Do Pensioners Need to Lodge a Tax Return in Australia?
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Table of Contents
Do aged pensioners need to lodge a tax return in Australia?
Generally, aged pensioners or seniors will only need to lodge a tax return in Australia if they have another source of income outside of government aged pensions.
However, you might need to lodge a tax return even if your only source of income is your aged pension because a portion of Centrelink payments is taxable if they exceed a certain threshold.
This guide explains when seniors are required to lodge and when they are not.
You need to lodge a tax return if:
- Centrelink is withholding tax from your Age Pension (this will show up on your income statement or PAYG summary)
- If you’re earning other income aside from your aged pension
You don’t need to lodge a tax return if:
- Centrelink is not withholding tax, and
- Your only income is the Age Pension.
📣 Important! Even if you don’t pay tax on your earnings from your other sources of income, you will still need to lodge a tax return in Australia.
Still unsure if you need to lodge a tax return in Australia? Chat with us today.
What counts as taxable income for pensioners in Australia?
Taxable income for pensioners might look like:
- Rental income earned from investment properties
- Interest earned from savings accounts or term deposits
- Income from investments/dividends
- Income from employment, such as a wage or salary paid by an employer
- Any business income if you are self-employed
- Lump-sum payments (such as inheritance or compensation)
- Lump-sum superannuation payments
💡 Tip! It’s best to protect yourself! If you earn any other income, assume that you will be required to submit a tax return to the ATO by the deadline each year.
Australian tax return rules for seniors and pensioners
1. Seniors and Pensioners Tax Offset (SAPTO)
SAPTO is a tax offset that helps eligible seniors and pensioners reduce the amount of income tax they owe. It doesn’t give a cash refund, but it can lower your tax bill, sometimes even to zero, making it one of the most crucial tax rules for pensioners.
To get SAPTO, you’ll need to be eligible first. This usually means:
-
- You receive the Age Pension or a similar payment from Centrelink or Veterans’ Affairs.
- You meet the age requirement for the Centrelink Aged Pension.
🎁 Bonus! In some cases, you may even be able to transfer your unused SAPTO to your spouse or vice versa (if you’re both eligible).
2. Non-lodgement advice
If you are not required to lodge a tax return, you will still have to submit a ‘non-lodgement advice’. This alerts the ATO that you will not be lodging a tax return and prevents them from expecting a return from you.
You can file this non-lodgement advice through your myGov account or directly through the ATO website. If you skip this step, the ATO might assume you’re late and send reminders or penalties.
In summary
As a pensioner, you will have to do one of the two things: lodge a tax return or file a non-lodgement advice. If you don’t have to do a tax return this year, it’s still important to let the ATO know.
This is one of the tax obligations for pensioners in Australia and staying on top of it helps you avoid penalties, delays, or complications with future payments or entitlements.
FAQ'S
Does having tax withheld by Centrelink mean I don’t need to lodge a tax return?
No, Centrelink only withholds tax from your Age Pension so you can avoid owing taxes at the end of the year but it doesn’t avoid you from needing to lodge a tax return.
What happens if I fail to lodge a required tax return?
Where can Australian pensioners get help lodging their tax returns?
Do self-funded retirees have to lodge a tax return in Australia?
