I’m 67 and working part-time. Should I start drawing on my super?

I am 67 and work part-time as an emergency teacher. A colleague of mine, who like me is with AustralianSuper and also works part-time, has recently moved most of his super into a pension account. He is encouraging me to do the same, saying it will save tax on the income earned on my super, which I have not yet touched and is still in the accumulation phase. Could you explain the ins and outs of this strategy?

Every investment decision has advantages and disadvantages. If you leave your money in accumulation mode, earnings will be effectively taxed at 15 per cent within the fund, but there is no requirement to draw any money out of it.

If you move it to pension mode, the earnings will be entirely tax-free, and the income you draw from it will be tax-free. The disadvantage is you must draw a minimal annual pension, which increases as you get older – for somebody aged 67 to 74, the minimum drawdown rate is 5 per cent.

Unless you have substantial income in your own name outside super, I see no disadvantage in moving to pension mode.

I will have a super balance of more than $3 million at June 30, 2026, and I am trying to understand how the proposed additional 15 per cent tax will apply. To avoid this extra tax, when would it be best to reduce my balance below $3 million – by this June 30 or by June 30, 2027?

If the relevant date is June 30, 2027, I am unclear why, given that the new tax will apply to earnings on amounts above $3 million during the year, as those earnings would accrue throughout the year even if the balance is reduced before June 30, 2027. Could you clarify how the timing works?

For Centrelink, your superannuation balance and other financial investments such as shares and cash in the bank are given a deemed income.

Mindy Ding of the Entireti Technical team says you are correct that from July 1, 2026, a new, additional 15 per cent tax will apply to a portion of earnings attributable to super balances above $3 million.

Ordinarily, this new Division 296 tax will apply if your super balance is greater than $3 million at either the start or the end of a financial year. However, there is some good news for the first year of operation.

If your super balance is below $3 million at the end of the 2026/27 financial year (i.e. on June 30, 2027), then you will not be liable for this new tax, even if your balance at the start of the year was above $3 million. This applies to the 2026/27 year only.

This means that if you are considering reducing your super balance to avoid the new tax, you effectively have until June 30, 2027, to do so. However, it is critical to seek financial advice before taking any action as it is a decision that would be extremely difficult to reverse.

Is the allocated pension I receive each month from my super fund included in the Centrelink income test? My assets consist of my superannuation (from which I draw the allocated pension), bank accounts, a car and household effects. I understand that deemed income from my super balance is already assessed – does the pension payment itself also count as income?

For the Centrelink income test, your superannuation balance and other financial investments such as shares and cash in the bank are given a deemed income. The pension payments you draw from your account-based pension are ignored.

Note that the more assets you have, the more likely it is that the asset test will be the test that determines your age pension payment, rather than the income test. For taxation purposes, your age pension is taxable income.

I am 66, still working part-time and earning about $60,000 a year, with about $370,000 in super. My wife is 62, retired and currently has no super as her previous balance was used to pay off loans when she closed her account two years ago. We jointly own four investment flats worth about $1.8 million and are considering selling them progressively, with expected taxable capital gains of about $120,000 to $140,000 after the CGT discount on the first two sales.

My myGov account shows about $80,000 in unused concessional cap and confirms I can bring forward three years of non-concessional contributions. However, my wife’s myGov shows no information, presumably because she no longer has a super account. What is the best way for us to contribute the sale proceeds into super, particularly for my wife, and are there any restrictions, given she is no longer working?

I assume the main purpose of making the superannuation concessional contributions is to minimise your CGT. To be eligible for catch-up contributions, your superannuation balance at the previous June 30 must be under $500,000, and you both qualify for this.

You are both under 67, so no work test is required. You also need to keep in mind that the appropriate date for CGT is the date the contract is signed, not the date of settlement, and your concessional contributions must be made in the same year as the effective sale date of the property.

You have $80,000 in unused concessional contributions, and your wife should be able to contribute $170,500, which includes the $30,000 allowed in this financial year.

You may need to sell the properties progressively to minimise your CGT, which means it may be necessary for you to pass the work test to make a contribution after you turn 67. You should get expert advice because getting this wrong could be very costly.

Noel Whittaker is author of Retirement Made Simple and other books on personal finance. Questions to: noel@noelwhittaker.com.au

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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