Do pensioners need to lodge a tax return?

One of the most common questions people ask after they retire is whether they still need to lodge a tax return.

The answer depends on your income, where it comes from, and whether you've had any taxable events during the financial year. This simple checklist explains when you may not need to lodge a tax return, when you probably should, and a few important exceptions that are worth knowing about.

You may not need to lodge a tax return if:

The Age Pension is your only income.
Your income is below the ATO lodgement thresholds.
Most or all of your income comes from a tax-free superannuation pension.
You have not sold investments or made a capital gain during the year.
The ATO's lodgement rules indicate you do not need to lodge.

Even if you don't need to lodge a return, consider submitting a Non-lodgment Advice to the ATO so your records remain up to date.

You may need to lodge a tax return if:

You receive income from shares, managed funds, term deposits or investment properties.
You have sold investments and made a capital gain outside of super.
You continue to work part-time, casually or as a consultant.
You receive taxable income from certain superannuation arrangements.
You receive foreign income.
Tax has been withheld from income you received during the year.
You want to claim deductions, tax offsets or a tax refund.

What about franking credits?

Even if you don't need to lodge a tax return, you may still be entitled to a refund of franking credits from the ATO.

Many retirees receive franked dividends from Australian shares. If you are not otherwise required to lodge a tax return, you may still be entitled to claim a refund of excess franking credits from the ATO. In some situations, this can be done using the ATO's Refund of Franking Credits application rather than lodging a full tax return.

If you receive franked dividends, it is worth checking your position each year so you don't miss out on a potential refund.

Special situations

It's important to seek advice if:

You have moved into aged care.
You receive rental income from a former home.
You have sold assets during the year.
You receive income from overseas.
Your circumstances have changed significantly since last year.

Final thought

While many retirees no longer need to lodge a tax return, every situation is different. If you're unsure, speak with your FMD adviser or tax professional before deciding not to lodge a return. A quick conversation could help you avoid missing an obligation or a refund you're entitled to receive.

General advice disclaimer: This article has been prepared by FMD Financial and is intended to be a general overview of the subject matter. The information in this article is not intended to be comprehensive and should not be relied upon as such. In preparing this article we have not taken into account the individual objectives or circumstances of any person. Legal, financial and other professional advice should be sought prior to applying the information contained on this article to particular circumstances. FMD Financial, its officers and employees will not be liable for any loss or damage sustained by any person acting in reliance on the information contained on this article. FMD Group Pty Ltd ABN 99 103 115 591 trading as FMD Financial is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977. The FMD advisers are Authorised Representatives of FMD Advisory Services Pty Ltd AFSL 232977. Rev Invest Pty Ltd is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977.