Does the Prime Minister Get Special Tax Treatment in Australia?
Every few weeks someone leans over a bar or a barbecue, lowers their voice and asks:
“So… does the Prime Minister really pay tax like the rest of us?”
It’s a fair question. The role comes with motorcades, official residences, security details and the occasional leadership spill before morning tea. No surprise people start wondering whether there is some special “Prime Minister tax Australia” rule quietly shielding the PM from the ATO.
Let’s strip out the rumour and walk through what actually happens when the Prime Minister’s life collides with Australian tax law.
So, does the Prime Minister get special tax treatment?
Short answer: the Prime Minister pays tax.
There is no carve-out in the Income Tax Assessment Act that says, “section 1: everyone except the PM.” Their salary goes through the PAYG system, the Medicare levy applies, and a tax return still has to be lodged each year.
Where things get interesting is not whether the Prime Minister pays tax at all, but how the different pieces of their remuneration and perks are treated for tax purposes. That’s where the “Prime Minister tax Australia” myths usually start.
How is the Prime Minister’s salary taxed?
The Prime Minister’s salary is set ribunal, not by Parliament or the government of the day. Recent determinations have pushed the PM’s total salary package to a little over $600,000 a year, making it one of the most scrutinised pay packets in the country.
From a tax perspective, this is still ordinary employment income. It is subject to:
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Pay As You Go (PAYG) withholding
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Medicare levy
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The usual marginal tax rates
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Any applicable additional levies decided by Parliament
In other words, the salary component of “Prime Minister tax Australia” is completely conventional. It might be a bigger number than most, but it is taxed under the same law and at the same rates as any other Australian resident taxpayer.
Official residences and housing fringe benefits
The Prime Minister has access to two official residences:
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The Lodge in Canberra
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Kirribilli House t-owned properties used to allow the Prime Minister to perform their duties. Because the accommodation is provided solely for work-related purposes, it is treated as an exempt housing benefit for fringe benefits tax (FBT) purposes.
Key points:
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The PM does not own the properties.
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They cannot be sold, mortgaged or rented out by the PM.
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The provision of the accommodation is an exempt onal taxable salary.
Under FBT rules, certain accommodation provided purely to facilitate the performance of employment duties can be exempt. Where a benefit is exempt from FBT, it is also generally exempt from income tax in the employee’s hands.
So, is this “special tax treatment”? Not really. The rules are the same ones that can apply to other employees who are required to live somewhere for work reasons, such as remote workers or live-in managers. The Prime Minister simply happens to be a very visible example of that framework in action.
Travel, security and other “perks”
The optics of the Prime Minister’s lifestyle often fuel the idea that there must be a separate “Prime Minister tax Australia” regime. Let’s look at the major categories.
Official travel
The Prime Minister travels on official business using Commonwealth-funded resources, including RAAF aircraft and ground transport. Where travel is undertaken purely in the course of official duties, it is not treated as a personal f o the PM personally.
There are detailed rules, audits and reporting obligations around parliamentary travel entitlements, administered by bodies such as the Independent Parliamentary Expenses Authority (IPEA) and the Department of Finance.
If a Prime Minister takes a private family holiday, they are not meant to hop onto a taxpayer-funded VIP jet for leisure. Private trips are generally taken on commercial flights and paid for privately, just like everyone else.
Security and protective services
The Prime Minister receives 24/7 security coverage, typically through the Australian Federal Police and other agencies. Those costs are incurred for national security and public interest reasons, not as a personal perk.
As a result, there is no assessable benefit to the Prime Minister and no FBT applied. This is a government expenditure item, not employment income.
Staff, offices and operating resources
Office staff, electorate offices, ministerial offices, vehicles, communications and IT infrastructure are publicly funded to support the PM in performing their role. Again, these are not treated as salary or fringe benefits to the individual. They sit in the same category as the budget that funds Parliament House itself: necessary infrastructure, not personal income.
Do any tax exemptions actually apply?
There is one narrow area where yo ax concession linked to official duties: luxury car tax (LCT).
The Commonwealth and certain government bodies may obtain exemptions from LCT when acquiring eligible vehicles for official purposes under specific legislation and customs rules.
What matters here is that:
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The car is acquired by the Commonwealth, not by the Prime Minister personally
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The vehicle is a government asset, not part of the PM’s private wealth
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The exemption is a feature of the LCT regime generally, not something created for one individual
So the PM is not “dodging” LCT on a personal car. The government is applying a statutory exemption to a government-owned asset.
What happens to tax when a Prime Minister leaves office?
After leaving of be entitled to limited travel, staff and office support to assist with ongoing public duties, such as official events or public engagements. These frameworks are governed by a combination of legislation, determinations and administrative guidelines.
Crucially:
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Administrative allowances are typically paid to service providers (for example, airlines, office landlords, staff) rather than directly as cash to the former PM.
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Because these amounts are not income to the individual, they are not taxed as personal assessable income.
However, once a former PM starts earning:
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Speaking fees
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Board fees
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Consulting income
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Book royalties
all of that is just ordinary taxable income. The ATO does not distinguish between “former Prime Minister consulting income” and any other high-earning professional.
Why this matters for everyone else
So where does this leave the original question: is there special “Prime Minister tax Australia” treatment?
In practice:
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The PM’s salary is taxed like any other resident taxpayer’s salary.
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Official residences, travel, security and staff are structured and exempt under the same FBT and public expenditure rules that apply to other officials.
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Limited concessions, such as LCT exemptions, attach to government ownership and use, not the Prime Minister as an individual.
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After leaving office, private income streams are fully taxable like anyone else’s.
The real story is less about secret loopholes and more about how the tax system deals with public office holders who cannot realistically perform their role without significant publicly funded infrastructure wrapped around them.
Need advice on how the rules apply to you?
Most people will never live at The Lodge or travel with a security detail, but the same principles that apply to “Prime Minister tax Australia” questions also show up in more ordinary situations:
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Employer-provided housing or accommodation
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Company cars and fleet vehicles
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Travel allowances and reimbursements
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Mixed personal and business use of assets
If you are a business owner, professional, executive or high-net-worth individual trying to work out where personal benefit stops and legitimate business expenditure begins, it pays to get clear advice before the ATO comes asking.
Chris Garlick is a Brisbane-based tax barrister who acts for both individuals and businesses in disputes with the ATO, complex advisory matters and tax controversy. To discuss your position, contact the chambers on 0417 427 535 or via the website contact form at chrisgarlickbarrister.com.au.
For a lighter look at how far the residency rules can stretch, you can also read our story about the man who managed to become a tax resident of a tree:
https://chrisgarlickbarrister.com.au/tax-resident-of-a-tree