Most seniors and aged pensioners in Australia are not sure about their tax returns. In fact, they may have been avoiding doing their tax returns entirely just to avoid the hassles that come with it. In this guide, we will look at all possible scenarios where such people are required to lodge or not lodge tax returns.
This guide also acts as a general guideline for seniors and aged pensioners in Australia. Generally, you are required to lodge an income tax return if you are earning any kind of taxable income whatsoever. This includes:
- Income from wages or salary
- Income from investments such as dividends or interest from savings accounts or term deposits
- Income from a business: If you run your own business and earn an income in any form, you will need to lodge a tax return.
- Lump-sum payments such as inheritance, insurance or compensation payments: This also includes superannuation that is paid upon retirement.
- Rental Income
Tax Returns for Aged Pensioners
If your only source of income is the aged pension, it is not compulsory for you to lodge a tax return each year. This applies as Centrelink is withholding tax from the aged pension. This information will be included in your PAYG summary, indicating the amount of tax withheld.
However, if Centrelink does not withhold any tax from aged pension, and you do not earn any other income, you will not need to lodge tax returns.
Seniors with Aged Pension and Other Incomes
If you are a senior citizen and you are getting the aged pension but you earn other income (such as income from employment, business, investments etc.), you may need to lodge tax returns.
Your rebate income is what will be used to determine if you need to lodge tax returns or not. Rebate income is calculated as the total taxable income earned plus the following elements:
- Net property loss
- Adjusted fringe benefits total
- Reportable super contributions
- Total net investment losses
Divide this amount by two to get your rebate income. If you are single, the rebate income limit is $32,279 for the financial year. If you live with your spouse and the combined rebate income is more than $57,588 for the financial year, you both must lodge a tax return. However, if one spouse lived in a nursing home or away due to illness, the combined rebate income limit is $31,279.
It is important to note that everyone is required to lodge a tax return or non-lodgement advice with the ATO. This means that even if you are not lodging a tax return, you will need to notify the Australian Taxation Office. You can file the non-lodgement advice online via myGov or through the Australian Taxation Office website.
If you are not required to lodge but want to take advantage of concessions available through tax offsets, deductions and rebates, you can still do so by lodging a simplified tax return. If you are a senior or aged pensioner and you do not need to lodge a tax return but see that the ATO is withholding tax from your pension, you can advise them of this by filing non-lodgement advice.
If you are aged 60 years and above and have a taxable income, whether it is from investments or employment, you will need to lodge a tax return by 30th June each year. If you are not required to lodge a tax return but your Australian Taxation Office withholds taxes from your pension payments, file non-lodgement advice.
Working with a tax expert from Accurate Business & Accounting Services makes it easier for seniors to lodge tax returns on time and accurately. Get professional assistance today!