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Tax time is here!

It is time to keep the taxman happy again. Are you aware of your tax issues – and changes to tax law – in retirement?

Tax time needn’t be stressful for retirees, after all you have paid tax all your life! But depending on your circumstances there are some areas that you need to keep an eye on.

If you are worried about how potential tax changes may impact your retirement income? You could restore calm by looking for ways to reduce your spending. Another alternative is to review your tax planning in retirement. And you need to make sure that you are aware of any government policy changes that might affect you.

But before you do anything you have to make sure you get the right advice and that is where a financial planner comes in. RetireInvest is a PSPL sponsor and a good place to start for retirement tax advice.

With that in mind, here are some areas you might want to take a look at:

You may have used tax-effective methods to build your retirement savings. For instance, by salary sacrificing or making spouse contributions into superannuation.

It’s equally important to consider tax implications when you are deciding what to do with your superannuation in your post-retirement years.

When your money stays in your super fund, investment earnings are taxed at up to 15 per cent. This may be more than the tax that you’ll be charged if you invest in a retirement income stream product. But make sure you get advice on which product might be suitable for you.

You can transfer your super into a ‘retirement phase’ account within your super fund; with another super fund; or with a life insurance company.

The benefit of keeping your money in the super system in an income stream product is that your investment earnings are tax-free and for most people over 60, income payments are also tax-free. But talk to a planner to make sure you qualify as tax-free before making any changes.

While paying off the house or buying a new car or taking a holiday may be in your sights, if you withdraw super as cash and use it to invest outside super you will have to pay tax on any investment earnings. This is a big move and one that will require professional advice.

Don’t forget, too, you may be eligible for tax offsets.

If you have reached age pension age you may be eligible for the seniors and pensioners tax offset. If eligible you can earn more money before paying tax or the Medicare levy. According to the Australian Tax Office, in some situations any unused offset amounts may be transferred between spouses.

If you have income from an Australian superannuation income stream you may be entitled to a tax offset if you are either receiving a disability superannuation benefit or death benefit income stream.

This article is intended only as a guide, as individual circumstances vary greatly. Probus South Pacific Limited (ABN 152 374 395) does not hold an Australian Financial Services Licence and cannot provide recommendations or advice. It is the responsibility of each Probus member to make sufficient enquiries to determine if the advice above meets your financial needs.