Distributing Money To Retired Parents

Quick reminder, as an adult tax resident in Australia, you will get the first $20K or so of your income tax for free, that is called the tax free threshold. If you look at distributing $20K to one person at no tax versus giving it to yourself at 39% tax, you can save under $8K per person in tax, so it can add up to a decent tax saving.

Be careful if your retired parents are receiving Centrelink, because it affects their pension if they are receiving one from Centrelink which is their old age pension. But it does not affect the pension they receive through super or their own super fund because that is not taxable if they meet those certain conditions.

We’ve done the analysis on how you should distribute to someone’s retired parents and there is no cost benefit if they lose their pension. There is so much paperwork involved when you want to know everything about your trust. If a retired parent’s Centrelink pensions come in, keep in mind that they usually need to be self-funded retirees to help you out in that instance.

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