Skip to main content

Do I need to lodge a tax return in retirement?

Another financial year will soon be over, and if you’ve recently retired you may be unsure what your tax obligations are. The rules around pensions, superannuation and tax can be complicated, so it’s best to speak to your accountant, financial advisor or a tax professional for personalised advise.

The following is some general advice we’ve pulled together that you may find useful.

Do I need to pay tax after retiring?

Yes – retirement doesn’t mean you’re automatically free from paying any tax. The same tax rules apply as they did before you retired. You’re obliged to pay tax on any of your income that exceeds the Australian Taxation Office (ATO) annual tax-free threshold, minus any eligible tax deductions or offsets.

What is classed as assessable income?

Assessable income must be reported to the ATO each year. This includes:

  • 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 additional income raises your total earnings above the tax-free threshold.

If you receive a Centrelink Age Pension and it is your only source of income, you will typically be exempt from paying tax, thanks to the Seniors and Pensioners Tax Offset (SAPTO). Tax rules in Australia do require you to submit a non-lodgement advice though.

Seniors and Pensioners Tax Offset (SAPTO)

SAPTO can decrease or even remove 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. Bear in mind that you will likely need to submit a non-lodgement advice.

To check whether or not you’re eligible for SAPTO, use the ATO’s Seniors and Pensioners Tax Offset Calculator.

Consult a tax professional

If you’re unsure about your tax obligations, seek professional advice from the ATO or a tax agent. The ATO website has comprehensive information available on retiree tax obligations.

 

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.

 

Important information

Banking and Credit products issued by Police & Nurses Limited (BCU 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.