WEALTH SOLUTIONS: Andrew Heaven.
WEALTH SOLUTIONS: Andrew Heaven.

FINANCE: Learn about the Age Pension tax offset

I HAVE been retired now for nearly 20 years and widowed. I receive the Age Pension and dividends from a small share portfolio. Do I have to lodge a tax return? I don't generate sufficient income to pay tax. I have previously lodged tax returns via an accountant to get a refund on the franking credits on my share portfolio. Is there a simpler way?

Andrew Heaven, an AMP financial planner at WealthPartners Financial Solutions, answers a question on Age Pension tax offset.

Answer:

Retirees who are eligible for the Seniors and Age Pensioners Tax offset and have rebatable income of less than $32,279 as a single (or $28,974 each if a member of a couple) are not obliged to lodge an annual tax return provided they meet these criteria and do not have the following circumstances.

You would be obliged to continue to submit annual tax returns if any of the following circumstances apply:

You receive income as a Pay-as-You-go- employee where tax was withheld. You received reportable Fringe Benefits in the financial year. You carried on a business as a self-employed person. You received a distribution from a trust. You received income from foreign employment, investments or pensions. You have not claimed your Private Health Insurance Rebate and wish to do so. You wish to claim tax deductions for donations or eligible expenses. You have made a capital gain in the current year or a loss in this year or earlier years that you wish to claim. You own foreign assets worth more than $50,000 Australian.

Other criteria requiring a tax return to be lodged would be if you made a personal contribution to superannuation and you are entitled to claim a tax deduction or receive the government co-contribution (for those under 71). If you have received an Australian superannuation lump sum where there was an untaxed component or you received a lump sum death benefit paid to you as a non-dependent.

Assuming that you do not fall into the above category and your income falls within the SAPTO limits, then you would not need to lodge a tax return.

Dividends paid to shareholders by Australian resident companies are taxed under a system known as imputation. This is where the tax the company pays is imputed to the shareholders. The tax paid by the company is allocated to shareholders as franking credits attached to the dividends they receive, typically the tax credit is 30%.

If you are not required to lodge a tax return, you can claim a refund of the franking credits by lodging an application for a refund of franking credits for individuals with the ATO.

You can lodge the form online, via www.my.gov.au, complete a paper form and submit the records over the phone or via post direct to the ATO in your capital city. Applications forms for the 2017 tax year will be available after June 30.

Processing of the refund typically takes two weeks for online or telephone claims. Paper based applications will take up to 50 days to process. Visit www.ato.gov.au for further information or contact the ATO on 132865.

Q&A with The Coach story first appeared on the WealthParners website. Any general advice in this story doesn't take account of your personal objectives, financial situation and needs. For more information from Wealth Partners, go to www.wealthpartners.net.au.


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