How retirees can maximise their tax return

JD: Welcome back to  Mind Your Own Retirement and its getting very close to tax time. Do you have all you receipts? Do you have everything spread out on the kitchen table?

KF: No this year I’m better organized John but I still think it’s a really confusing time

JD: Always and things change so much, that’s why you have called up an expert, Mr. tax man, Dr. Adrian Raftery is on the line and you are the best-selling author of ‘101 Ways To Save Money On Your Tax Legally’. It’s in its 10th edition sir! You must be doing something right. Adrian, tell us what you’re doing right.

AR: Well not quite sure! When I wrote the book,  I just wanted to do one book as my bucket list and lo and behold people loved it. I think they would like to buy the illegal edition of the 101 ways to save money in your tax as well but um unfortunately I can’t release that but I know that would be a best seller. But  really,  I think mainly I’ve written it in a simple way that people can understand and not too complicated. I try to talk as if I was their mum and dad giving them advice.

KF: But I wouldn’t listen to my mum and dad but I would I certainly listen to you! Adrian, because we’re talking generally to retirees on YourLifeChoices would you like to cover some of the things connected with shares or imputation credits or super drawdowns that retirees might be interested in.

JD: Huh? what was that last one?

KF: Let’s start with Shares!

AR: Yeah well I guess four things that I’ll be looking at for retirees at financial year end and one of them is shares, in particular with capital gains and losses. So this year has been a really strange one on the stock market, it went  up really high for the first seven months of the year with an all-time high in January so there may have been  substantial capital gains made by some people out there, and then we felt devastated when it went down by 20 or 30% as the Coronavirus slammed the market. There may have been some losses incurred then and we’re seeing a bit of bounce back up over the last 4 or 6 weeks which again, some people would have bought near the bottom of the dip  and they would have made some pretty nice gains as well.  Probably the one thing I look at with shares is really doing an analysis of what’s your current capital gain and loss situation? You don’t want to have to pay tax on any gains already made this year when you’ve got these unrealized losses waiting in the wings, so look at selling some of those before 30 June so you negate out those gains early in the year.

Also, be mindful of capital gains tax reduces by half if you hold assets for more that 12 months so if you’re getting close to that borderline – should I sell now or in another 2 months?  You could be saving yourself 50% on tax, but be mindful that the stock market can correct itself once again so it’s a bit of a punt in relation to that. Just keep in mind that deferring some capital gains until after the first of July as well you get you another 12 months to consider having to pay the tax, or you can have another 12 months of tax planning as well. That’s one of the things that we’re really looking at in relation to shares.

Dividends we know that they’re starting to reduce now but you’ll still going to gain imputation credits in relation to them because the government got re-elected so the Labor policy didn’t get through.

I guess a few other things I’ll be looking at if I was a retiree is that we have the pension draw-down which the government has legislated for the last few years in terms of how much money you need to withdraw out of your pension each year.  With COVID19 the government was very good in terms of reintroducing the rule that they had in the GFC where only 50% of the minimum draw-down that they previously calculated needs to be withdrawn in this year and also for next year as well. It can be a little bit hard for some people who drew out the first 10 months of the year their minimum percentage, they probably wouldn’t be able to reduce it by 50% but definitely they could stop it  over the last month because the market had devastated their share value over the last few months so you don’t want to draw out the full amount unless you really have to.

KF: So Adrian just to help our members here to lot of people won’t actually know their minimum and maximum drawdowns maybe they should but they won’t necessarily and given that this episode is June 14 so there’s 2 weeks before the bell rings they could perhaps go to their super fund to find this information out?

AF: Yeah they sure can and they can also just do a google search as well so it is dependent on their age so it ranges from 2% for under age 65 right up to 7% if you’re over 95 so it is a big range. It was  4% to 14% so talk to your super fund but if you got self-managed  super fund do Dr. Google or talk to your accountant

KF: Well will put a link on the website as well so people can absolutely can cut straight through to the right numbers: Here’s the link: minimums and maximums of the pension drawdown,

JD: And is your book ‘101 Ways To Save Money On Your Tax Legally’ readily available Adrian?

AR: Yeah hit book stores at the start of June so all good book stores

JD: I’m going out to buy one Yeah definitely going to get a copy

AR: And it’s also available online in e-book version

JD: Is it tax deductible?

AR: It sure is as long as you’re using it for your tax but if you’re using it to help you sleep at night unfortunately you can’t claim it then!

KF: So Adrian another question I think I know the answer but I rather have an expert tell us this.  Pensioners have received two lots of $750 from the government as a top up because of the pandemic.  How’s that treated tax wise?

AR: As I understand it that $750 payment is actually tax free which is a bonus for this one off payment.  If you receive other benefits such as job keeper or job seeker or the $550 per fortnight corona supplement, they are taxable.  And if you are in business the job keeper you receive is taxable but the cash flow boost scheme is not taxable so they’re may be a few out there who are running a small business with that cash flow boost gain don’t pay tax on the year end

KF: Okay well that’s helpful. That’s a good distinction so we’re going to also list au on the website so people can follow you up and ask you even more questions

AR: I’m more than happy to answer questions and my blog is also set-up there so fire away any questions you do have but try not to  make them too difficult for me.

JD: Mr. tax man thank you so much for joining us today and we will put that link up as Kaye mentioned and good luck with the book a ‘101 Ways To Save Money On Your Tax Legally’ and good luck as we approach the end of the financial year

AR: And good luck to everyone there and at home as well thanks for your time John and Kaye

Learn more about the minimums and maximums of the pension drawdown, visit the MrTaxMan website, or follow Mr TaxMan on Facebook and Twitter. Or look for his new book 101 Ways to Save Money on Your Tax Legally

YourLifeChoices Writers
YourLifeChoices Writers
YourLifeChoices' team of writers specialise in content that helps Australian over-50s make better decisions about wealth, health, travel and life. It's all in the name. For 22 years, we've been helping older Australians live their best lives.
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