How Much Can I Earn Outside of my SMSF Tax Free

Client Question : My next question is about the threshold income level at which my wife and I will start to pay personal tax in 2017-18.  I read “about $28,000” in the paper the other day for my situation (age >65), but my wife is does not turn 65 until 2018, so her level may be different.  It would be useful to know these numbers in case we decide to take some lump sums out of super because of the new limits, and invest that money tax-free and also free of SMSF red tape.

Image courtesy of Stuart Miles /

Image courtesy of Stuart Miles /

Personal Tax-free Thresholds
The amount you can earn before you have to pay tax, actually depends on your age.

Under 65

For those people under age 65, the effective tax-free threshold is currently $20,542. How do we calculate this amount? Well, if you look at the ATO’s  current Individual income tax rate table, you pay no tax on the first $18,200 you earn in a year.

However, you also get the benefit of the full low income tax offset if you earn below $37,000. That means the tax office will offset up to $445 from the tax you would normally have to pay. So you can earn another couple of thousand dollars before you have to pay tax.

How much can I earn before paying taxes after age 65

For those who have reached age pension age, they can earn even more without paying tax. If you are over 65, you get access to the Seniors and Pensioners Tax Offset (SAPTO). This reduces or eliminates the tax that would normally be liable to pay on some additional income

Using the  SAPTO benefit, the amount you can earn each year as a pensioner before having to pay tax, is:

  • $32,279 for single people,
  • $28,974 each for members of a couple or $57,948 combined.

The beauty of this benefit is that for clients in SMSF Pension phase any income drawn from a super fund income stream once over 60 is tax-free and non-assessable, meaning it doesn’t count towards the above thresholds.

Based on an earnings rate of 5% this means that a couple could have over $500,000 in each of their names and not pay any tax. But be careful as if you are investing in growth assets then triggering capital gains in the future may mean exceeding these thresholds where as within the SMSF the CGT on pension assets is NIL and 10-15% in accumulation.

Also consider the tax position if you are likely:

  • to receive an inheritance
  • large capital gain on an asset he’d outside super
  • to have one parter live significantly longer (they may end up with large amounts outside the super system)

Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one on one consultation. Just click the Schedule Now button up on the left to find the appointment options.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

SMSF Specialist Adviser 

 Follow SMSFCoach on Twitter Liam Shorte on Linkedin NextGen Wealth on Facebook   

Verante Financial Planning

Tel: 02 98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

Leave a comment


  1. Kevin Butler

     /  December 18, 2020

    I’m aged 70 and my wife 68 our combined SMSFs is in pension mode. My question is what is the tax percentage I would pay on any monies earned outside the SMSFs .


  2. Colin Daly

     /  July 28, 2019

    I think that you need to look again at the SAPTO. If one member of a couple earns say $52k and the other earns $2k then there is a tax bill for the first member who is earning more than the maximum of $28974. I know because this happens to me. Every year I have to pay over $5k in tax and medicare levy on my super from an untaxed source (State Pension Scheme). The result is that a well paid member of a couple pays more tax than a single person – bizarre isn’t it?



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