Balancing super against pension entitlements

On the one hand the reduction factor applied to income has been decreased, increasing the chances that a person will qualify for benefits.

On the other hand salary sacrificed as superannuation is now counted as income and so will affect the eligibility for benefits.

Q Next month I will turn 60 and my super payments will not be regarded as taxable income by the ATO and I won't need to include them in my tax return. My wife's income will be nil.

Will Centrelink continue to treat my super payments as income for the purpose of the Family Tax Benefit and the Low Income Health Care Card?

A The treatment of superannuation pensions by Centrelink has not changed. Although your pension will not be counted as income by the ATO, it will still be counted as income by Centrelink. If you have been receiving your super pension for some time you may get a benefit by ceasing it then starting a new one.

Centrelink does not count the total of your super pension as income, it instead includes the net amount of pension you receive after taking account of the purchase cost of the pension. This purchase cost is calculated by dividing the value of your superannuation at the time you start the pension by your life expectancy. If you started the super pension when you were 55, your life expectancy would have been greater and the deductible amount less than if you started a super pension now.

Q My husband will be 65 in March and I will be 61.5 years old. He has $440,000 in a "flexi-pension" in a super fund and will get an income stream of $11,000 after turning 65. I have $850,000 in an accumulation account in a super fund. Is my super accumulation account an asset if he applies for the aged pension? Will some of it be deemed as income if he applies for the aged pension?

A Centrelink includes the value of a person's superannuation if they are of age pension age. In your case, as you will not be eligible for the age pension until you reach 64 or 64.5, depending on your date of birth, the value of your superannuation will not affect your husband's eligibility for the pension. In addition, there will be no deemed income included for you. Had you been receiving a pension, the income would be counted under the income test and its value would have been counted as an asset.

Q I am 57, have super of $40,000 and no other income. I have heart problems and am an amputee. I want to apply for a disability pension. How will my super affect my eligibility for the pension and a health care card?

A As you are not of pension age your superannuation will not be counted as an asset and will not affect your eligibility for the disability support pension.

Q My husband has just qualified for a pension. I am 62, recently retired and looking at working for 10 weeks in a remote settlement. What is the maximum amount I can earn in that 10 weeks without my husband losing the pension? How much can I earn in a year without affecting his entitlements?

A The maximum amount of income per fortnight that you as a couple can earn is $2642.50. If you have no other income as a couple, you can receive less than the $2642.50 and your husband will still be entitled to some age pension.

Email questions to max@taxbiz.com.au

Self-Managed Superannuation Funds: A survival Guide by Max Newnham, is available in book stores.