The end-of-financial year is fast approaching, and if you’ve recently retired you may be wondering about what your obligations are when it comes to tax. The rules around superannuation, pensions and tax can be complex, so you should talk to your accountant, financial advisor or a tax professional for personalised advise, but we’ve put together some general advice that you may find helpful.
Do I still need to pay tax after retiring?
Retirement doesn’t mean you’re automatically exempt from paying tax. The same tax rules apply to you as they did before you retired. You’re required to pay tax on any income that exceeds the Australian Taxation Office (ATO) annual tax-free threshold, minus any eligible tax offsets or deductions.
What is assessable income?
Your assessable income must be reported on your tax return each year, and can include:
- Employment income (wages or salary)
- Investment income (bank interest from savings or term deposits or dividends)
- Business income (including sole traders)
- Lump-sum payments (such as inheritances, insurance payouts, or proceeds from selling assets)
- Rental income
- Foreign income
If you're a self-funded retiree and receive a tax-free superannuation pension, you generally only need to lodge a tax return if your additional income takes your total earnings above the tax-free threshold.
If you receive the Age Pension from Centrelink and it is your only source of income, you’re typically exempt from paying tax, thanks to the Seniors and Pensioners Tax Offset (SAPTO). Australian tax rules do mean you’re required to submit a non-lodgement advice though.
Seniors and Pensioners Tax Offset (SAPTO)
SAPTO can reduce or even eliminate the amount of tax you’re liable to pay. If you do meet the eligibility requirements, you may not need to lodge a tax return – but you will likely need to submit a non-lodgement advice.
To check whether or not you’re eligible, use the ATO’s Seniors and Pensioners Tax Offset Calculator.
Consult a tax professional
If you’re unsure about your obligations, seek professional advice from the ATO or a tax agent. The ATO website has comprehensive information available.
Important information
Banking and Credit products issued by Police & Nurses Limited (P&N Bank).
Any advice does not take into account your objectives, financial situation or needs. Read the relevant terms and conditions, before downloading apps or acquiring any product, in considering and deciding whether it is right for you. The Target Market Determinations (TMDs) are available on our website or upon request.
This information is general in nature and does not constitute tax advice. We recommend that you seek independent tax, legal and/or financial advice where appropriate.