Hi
I have recently started a PSS pension at age 59.
My question relates to how the taxable untaxed component is handled when I turn 60.
Example:
Taxable Untaxed - $1090.00/Fortnight ($28K/year)
From my understanding of the formula, the 10% offset will be $109/fortnight.
The ATO Simple tax calculator says I should pay $74/fortnight on the taxable untaxed component (Before applying the offset).
Applying the offset to the taxable untaxed component gives: $74 (tax) minus $109 (Offset) = Negative $35 tax payable.
So, the outcome is NO TAX on the taxable untaxed component.
Now to my question:
Is the $28K/year (taxable untaxed component) added to my assessable income with other (out-of-super) investment income?
My feeling is that it shouldn't be included in assessable income.
The 10% offset has negated the tax, therefore out-of-super investment income should be dealt with separately.
If the $28K is included in assessable income it effectively means the "outside of super investment income" is added on top of the tax-free (after offset) PSS pension.
This pushes investment income to a higher tax rate.
Follow-up Medicare levy question:
The PSS Documentation states:
"Please note the Medicare levy is applied where tax is deducted at your marginal tax rate".
I interpret this to mean that the Medicare levy does not apply to the taxable untaxed component in my case because there is no tax payable.
I'm interested to hear if anyone knows of this.
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