Although we may not particularly enjoy paying tax, it’s an important and necessary part of working life. These taxes fund important Government services and projects within the community.
Education, health care, defense, infrastructure services and other vital projects are all made possible, partly or wholly through Australians paying taxes.
Understanding tax contributions and filing tax returns can be a headache for some though, but we get by with a little help from our Gold Coast Accountants.
What about understanding tax in retirement? How does that change and what do we need to know?
Read more from the Gold Coast financial planner team at Crest to find out.
Understanding superannuation in retirement
When you transition into retirement, ideally, you want it to be as smooth and stress-free as can be.
Hopefully, you made smart decisions in your career, that led to your wealth building.
Whether you did or not, a planner can work with you to create and understand your retirement plan.
Let’s take a look at superannuation (or super):
- Within your super, there’s taxable and tax-free components.
- The taxable component includes concessional contributions, employer contributions, salary sacrifice and personal contributions that you may have claimed a tax deduction on when placing into super.
- This component also includes any investment earnings made by your super in accumulation phase such as dividends or interest payments.
- The tax-free component is your non-concessional (‘after-tax’) contributions and any co-contributions from the government.
These above components, as well as your age and utilisation of income stream choice will affect the amount of tax you pay on your retirement income and how the benefits are taxed when payable to a non-dependent on death.
Withdrawing your super as a regular income stream or lump sum
These are the two ways you can withdraw your super in retirement.
It’s important to remember though, that your choice of fund and withdrawal process may affect how your income is taxed.
What does this mean?
- If you’re 60+ with a standard super fund, you won’t pay any tax on a structured income stream OR lump sum withdrawal, regardless of taxable and non-taxable components.
- If you’re under 60 but have reached your preservation age (not pension age, but likely to be between 55 and 60), you’ll be taxed accordingly if you commence your super income stream.
Talk to your Financial Planner about what options are best for you as you near your retirement.
How a Gold Coast Financial Planner can help
Crest Wealth are your trusted Gold Coast financial planners who are here to help you shape your financial future.
Our expert team of financial planners will help you understand more and access the main types of retirement and superannuation pensions based upon your circumstances.
- Transition to retirement pensions (TTR),
- Account-based pensions,
- Government’s Age Pension, and
- Withdrawing super as a lump sum.
Everybody deserves to understand their tax obligations and strategies in retirement, and this is easily achieved through formalising a retirement plan with a financial planning professional.
Need more help understanding tax requirements in retirement?
Contact Crest Wealth, your local team of Gold Coast financial planners to gain the knowledge you need.
Disclaimer: The information contained in this news post is general in nature and is intended to provide a general summary only and should not be relied on as a substitute for professional advice.