The Australian taxation system is one of the most complex tax setups in the world, so knowing what you are entitled to and what you aren’t is very important when you reach the age of 55.
Understanding your rights with tax can be the difference between saving a couple hundred thousand dollars or more when you retire, so it is well worth your time to get professional advice and learn the ways you can minimise your tax owing on your superannuation and retirement savings.
A tax benefit that is very important to people over the age of 55 years, is that of the mature age worker tax offset and the reason this benefit is valuable is because ot reduces your tax bill directly, as opposed to just reducing your taxable income.
What is the mature age worker tax benefit?
A program created by the ATO in Australia to encourage people over the age of 55 years to work.
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Who is entitled to the mature age worker tax benefit?
This tax benefit is payable to those over the age of 55 who has recieved earned income.
What is earned income?
Earned income has been defined as any income recieved by the retiree in question who is working full time, part time, self employeed or someone running a home based business.
What do you get with this tax benefit?
The mature age worker tax offset is valued at 5 cents from every dollar you earn upto $500. The benefit begins to phase itself out at the same rate when your income goes over $53,000 with it cutting out completely at $63,000.
Under $10,000 = calculated at 5 cents per dollar from 0 – $9,999.
$10,000 – $53,000 = $500
$53,000 – $63,000 = reduced by 5 cents per dollar over $53,000.
Over $63,000 = nil
That is an extra $500 in your pocket, which if compounded annualy could steadily grow and provide a lot more money for you in your retirement. Remember, every dollar counts! Ask next time you do your tax return if you are eligible!
What are your tax tips for over 55s?
We would love to hear your thoughts on how to save money on tax when you are over 55 years of age.