Retirement

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RetirementUnder new transition to retirement rules at the ATO, if you have reached your preservation age, you may now be able to reduce your working hours without reducing your income. You can do this by topping up your part-time income with a regular ‘income stream’ from your superannuation. Previously, you could only access your superannuation once you turned 65 or retired. Under these rules, you can only access your superannuation benefits as a ‘non-commutable’ income stream. A non-commutable income stream is one that cannot be converted into a lump sum. This generally means you cannot take your benefits as a lump sum cash payment while you are still working. You must take your superannuation benefits as regular payments.

Employers still need to make compulsory superannuation guarantee contributions for all their eligible employees, including people on transition to retirement. Superannuation rules ensure your super is preserved for you to use in retirement and not for other purposes. Generally, you must meet a condition of release before your super fund can pay you a benefit. Your fund can only pay benefits in a manner that the fund’s rules allow. Reaching preservation age and retirement , or reaching the age of 65 are two of the most common examples of conditions of release.

When considering the tax aspects of retirement, transition to retirement or superannuation income streams, we recommend you seek financial advice by calling Taxwise Australia on (08) 9248 8124 to find out what is best for you.

Once you’ve reached retirement, you can access a number of tax offsets, such as the seniors and pensioners tax offset and the superannuation income stream offset.

The seniors and pensioners tax offset allows you to earn more money before you have to pay tax or the Medicare levy. There are eligibility conditions relating to age and income. The offset is non-refundable, but unused offset amounts may be transferred between spouses (in some circumstances).

If you have income from an Australian superannuation income stream, you may be entitled to a tax offset if you are either in receipt of a disability superannuation benefit or death benefit income stream, or 60 or over.

If you liked this article you may also want to read Tax offsets for Seniors and Retirees.

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Warren Kruger

Specialist Tax Consultant - “Helping YOU Pay The Correct Tax And Not A Penny More”. My story starts on Christmas Eve, back in 1983 in South Africa.

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