cap of $250,000 per year. The annual Carer Supplement of $600 per qualifying Carer Allowance is also non-taxable. Carer Payment is taxable and subject to the pension income test, with a single income free area of approximately $212 per fortnight.
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Self-employment as a carer is a scheduling problem that the tax system does not acknowledge. The compliance rules are identical to every other sole trader. What matters is how Carer Payment, Carer Allowance, and the 100-hour work limit interact with self-employment profit, and whether trading income leaves you better off or triggers a payment reduction you did not anticipate.
The reality this serves
Adults providing substantial daily care to a family member, partner, parent, child, or other person with disability, chronic illness, or frailty, who also run a sole trader business or freelance practice that fits around care commitments. Self-employment is often the only viable work pattern because it flexes around hospital appointments, personal care schedules, and crisis days. Trading income is rarely the primary household safety net, but it preserves professional identity, skills, and a route back to fuller work when care intensity reduces.
Carer Payment income test and self-employment profit
Carer Payment is a pension-type income support for people providing constant care. Self-employment income is counted under the standard pension income test. A single carer can earn up to approximately $212 per fortnight before Carer Payment starts to reduce, with a formal cut-off above $2,600 per fortnight. Centrelink assesses business profit (income minus allowable deductions), not gross turnover, and averages business income over time to smooth lumpy self-employment earnings. Super contributions claimed as a tax deduction are generally not deducted for Centrelink purposes even though the ATO allows the deduction. Keep a simple profit and loss for each quarter because Centrelink works off profit, not turnover.
Carer Payment is subject to the pension income test, which assesses net business profit for self-employed recipients.(Social Security Act 1991 s 198; Social Security Guide 4.3.4.10)
100-hour work limit (from March 2025)
From March 2025, carers can undertake up to 100 hours of paid work or self-employment across a rolling four-week period and still receive Carer Payment, provided they continue to provide care for a significant period each day. This replaced the old 25 hours per week limit. Self-employed work hours count toward the 100-hour limit in the same way as employment hours. Study and unpaid training generally do not count toward the limit under the updated rules, making upskilling more feasible while keeping Carer Payment. If hours are exceeded for a period, payments can be suspended rather than cancelled for up to approximately 26 weeks.
Carer Payment recipients may undertake up to 100 hours of employment, self-employment, or voluntary work in each 4-week period without losing eligibility.(Social Security Act 1991 s 197A (as amended March 2025))
Carer Allowance and Carer Supplement: non-taxable
Carer Allowance is a supplementary fortnightly payment (approximately $162 per fortnight for care of someone aged 16 or over) paid on top of wages, self-employment income, and Carer Payment. It has no assets test. The income cap for eligibility is $250,000 combined adjusted taxable income per year, but ongoing earnings do not change the fortnightly rate once you qualify. Carer Allowance is not taxable income and is not included in your assessable income for income tax. Carer Supplement is a separate annual lump sum of $600 for each qualifying Carer Allowance, usually paid automatically around July to August, and is also non-taxable.
Carer Allowance and Carer Supplement are exempt from income tax and are not assessable income.(ITAA 1997 s 52-10; Social Security Act 1991 Part 2.5A)
Tax treatment: what is taxable and what is not
Self-employed carers are taxed like any other sole trader: all business profit plus taxable Centrelink benefits is included in assessable income. Carer Payment is taxable. Carer Allowance and Carer Supplement are not taxed. You may be eligible for the Invalid and Carer Tax Offset if you maintain an eligible invalid adult or carer who receives certain government benefits and your adjusted taxable income is under the relevant threshold (around $117,000 for recent years). The offset is claimed at the 'Other tax offsets' section of the individual return and can reduce tax payable but cannot create a refund on its own.
