Changes affecting self-funded retirees

As a self-funded retiree, staying up-to-date on new tax laws or government benefits probably isn’t your highest priority!

However, we’ve seen two notable announcements in the past few months that are well worth considering for many self-funded retirees.  

These include changes to the eligibility requirements for the Commonwealth Seniors Health Card, and proposed tax changes to superannuation balances that exceed $3 million.   

Eligibility for a Seniors Health Card

Previously, self-funded retirees of a certain age could only access the Commonwealth Seniors Health Card if their income was under $57,761 for singles, $92,416 for couples, or $115,522 for couples separated by illness.

From November 2022, these thresholds increased significantly. They are now $90,000 a year for singles, $144,000 for couples, and $180,000 for couples who are separated by illness, respite care or prison. The amounts further increase for seniors who provide care for a child (or children).

This change enables thousands of self-funded retirees to access an array of benefits that were previously unavailable. Some of the benefits include relatively substantial discounts on:

• Certain prescription medication
• Doctor visits
• Health care including dental, eye care and ambulances
• Public transport
• Utility bills
• Property rates

Note that some benefits depend on the initiatives that your state or territory government has in place.

In addition, there are many businesses which provide reduced cost products and services to people who can present a Seniors Health Card.

At a time when inflation is driving up the cost of living by the day, these changes to eligibility for the Seniors Health Card could provide some much-needed relief.  

For support applying for a Seniors Health Card, simply speak with your accountant. They can help you confirm financial eligibility and whether you meet certain other conditions such as age and residency. They can also assist with the application process.    

Proposed superannuation changes

Self-funded retirees may have also heard about the proposed change to superannuation taxes. This is set to affect Australians with a superannuation balance over $3 million, for whom an additional 15% tax would apply to certain earnings.

While the change is unlikely to impact the majority of retirees, those who would be affected are already considering their options to counter the impact to their savings. Some examples include restructuring their superannuation, or planning to withdraw lump sum amounts for investments.

If you believe the change will affect you, speak with your accountant. They can assist with reviewing your financial situation ahead of time, which could make a wealth of difference if the proposed change comes into effect.

We expect to hear more on this in coming months as the government undertakes consultation with the superannuation industry and relevant stakeholders. If the change was to become law, the new tax would apply from 1 July, 2025.

Maintain regular contact with your accountant

Financial issues are probably the last thing you want to concern yourself with as a self-funded retiree.

For this reason, it’s worth maintaining a close relationship with your accountant. It’s their job to stay up-to-date on regulatory and tax changes, and they can inform you if something arises that is important for you to consider.  

They will also be able to explain how the change could or will impact you and, in most cases, assist with actions to help you achieve the best outcome (such as applying for a new Seniors Health Card on your behalf).

For more information

To chat about the Seniors Health Card or proposed superannuation changes, please contact Thiru Kandiah or get in touch with your local RSM office.