Retirement changes how you interact with the tax system, but opportunities still exist to reduce tax, optimise income, and preserve your wealth. Strategic planning can ensure your retirement savings go further while keeping you compliant with ATO rules.
Here’s what every retiree should know.
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Understand Your Superannuation Income Streams
Most retirees access their savings through account-based pensions, which are generally tax-free once in retirement (within transfer balance caps).
- Account-based pensions: Tax-free for those over 60
- Transition-to-retirement pensions: Taxed differently if you are still working part-time
Hack: Check the balance of your super and your transfer balance cap before making withdrawals. Planning ahead ensures you maximise tax-free income and avoid unintended tax liabilities.
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Manage Other Income Sources Wisely
Even in retirement, income may come from other sources that are taxable:
- Dividends from shares (with franking credits)
- Rental income from investment properties
- Managed fund distributions
- Casual or part-time work
Hack: Coordinate withdrawals and income sources to minimise tax. For example, franking credits from dividends can offset other taxable income, boosting your cash flow.
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Consider Part-Time Work or Casual Income
Many retirees choose to work part-time, either for lifestyle or supplementary income. Understanding how this affects tax is important:
- Additional income may affect Age Pension eligibility
- Stay aware of tax-free thresholds and offsets
- Plan withdrawals and earnings to optimise overall tax outcomes
Hack: Keep a clear record of work income and super withdrawals. Combining both strategically can reduce tax while maintaining benefits.
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Plan for Investment Income and Capital Gains
Even in retirement, managing investments can impact tax:
- CGT planning: Selling investments strategically can reduce tax exposure
- Franking credits: Fully utilise credits from dividend-paying shares
- Timing income: Consider the timing of rental income, interest, and distributions
Hack: Periodically review your portfolio with an accountant to ensure your investment strategy remains tax-efficient and aligned with retirement goals.
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Make Use of Available Offsets and Benefits
Retirees may be eligible for tax offsets or concessions:
- Seniors and pensioner tax offsets
- Rebates on certain medical expenses or insurance premiums
- Government incentives for downsizing or super contributions
Hack: Stay informed on thresholds and eligibility criteria. Small changes in income or super withdrawals can affect offsets and benefits.
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Keep Accurate Records
Even in retirement, good record-keeping is essential:
- Track super withdrawals, pension payments, and investment income
- Maintain receipts for deductible expenses and offsets
- Document any changes in financial circumstances affecting benefits
Hack: Use a simple digital filing system or accounting software to ensure all information is ready for tax time and strategic planning.
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Consider your Estate Planning
Minimise tax when passing assets to your loved ones by ensuring your estate plan has also considered tax.
- Superannuation payouts can be taxed differently: The way your super is paid out after you die can depend on who receives it. For example adult children may pay tax on some benefits whilst dependants (like a spouse) may not.
- Capital gains tax can add up: How and when assets are owned or transferred can affect how much CGT your estate might owe.
- Testamentary trusts can help protect and grow wealth: Talk to your estate lawyer about how including a testamentary trust in your will can provide tax flexibility and safeguard assets for children or grandchildren.
- Smart planning avoids double taxation: Align your estate, super and tax strategies to help prevent your estate being taxed more than once.
- Ensure there is a plan in place for entities you control: Shares you own in private companies also need to be considered as part of your estate plan, this will determine who controls any companies or trusts.
- Review your plans regularly: Life changes, new laws and changing priorities can make your estate plan out of date, review it regularly to ensure it still reflects your intentions and wishes.
Hack: Your superannuation is treated separately to your Will, ensure you’ve thought about, discussed and have documents in place to enable your super to go where and to whom you want (whether that’s directly to someone from your fund or to your estate)
The Bottom Line
Retirement doesn’t mean tax planning ends — it just evolves. By understanding superannuation income streams, managing other income sources, planning investment sales, and keeping detailed records, you can reduce tax, optimise benefits, and make your retirement savings go further.
At Lemonade Beach Accounting, we help retirees navigate tax rules, maximise deductions, and plan for a secure financial future — giving you peace of mind and confidence in your retirement years.
Ready to Optimise Your Retirement Finances?
Book a Tax Planning Appointment with Lemonade Beach today — we’ll help you align your super, investment income, and tax planning so your retirement money works as hard as you did.
FAQs: Tax Planning for Retirees in Australia
How is superannuation income taxed in retirement?
Account-based pensions are generally tax-free for those over 60. Transition-to-retirement pensions may be taxed differently if you’re still working part-time. Checking your super balance and transfer balance cap before withdrawals ensures you maximise tax-free income.
How should retirees manage other income sources?
Taxable income may include dividends (with franking credits), rental income, managed fund distributions, and casual work. Coordinating income streams can help reduce tax, and franking credits can offset other taxable income.
Can part-time work affect my retirement tax situation?
Yes. Additional income may affect Age Pension eligibility and taxable income. Keeping records of work income and super withdrawals allows you to plan strategically and minimise tax while maintaining benefits.
How should retirees handle investment income and capital gains?
Strategic timing of selling investments can reduce capital gains tax (CGT). Fully utilising franking credits and reviewing investment timing ensures your portfolio remains tax-efficient and aligned with retirement goals.
Are retirees eligible for tax offsets and benefits?
Yes. Seniors and pensioner tax offsets, rebates on certain medical expenses or insurance premiums, and government incentives for downsizing or super contributions may be available. Eligibility depends on income and super withdrawal strategies.
Why is record-keeping important in retirement?
Tracking super withdrawals, pension payments, investment income, and deductible expenses ensures compliance and supports strategic planning. Using a simple digital filing system or accounting software simplifies tax time.
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