Eligibility for pension can be a twisting road
WHEN it comes to assessing eligibility for benefits, Centrelink does not just take what a person earns for income tax purposes. In some cases certain types of taxable income are ignored and Centrelink instead calculates the amount of income it will assess.
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WHEN it comes to assessing eligibility for benefits, Centrelink does not just take what a person earns for income tax purposes. In some cases certain types of taxable income are ignored and Centrelink instead calculates the amount of income it will assess.Q What income figure should be given to Centrelink? As I have invested in shares and an investment property is it the total income earned in the year or the amount shown on my tax return with deductions?A Under the deeming rules the actual amount of income earned from financial assets is ignored by Centrelink and a deemed income is used to assess eligibility for benefits. Shares in listed companies are regarded as financial assets so you do not need to advise Centrelink of the actual dividends you earn.Where a rental property makes a taxable profit this will be counted as income. If a rental property makes a loss this is ignored and cannot be used to reduce the overall income earned.Q I am a 54-year-old woman earning $40,000 a year and have $50,000 in super. I own a home and have $20,000 in the bank and own a car. How much can I have in super and still be eligible for the age pension? I know I will have to work until I'm 57 before I can get the pension.A As you are 54 now it would appear that you were born after January 1, 1957. This means you will not be eligible for the age pension until you turn 67. The asset limits at which the full age pension is received are $186,750 for a single person and $265,000 for couples. Assuming a value for your car of $10,000, and combining this with $20,000 in the bank, as a single person you could have up to $156,750 in superannuation and receive the full pension. For every $1,000 in excess of the limit, the pension received reduces by $1.50 a fortnight. Entitlement to the age pension for a single person ceases when assets reach $673,000.Q We are non-home owners with $50,000 in assets being a car and contents.I am 66 and my wife turns 65 soon. I am a bit confused about Centrelink's assets and income test.In addition to my super balance of $140,000, I have a transition-to-retirement pension worth $330,000 and my wife has super of $64,000.When I retire, if I put all of what I have into super can I withdraw any amount tax free?Other than the deeming rate, would the amount I withdraw be counted as income?A The rules relating to pensions received from super funds are different for income tax purposes and Centrelink pension assessment.Once a person turns 60 a superannuation pension paid by taxable super funds is tax free.Once a person is eligible to receive the age pension, and if they are not receiving a pension from their superannuation fund, the deeming rules are applied to the value of their superannuation to assess how much they will receive.Questions can be emailed to super@taxbiz.com.au
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