Changes to the Assets Test for Centrelink Age Pensions from 1 January 2017
13 December 2016
Beginning 1 January 2017, changes announced in the Federal Budget regarding the Assets Test for the Age Pension will come into effect.
Who do these measures apply to?
If you are over 65 and in receipt of a full or part Age Pension, then you need to be aware that for every $1,000 owned above the assets test free amount your pension will be reduced by $3 (this was previously reduced by $1.50 for every $1,000).
The thresholds that apply are dependent on whether you are single or a couple, own your own home or not, and are either in receipt of a full or part pension.
Source: Colonial First State
As per the above table, for those on full pensions and are single homeowners, the pension starts reducing when assets reach $250,000. For couples it is when their assets reach $375,000. For non-homeowners, it is $450,000 for a single and $575,000 for a couple.
For single homeowners, the pension cuts out when assets exceed $542,500 and for a couple it stops when assets exceed $816,000.
For non-homeowners who are single the pension ceases when assets exceed $742,500 and for couples, when assets exceed $1,016,000.
What assets are included in the threshold?
The market value of most of your assets is taken into account when calculating your Age Pension. This includes, but is not limited to, things such as:
• Property (excluding your principal place of residence i.e. your home)
• Motor vehicles, boats and caravans
• Financial investments
• Superannuation if you’re over Age Pension age
• Business assets
Commonwealth Seniors Health Care Card
For those pensioners who lose their Age Pension entitlement in full on 1 January 2017, all is not lost! You should be issued with a Commonwealth Seniors Health Care Card and this card is exempt from the usual income test requirements that would usually be applied.
How can we help?
For some people, there will be little or no effect at all. They had always planned that they would be self-sufficient in retirement. For others, these changes may have a detrimental effect on their retirement income, and will require some consideration.
If you are concerned that the Government’s changes to the Age Pension are going to affect you, please contact your local Boyce accountant or advisor so we can discuss your particular requirements in more detail.