Top five tax time tips for retirees

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It’s that time of year again when many Australians complete their ‘dreaded’ tax returns. While completing a return isn’t required for those who are below the taxable income thresholds, regardless of your income there are reasons why you should still consider taxation issues.

These five tips can help you get your tax affairs in order.

1. Keep detailed records of any investments and income, even if you are not required to complete a tax return. This is important when shares are bought or issued in a dividend reinvestment program and then sold, resulting in a Capital Gains Tax (CGT) liability or loss. Records will show the purchase or issue price, as well as the sale price, to determine any CGT liability.

2. Be aware of the latest tax thresholds and offsets that apply in your situation. Taxation thresholds and offsets change according to government policy. Those eligible for the Senior Australians and Pensioner Tax Offset (SAPTO) can earn up to $32,279 for singles and $28,974 for each member of a couple before they pay any tax.

3. Claim your franking credits. Many people own shares these days due to employment share schemes, company mergers or simply having bought them. Share or ‘equity’ investments in Australia have a dividend imputation system so that shareholders do not pay double tax. Even if you are not required to complete a tax return, you can still claim these credits each year by completing an application called ‘Application for refund of franking credits for individuals’ or by calling the Australian Tax Office on 132865. Individuals with dividend income and franking credits above $18,200 will need to complete a tax return to claim the franking credits even if their taxable income is below the required threshold (see point 2).

4. Consider the taxation status of your superannuation/retirement income stream investments. Your age, your overall financial situation, the amount you draw down and what you do with the proceeds can result in taxation issues arising. Consider the components within the fund and the nomination of beneficiaries in the event of your death, as depending on your age and work status, strategies can be put in place to minimise tax.

5. Ensure taxation considerations are part of any financial decisions but don’t make decisions purely from a taxation point of view. Investing in tax-effective strategies may actually result in a negative outcome as other needs and objectives of high importance are neglected.

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Written by Debbie McTaggart

5 Comments

Total Comments: 5
  1. 0
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    4. – you have to draw down 4%+p.a. age dependent. So how can you avoid those taxes?

  2. 0
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    In 2002 we moved into a permanant Park Home in a caravan park, and today are still only paying $270/ Fortnight and a 10% per anum increase limit on our contract. Our power runs at about $40/Fortnight costing a total of about $310/ Fortnight. If we were renting out in the suburbs we would probably be up for 5 or $600, plus power, plus water etc. On a good fortnight we can easily save $200 to $300 if no car, building insurance or rego etc. We are in a country town 1000 Kms from the city, so no real risk of the park being closed down. So anybody getting close to retireing, and don’t own your own home, have a good look at setting up in a caravan park, Life is a Breeze, and if we need a new Fridge, Hot water system, or Heater etc we just get it, no drama. Our biggest mistake in our lives was, selling our 3rd house in 1983, but who can really see into the future?

    • 0
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      !983 was a bitch of a year. That was a very nasty recession as I recall.
      You can’t beat yourself up over those things outside your control. Sounds like you have ended up in a sweet spot anyway and much cheaper than rates, insurance etc on a house now.

  3. 0
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    I received a letter from the tax office stating I will not have to make an application for refund of franking credits on my AMP shares as this will be done automatically from information received from the company, providing there is no change from previous years.


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