Amanda Hardy Lai

Amanda has worked in the financial services industry since 1998 and has been providing financial advice since 2006. Her career has been driven by a commitment to ensuring the highest standards of financial advice and client care. To book a consultation with Amanda click here.
Tax and the Age Pension: When to lodge, or skip

Tax and the Age Pension: When to lodge, or skip

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Navigating tax obligations can be tricky, especially for retirees relying on the Age Pension. While many assume they’re exempt from lodging tax returns, certain situations may require action. This article highlights real questions asked by our members – and the practical answers that help avoid surprises.

Is the Age Pension taxable?

Yes, the Age Pension counts as taxable income. However, if it’s your only source of income and no tax has been withheld from it, you generally don’t need to lodge a return.

Most retirees avoid paying tax because their total income falls under the tax-free threshold—especially when the Seniors and Pensioners Tax Offset (SAPTO) is applied.

Can you still work and get the Age Pension?

Can you still work and get the Age Pension?

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Retirement isn’t always a full stop to earning income. Plenty of older Australians keep working — some for financial reasons, others for social connection, personal fulfilment, or simply because they enjoy it.

But how does paid work affect the Age Pension? That’s where things can get confusing. The current system is often criticised for being complex and, at times, discouraging older people from staying in the workforce.

Government reports have recognised both the opportunities and the barriers to this employment. The 2023 Intergenerational Report highlights that older Australians are healthier, living longer, and increasingly participating in paid work. Meanwhile, the 2021 Retirement Income Review acknowledged that the complexity of Age Pension settings and frequent policy changes can create uncertainty and erode confidence in working and contributing to the superannuation system.

Advocates such as the Actuaries Institute and National Seniors Australia have called for simpler rules — or even a universal pension. But if and until that happens, it’s worth understanding how the system currently works, especially if you’re considering earning some extra income.

Are you ready to apply for the Age Pension?

Are you ready to apply for the Age Pension?

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Applying for the Age Pension can feel like a big step. Even if you’re confident that you meet the eligibility rules, the process can be time-consuming and confusing. Small mistakes – like missing documents or misunderstood rules – can result in frustrating delays or even a knockback that could have been avoided.

Some people sail through. 

Eveyln told us ‘My dealings with Centrelink have been amazing so far…the process was not as cumbersome as I was led to believe.’ Matthew had a similar experience: ‘Quick and easy process…my pension was approved in a month, noting ‘it helps if your financial situation is not too complicated.’’ Greg applied online and was approved in seven weeks, describing the process as ‘fairly simple’.

But not everyone finds it that smooth and straightforward. 

Keith and Rosemary were still waiting months after applying – frustrated by unclear timelines, long call centre queues, and requests for information that seemed never-ending. Rosemary wrote: ‘Six months of waiting…missing out on lower doctor and chemist fees.’ 

And it’s not just Age Pension applicants who run into challenges. Angus, who recently applied for the Commonwealth Seniors Health Card (CSHC), was similarly overwhelmed:  ‘The details required were far too complex. I bet many people give up during their application.’

While the CSHC has different eligibility rules to the Age Pension, Angus’s comments highlight a common challenge – navigating an unfamiliar and often overburdened system. For many people, this might be their first (and only) time applying for government support ever, so what are your chances of knowing how to get through without a hitch on the first go?

To give you an idea of what’s involved, this checklist outlines the key steps and documents that most applicants will need. It’s designed to help you:

Check if you’re on the right track – whether you’re applying now or planning ahead for Age Pension eligibility. 

Stay organised during the process

Troubleshoot delays or issues after you’ve applied