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The government has exempted income support recipients, such as those on the Age Pension and JobSeeker, from the 30 per cent minimum CGT tax. \u00b7 Source: AAP\/Getty <\/p>\n The government has exempted income support recipients, such as those on the Age Pension and JobSeeker, from the 30 per cent minimum CGT tax. \u00b7 Source: AAP\/Getty <\/p>\n
New capital gains tax rules<\/a> are expected to spark an increase in Aussie seniors seeking out a part-age pension from Centrelink. Age pension recipients<\/a> will be exempt from the new minimum 30 per cent CGT rate, meaning even those who receive just $1 worth of benefits could avoid the new tax hike.<\/p>\n The 30 per cent minimum tax rate<\/a> will apply to real capital gains accruing from July 1, 2027. This is designed to stop taxpayers from selling assets at a time when their income and marginal tax rates are low. It will also mean low income earners who happen to realise a capital gain will also be paying much more tax.<\/p>\n But the government has included an exemption for income support recipients<\/a> as a way to ensure the most vulnerable on low income and with low wealth aren\u2019t disadvantaged.<\/p>\n RELATED<\/p>\n \u201cThe minimum tax reduces the incentive to defer realising capital gains until marginal tax rates are low, and better aligns the tax rate on gains with the tax rates paid by most workers,\u201d Treasurer Jim Chalmers said.<\/p>\n \u201cRecipients of certain government payments, such as the Age Pension and JobSeeker, will be exempted from the minimum tax.\u201d<\/p>\n Income support recipients would be taxed on any capital gain at their marginal tax rate after the new inflation-adjusted CGT discount is taken into account, but they would avoid the 30 per cent minimum CGT tax.<\/p>\n Do you have a story to share? Contact tamika.seeto@yahooinc.com<\/a><\/p>\n Millions of Aussies able to avoid tax hit <\/p>\n Around 2.67 million Aussies receive the age pension<\/a>, which represents about 63 per cent of all Aussies over the age of 67. But about 860,000 are part-pensioners, according to Department of Social Services data.<\/p>\n To qualify for the age pension, you need to be 67, an Australian resident and pass income and asset tests.<\/p>\n The income cut-off point is $2,619.80 per fortnight for singles and $4,000.80 per fortnight for couples.<\/p>\n For assets, the cut-off point is $722,000 for single homeowners and $1,085,000 for couple homeowners. For non-homeowners, it is $980,000 for singles and $1,343,000 for couples.<\/p>\n Importantly, the family home is not counted in the assets test.<\/p>\n Part pensions set to become more popular <\/p>\n Financial advisers expect Aussies to increasingly consider pension strategies to help them reduce their tax following the changes.<\/p>\n Perks Private Wealth adviser Emma Burckhardt said advisers won\u2019t chase the age pension at the expense of long-term wealth, but would look more closely for clients near the borderline.<\/p>\n \u201cThe policy creates a sharp divide with self-funded retirees facing a minimum 30 per cent tax on capital gains regardless of their marginal rate, while age pension recipients are exempted from the minimum tax,\u201d she told The Australian<\/a>.<\/p>\n Findex adviser Jonathan Scholes said the devil would be in the details, but it was a \u201cgood carve-out for Boomers\u201d.<\/p>\n \u201cThat\u2019s going to be a big thing. Particularly if you\u2019ve got a large capital gain, to try and get into the system to avoid that tax for a couple of years might be advantageous,\u201d he told The Australian Financial Review<\/a>.<\/p>\n Those who qualify for a part-age pension can also access the pensioner concession card, which can provide cheaper health care, medicines and some discounts.<\/p>\n Get the latest Yahoo Finance news – follow us on Facebook<\/a>, LinkedIn<\/a> and Instagram<\/a>.<\/p>\n