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.
The Age Pension forms part of your taxable income. However, if it is your only source of retirement income, you will pay no tax.
Tax on pension payments
60 or over: generally, no tax is payable on your pension payments or lump sum withdrawals. Under 60: your pension payments may contain both a tax free and a taxable component.
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.
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%.
Can I access super at 65 and keep working? Yes. You can access your super when you turn 65 regardless of whether you're still working. You can also make certain types of super contributions up until you turn 75, even if you're retired and drawing a super pension.
A pensioner can earn up to $33,000 before paying tax in Australia, if single, or $30,500 if a member of a couple. This is calculated using the tax-free threshold of $18,200, plus being eligible for the Low Income Tax Offset and the Seniors and Pensioners Tax Offset (SAPTO).
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 are over age 60, any benefits paid to you (as a lump sum or, if applicable, as a pension) are tax free and not assessable for income tax purposes. If you are under age 60, all benefits are subject to Commonwealth benefits or income tax.
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.
You can access your super when you: reach your preservation age and retire. reach your preservation age and choose to begin a transition to retirement income stream while you are still working. are 65 years old (even if you have not retired).
As age 60 guarantees that you have met your superannuation Preservation Age, you are able to commence a Transition to Retirement (TTR) Pension income stream with some or all of your superannuation accumulation balance while you are still working.
This obviously depends on what annual income you want to fund but if you want to be able to afford a comfortable retirement—which is an income of just over $48,000 a year for a single according to the ASFA Retirement Standard—then you need a balance of at least $500,000.
The Seniors & Pensioners Tax Offset (SAPTO) is a tax offset available to people who have reached their Age Pension age (65 for those born pre-1 July 1952) and also meet the income criteria outlined below.
Taxable income is the amount you receive after you take away all your allowable deductions from your assessable or gross income. Gross income includes: Salary and wages, lump sum payments, money from business or self employment, rent, interest, investments and dividends. partnership and trust distributions.
Whether the money in your super account is tax-free or taxable when you withdraw it generally depends on the type of contributions made and whether tax was paid on it. Non-concessional (after-tax) contributions – those made from income after you paid tax on it – are tax-free when withdrawn from your super account.
Super lump sum
This payment is called a lump sum. You may be able to withdraw your super in several lump sums. However, if you ask your provider to make regular payments from your super it may be an income stream.
You do need to lodge a tax return if: Centrelink is withholding any tax from your aged pension payment. If Centrelink does withhold tax from your aged pension payment; this will be noted on your PAYG summary. If there is any amount of tax withheld listed on your PAYG summary, then you should lodge a tax return.
From 1 July 2022, for single pensioners, the pension income free area is $190 a fortnight and for couples combined, it is $336 a fortnight. This means a single pensioner over Age Pension age with no other private income could earn up to $490 a fortnight from work and still receive the maximum rate of pension.
Assets Test
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.
A one-off payment of $250 will be made to individuals who are currently in receipt of Australian government social security payments, including pensions, to ease cost of living pressures. A single Paid Parental Leave scheme of up to 20 weeks paid leave will replace the existing system of 2 separate payments.
Eligible pensioners will get $4,000 credited to their Work Bonus balance from 1 December 2022. The maximum Work Bonus balance will increase from $7,800 to $11,800 until 30 June 2023. The Work Bonus concession of $300 per fortnight will remain unchanged.
It comes down to the amount of savings you already have, plus all sorts of asset types combined. For example, if you are a single homeowner you can get a full pension with an asset limit of $270,500. As a couple with a home and combined assets your limit is reached at $405,000 to receive a full pension.
Taking money out of superannuation doesn't affect payments from us. But what you do with the money may. For instance we'll count it in your income and assets tests if you either: use it to buy an income stream.