The Invalid and Carer Tax Offset can reduce tax for taxpayers who maintain an eligible invalid dependant or invalid carer, subject to income thresholds.(ITAA 1936 s 159J; ATO Tax Offset Guide)
Allowable expenses in context
Standard sole trader deduction rules apply (ITAA 1997 s 8-1). Carer-specific judgement calls: Home-based business running costs (electricity, internet, phone, cleaning of workspace): deductible in proportion to business use. Running a home-based business is often the most practical option for carers who must remain close to the person they support. The revised fixed-rate method is 70 cents per hour. Occupancy costs (mortgage interest, rent, rates, insurance) are only deductible where part of the home is clearly set aside as a place of business, and claiming these may have CGT implications on sale. Bookkeeping and accounting fees: fully deductible. Scheduling tools, secure messaging apps, and business management platforms: deductible in proportion to business use. Cancellation insurance or business interruption cover with carer-related triggers: deductible as a business expense. Personal deductible super contributions: deductible for tax purposes (reduces taxable income) but NOT deducted for Centrelink income test purposes. Plan accordingly. NOT deductible: medical costs for the person you care for. Mileage to their medical appointments (personal travel). Respite care during your business work hours (personal expense, not a business cost). These boundaries apply regardless of how directly the caring role enables your business operation.
Support schemes
Carer Payment
Eligibility: Providing constant care to someone with a severe disability or medical condition. Must meet the care needs assessment. Can work up to 100 hours per rolling 4-week period. Income test applies: approximately $212 per fortnight free area (single), then taper.
Carer Allowance
Eligibility: Providing daily care to someone with a disability or medical condition. No assets test. Combined income cap of $250,000 per year. Can be received alongside Carer Payment and self-employment income.
Carer Supplement
Eligibility: Automatically paid to each person receiving Carer Allowance. $600 per qualifying Carer Allowance per year, paid around July to August.
Government super co-contribution (up to $500)
Eligibility: Low and middle-income earners who make personal after-tax super contributions. Full co-contribution where total income is at or below $47,488 (2025-26), tapering out by $62,488. Must be under 71 at year-end with at least 10% of total income from employment or business.
Frequently asked questions
Does Carer Allowance count as taxable income?+
No. Carer Allowance and the annual Carer Supplement ($600) are exempt from income tax and are not included in your assessable income. You do not declare them on your tax return. Carer Payment, by contrast, is taxable and must be declared. The distinction matters for tax planning: Carer Allowance does not push you into a higher tax bracket, but Carer Payment does form part of your taxable income alongside business profit.
How does the 100-hour work limit apply to self-employment?+
From March 2025, carers receiving Carer Payment can work up to 100 hours across a rolling four-week period (replacing the old 25 hours per week limit). Self-employed hours count the same as employment hours. Study and unpaid training generally do not count. If you exceed 100 hours in a four-week period, payments can be suspended (not necessarily cancelled) for up to approximately 26 weeks. Track your hours carefully because Centrelink can audit self-employment hours. The 100-hour limit applies to work time, not to income earned.
Can I claim home office deductions if I work from home to be near the person I care for?+
Yes, provided the home office is genuinely used for business purposes. The revised fixed-rate method allows 70 cents per hour for running costs. If your home is genuinely your place of business (dedicated room, clients can attend, signage, exclusive business use), you can also claim a proportion of occupancy costs (rent, mortgage interest, rates), but this may create CGT implications on sale. You must keep records of hours worked from home. You cannot claim purely private costs even if you are at home for caring reasons, and mileage to the care recipient's medical appointments is personal travel, not a business deduction.
Is the government super co-contribution available to self-employed carers?+
Yes. If you make personal after-tax (non-concessional) contributions to super, the government contributes 50 cents for every $1, up to a maximum of $500 per year (achieved with $1,000 of personal after-tax contributions). Full co-contribution is available where total income is at or below $47,488 for 2025-26, tapering out by $62,488. You must be under 71 at year-end and have at least 10% of total income from employment or running a business. For carers with interrupted work histories and low super balances, this is effectively free retirement savings that compounds over time.