Seven ways to help balance the books at tax time

Different income is taxed in different ways – and understanding how they work together will help you stay in control.

• Account-based pensions: If you’re aged 60 or over and you’re drawing from an account-based pension from a taxed super fund, the income is generally tax-free. But Centrelink may still assess it under the income test – either based on actual payments if your pension is grandfathered*, or under deeming rules if it is not.
• Part-time work: Income from employment is taxable and must be declared. But there are ways to reduce the effect on any government Age Pension payments (more on that below).
• Government Age Pension: You may not need to pay tax if this is your only source of taxable income. Age Pension is means-tested, and your Centrelink assessable assets and income determines how much Age Pension you can receive.
• Investments: Interest, dividends and capital gains are all taxable. Franked dividends come with franking credits, which can reduce your tax bill or even result in a refund.

If you’re receiving the Age Pension and working part-time, the Work Bonus can help by offsetting assessable employment income in the Age Pension income test.  It lets you earn up to $300 per fortnight from employment without affecting your pension. 

New Age Pension recipients start with a Work Bonus balance of $4,000. Any unused Work Bonus can accrue each fortnight – up to a maximum of $11,800 (as at 2025).

Just make sure you report your income accurately to Centrelink to avoid any surprises.

If you have reached Age Pension age or Service Pension age or older and are eligible to receive the Age Pension or DVA pension (even if none is paid because of the income or asset test), you might also be eligible for the seniors and pensioners tax offset (SAPTO), which allows you to earn more, but pay less tax. 

For singles, the maximum tax offset you are eligible to receive is $2,230. This reduces by 12.5 cents for every dollar your rebate income exceeds $34,919, and phases out completely at $52,759.

There are certain eligibility conditions. For detailed information, visit the Australian Tax Office website. 

If you’ve sold shares, property or other assets during the year, you may need to pay capital gains tax. The net assessable gain is added to your taxable income and taxed at your marginal rate. But if you’ve held the asset for more than 12 months, you may be eligible for a 50% CGT discount.

The timing of capital gains events is important. If your income was lower this financial year –perhaps because you worked less or markets were down – it might be a good time to realise gains. For more assistance with this, it’s worth seeking independent tax advice.

Centrelink uses both income and assets tests to determine your Age Pension eligibility. Even if your super income is tax-free, it will still be assessed under Centrelink’s income test—either under grandfathering* rules if the pension commenced before 1 January 2015 and you meet certain conditions, or under deeming rules if it commenced after that date.

If you have a pre-1 January 2015 account-based pension and qualify for grandfathering, Centrelink will assess the actual income payments you receive. However, you may be eligible for a deductible amount, which can reduce or even eliminate the assessable income.

If your pension is not grandfathered, Centrelink will apply deeming rules—estimating income based on set deeming rates applied to your account balance, rather than the actual income you receive.

If your circumstances change, let Centrelink know as soon as possible to avoid overpayments and potential debts. That includes changes to your income, assets, or relationship status.

These rules can be complex, so it’s a good idea to seek financial advice to ensure you’re making the most of your entitlements.

Retirement savings are a long-term investment and it’s important to avoid any knee-jerk reactions to market turbulence. Markets often bounce back faster than expected, and you don’t want to miss out on that growth. 

That said, if you’re recently retired, or close to it, you may want to reexamine the effect of volatility on your money, as how much you draw down could affect how long your savings last. 

Periods of market volatility are a good time to re-evaluate your risk tolerance, revisit how your money is invested, and ensure you have a cash buffer or cash reserve.

If you receive any government Age Pension, the value of any income streams you receive from your super fund is reported to Centrelink twice a year, in February and August. You can re-report this more often if markets are volatile and your account balance has fallen in value as it may allow you to receive more pension.

To do this, access your Centrelink statement online via FirstNet, or you can create a custom report whenever you'd like to see exactly where things stand: simply visit cfs.com.au and log into your account, tap on 'statements' and choose 'create report'. 

When you have multiple sources of income, stay organised by keeping track of:

• PAYG summaries from employers
• super or pension statements
• dividend and interest statements, and
• records of asset purchases and sales.

Having the necessary information on hand and knowing how your different retirement income streams work together to support your retirement lifestyle will keep you in control as the end of the financial year approaches.

If you would like more help with your retirement strategy, book a free consultation with our guidance team.