Centrelink can be a testing institution for age pensioners

Q My wife is 62 and receives a disability pension of $191 a fortnight. I intend to start working part-time and will earn $860 a fortnight. We have assets of about $60,000, including a term deposit of $30,000. Can you advise how much disability pension she will receive when I start the part-time employment?

A Under Centrelink rules, the amount of income a couple earns affects the pension each can receive. As a result the amount of income you earn from your part-time job, plus the deemed income on your $30,000 term deposit, will affect your wife's pension.

Under the income test a couple can earn up to $256 a fortnight without their pension being affected. The $30,000 in the term deposit will have the deeming rates applied to it. Under the deeming rules, where one member of a couple is receiving a pension, a deeming rate of 3 per cent is applied to the first $72,000 of their joint financial assets.

In your case this will result in $35 a fortnight and the $860 being counted. For the income test, your wife will be regarded as earning $466 a fortnight. Normally this would result in a her pension decreasing by $169 a fortnight but, as she does not appear to be receiving the full pension now, it may not have this effect.

Q My grandmother is 75 and has been on a Centrelink pension since she came to Australia seven years ago. She has since saved up $25,000 from her pension and wants to open up a savings account so she can get interest. Will this affect the amount of Centrelink pension that she receives?

A Under the pension income test, Centrelink deems an amount of income that has been earned on financial investments. Cash, whether it is in a cheque account, term deposit, or even a jam jar, has the deeming rules applied to it. For a single person they would need to have more than $96,355 in financial assets before the deeming rules would affect the rate of pension they receive.

In your grandmother's case, she is well below this amount and will not be affected by either the income or the assets test.

Q My mother recently died, leaving my father her assets. He is 90 and receives a part-pension. How much in assets can he have and how much earnings can he receive before his part-pension is affected?

A A single, home-owning pensioner can have assets worth up to $181,750 without the pension being affected. Once a person exceeds this limit, their fortnightly pension is reduced by $1.50 for every $1000 of excess assets, with the pension ceasing when assets exceed $659,250.

A single, non-home-owning pensioner can have assets up to $313,250 with no effect on the pension, with the pension cutting out once their assets exceed $790,750.

A single pensioner can earn up to $146 a fortnight without their pension being affected. Above this limit, the pension is reduced by 50? in each dollar. The age pension cuts out altogether once a single pensioner's income reaches $1578.20 a fortnight.

Questions can be emailed to super@taxbiz.com.au

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