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.
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.
You meet this condition if any of the following applied to you in 2022–23: You did not have a spouse, and your rebate income was less than $50,119. You had a spouse, and the combined rebate income of you and your spouse was less than $83,580. the combined rebate income of you and your spouse was less than $95,198.
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. The tax for a pensioner is calculated in the same manner as an ordinary working Australian or self-funded retiree.
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.
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.
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.
You can earn up to $2,332 per fortnight before you lose the pension as a single person, or up to $3,568 per fortnight as a couple, combined, before you lose the Age Pension, entirely. If you are working, an additional $300 per fortnight, per person, on top of these amounts can be earned before you lose the pension.
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%.
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 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.
Who Doesn't Pay the levy? Those who earn equal to or less than $23,365 do not need to pay the Medicare levy in the 2021-22 financial year. The cut-off is $36,925 for seniors and pensioners who are entitled to the seniors and pensioners tax offset (SAPTO).
In the United States, the best month to retire for tax purposes is January, especially if you'll begin taking money out of your retirement accounts to cover your living expenses. Retiring in early January means you'd typically be withdrawing your retirement funds at a lower tax rate because you've stopped working.
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.
Eligible pensioners have had $4,000 credited to their Work Bonus balance since 1 December 2022, increasing the maximum Work Bonus balance from $7,800 to $11,800. This measure extends the increase to 31 December 2023. The Work Bonus concession of $300 per fortnight will stay the same.
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.
When you don't need to lodge. You usually don't need to lodge a tax return where: your income is under the tax-free threshold ($18,200) no tax has been withheld from that income.
You can be fined
You may also have to pay interest on any amount you owe. It is best to lodge on time even if you can't pay the amount you owe. You can usually arrange a payment plan.
If you're above the age of 60, you don't need to provide us with your TFN. You may also be exempt if you're receiving certain government pensions, benefits or allowances. To find out about TFN exemptions, please visit the ATO website.