If you have received a lump sum or income stream from a taxed fund after age 60 you do not need to include anything on your tax return unless it is a capped defined benefit income stream, or it is a death benefit and you are not a tax dependant of the deceased.
Is the Age Pension taxable? The Age Pension forms part of your taxable income. However, if it is your only source of retirement income, you will pay no tax.
If you're 60 and over, the income will generally be tax-free. If you're between your preservation age and 59, the components of your super will dictate how it will be taxed.
Tax Returns for Aged Pensioners
If your only source of income is the aged pension, it is compulsory for you to lodge a tax return each year. This applies is Centrelink is withholding tax from the aged pension. This information will be included in your PAYG summary, indicating the amount of tax withheld.
Currently, a pensioner can only earn up to $240 per week before they lose the pension by 50 cents in the dollar. That means they can only really work one day a week before getting penalised (depending on their remuneration). If they earn more than about $33,000 per year—which includes their pension—they also get taxed.
Simply put, yes, retirees pay capital gains tax in Australia. However, being a retiree does make one eligible for certain exemptions and concessions, particularly in regards to the sale of property or a business.
If you're aged 60 or over and withdraw a lump sum: You don't pay any tax when you withdraw from a taxed super fund. You may pay tax if you withdraw from an untaxed super fund, such as a public sector fund.
You don't need to lodge a tax return if: Centrelink is not withholding tax from your pension payment and you have no other income. If your aged pension payment is your only source of income, then you do not need to lodge a tax return.
On 1 December 2022, a one-off $4,000 income credit was added to the Work Bonus income bank of those at least pension age and in receipt of an Age Pension, Disability Support Pension, Carer Payment or certain Veterans entitlement. Prior to 1 December 2022, the Work Bonus income bank was capped at $7,800.
Around 1.6 million NSW households and 320,000 small businesses are eligible for a new National Energy Bill Relief payment in financial year 2023-24. Eligible low-income households, pensioners, self-funded retirees, families and carers will receive a one-off $500 bill relief payment towards their electricity bills.
Can you get the Age Pension if you have super? Yes, provided you have reached the Age Pension age, you may be eligible for the Age Pension even if you have super savings.
Super is a great way to save money for your retirement. It is generally taxed at a lower rate than your regular income. You typically pay 15% tax on your super contributions, and your withdrawals are tax-free if you're 60 or older. The investment earnings on your super are also only taxed at 15%.
It is also possible for a retiree to not pay any capital gains tax when selling an investment property through deductible super contributions and the general 50% CGT discount, or if the investment property is owned within a SMSF that is in pension phase.
You won't have an assessable capital gain when you sell a business asset if: your business has owned the asset for at least 15 continuous years. you're aged 55 years or over. you're retiring or permanently incapacitated.
Capital gains
A capital gain is NOT treated as income for social security income support purposes. If a capital loss is made it CANNOT be offset against other income amounts.
From 20 March 2023 the maximum full Age Pension increases $37.50 per fortnight for a single person, and $28.20 per person per fortnight for a couple.
Full Age Pension income threshold increases by: Singles threshold $204 per fortnight, increase is $14 per fortnight, $364 per annum. Couples threshold $360 per fortnight, increase is $24 per fortnight, $624 per annum.
If you're a pensioner currently receiving support through Centrelink, you may be eligible for extra help with bills and medicine costs through the Pension Supplement. This supplement is a combined payment of Pharmaceutical Allowance, Utilities Allowance, GST Supplement and Telephone Allowance.
Taxable payments:
Age Pension (including Age Pension Blind) Austudy. Bereavement Allowance. Carer Payment (where carer or care receiver is of Age Pensions age)
If you lodge a claim after you reach your Age Pension age (because you were still working or forgot to apply), Centrelink will not back pay when you reached Age Pension age (only to your claim submission date).
If you get a Centrelink payment from us, you may need to lodge a tax return. If you get a Centrelink payment from us, or pay or receive Child Support, you should check if you need to lodge a tax return. If you're registered to pay or receive child support, you need to lodge a tax return.