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.
To be eligible for an Australian Government age pension from Centrelink, you must be 66 years and 6 months or older on 30 June 2021. This is 67 years or older from 1 July 2023.
Pension payments are tax-free after age 60: Any super benefits, either pension or lump sum, paid to you after age 60 are tax-free.
If an Age Pensioner's only source of income is the Age Pension, itself, then Age Pensioners do not need to pay tax, but you may still need to lodge a tax return.
If you make $70,000 a year living in Australia, you will be taxed $14,617. That means that your net pay will be $55,383 per year, or $4,615 per month. Your average tax rate is 20.9% and your marginal tax rate is 34.5%. This marginal tax rate means that your immediate additional income will be taxed at this rate.
From 1 July 2023, Age Pension age will be 67 years, if you were born on or after 1 January 1957.
If you earn less than the tax-free threshold, you generally won't pay tax. You won't have to lodge a tax return, but you may be entitled to receive back to tax you may have paid. You'll need to lodge a tax return to receive that money.
Taxable income is your gross income, less any allowable deductions. When you update your income estimate you need to include all the income you and/or your partner expect to receive for the full financial year including: salary and wages. lump sum payments.
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.
You don't pay tax if you withdraw up to the 'low rate threshold', currently $230,000. If you withdraw an amount above the low rate threshold, you pay 17% tax (including the Medicare levy) or your marginal tax rate, whichever is lower.
Work out which income you need to declare in your tax return, such as employment, government and investment income. Income from working such as wages, allowances, lump sum payments, cash and tips, reportable fringe benefits and super.
Tax returns for Age Pension recipients
If you receive the Age Pension (either full or part) and received income from other sources and Centrelink is withholding tax from your pension payments, it is compulsory to lodge a tax return each year.
If you get extra income and a Centrelink payment, your income may be more than the tax-free threshold. If it is, you'll have to pay tax and may need to pay the Medicare levy at tax time. You'll find out after you lodge your tax return.
Sign in to myGov and select Centrelink. Select MENU, followed by My Family, then Family assistance and Advise non-lodgement of tax return.
The Work Bonus income bank is useful for pensioners who wish to work, particularly those who undertake intermittent or occasional work. Note: from 1 December 2022 to 31 December 2023, a one-off, temporary credit of $4,000 applies to Work Bonus income bank balances.
Aussies who compare energy providers will receive a one-off $250 payment, as part of a new NSW election promise. NSW households will receive a $250 cost-of-living payment for comparing energy providers, if the Coalition is re-elected in March.
The government will provide $3.7 million in 2023–24 to extend the measure to provide age and veteran pensioners a once-off credit of $4,000 to their Work Bonus income bank and temporarily increase the maximum income bank until 31 December 2023.
If you use a part of your principal home for business only, that will be included in your assets test - land or buildings. Centrelink advises you need to contact them within 14 days of selling the home.
A single homeowner can have up to $634,750 of assessable assets and receive a part pension – for a single non-homeowner the higher threshold is $859,250. For a couple, the higher threshold to $954,000 for a homeowner and $1,178,500 for a non-homeowner.