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jimbo79(Initiate)Initiate
8 Jan 2024

Hi l am on the disability pension thats my only income and l dont pay tax . l plan to move house, sell my house and buy another house with the money. The house is worth approx 750K.l plan to rent for a year while l look for a house to buy and the $750K will be in my bank account for the year earning interest, Centrelink says the $750K l will get from the sale of my home will be considered an exempt assett for up to a year because l plan to use the money to buy another home also the interest will be deemed by centrelink at at a rate of 0.25%. My question is do l need to pay tax on the interest l will earn for the year from the $750K?

33,968 views
3 replies
33,968 views
3 replies

Most helpful response

Most helpful reply

YEP(Devotee)Devotee
8 Jan 2024

@jimbo79


First of all a disability support pension is assessable once you are of pensionable age.


You would only need to pay tax if your taxable income is more than the tax-free threshold. The tax free threshold is HERE


Your taxable income is all of your assessable income less all allowable deductions.


In your case your assessable income would include the interest earnt and your disability pension (if taxable).


All of the interest that you actually earn on your invested funds is assessable and will be used to determine your taxable income.

The deeming rate does not have anything to do with the interest you actually earn.


Please keep in mind that all financial institutions automatically report interest earned on investments to the ATO, as well as taxable pensions so at the end of a financial year the ATO will know all of this before you lodge your income tax return.

All replies

Most helpful reply

YEP(Devotee)Devotee
8 Jan 2024

@jimbo79


First of all a disability support pension is assessable once you are of pensionable age.


You would only need to pay tax if your taxable income is more than the tax-free threshold. The tax free threshold is HERE


Your taxable income is all of your assessable income less all allowable deductions.


In your case your assessable income would include the interest earnt and your disability pension (if taxable).


All of the interest that you actually earn on your invested funds is assessable and will be used to determine your taxable income.

The deeming rate does not have anything to do with the interest you actually earn.


Please keep in mind that all financial institutions automatically report interest earned on investments to the ATO, as well as taxable pensions so at the end of a financial year the ATO will know all of this before you lodge your income tax return.

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