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How much to give?

Know the rules about the age pension, writes Max Newnham.

Know the rules about the age pension, writes Max Newnham.

CHRISTMAS is a time of giving. The problem is if you receive the age pension, giving too much can get you into trouble with Centrelink. To ensure people do not maximise their eligibility for a pension, limits have been placed on how much can be given away.

A single person or couple cannot give away more than $10,000 in cash and assets in a year. In addition, they can also not give more than $30,000 over a five-year period. When these limits are exceeded the value of the gift is counted under both the assets and the income test.

QI am 80 years of age and receive a pension. I recently sold my home and moved into a retirement village and have $200,000 in the bank. Rather than waiting till I die I'd like to help my four children by giving them $25,000 each. What effect will this have on my pension?

AIf you gave away the $100,000 in one year $90,000 would still be counted as an asset and the deeming rules would be applied to this amount. When this $90,000 is combined with your remaining $100,000 you would be deemed to be earning $303 a fortnight. This would result in a reduction in your age pension of about $77 a fortnight.

QHow will Centrelink treat my super payments after I turn 60 when they assess our eligibility for a Health Care Card?

AEligibility for the low-income healthcare card is based on a person's adjusted taxable income. Where that income includes a pension from a super fund the amount received is reduced by its purchase cost. This is calculated by dividing the value of your superannuation by your life expectancy at the time you started the pension.

QI am 58, retired, and have a fortnightly net super payment of $1120. My husband is 62 and plans to work until 65. We still have a $500,000 home loan. What can we do to work towards being eligible for the age pension?

AIn general terms, because superannuation is counted as an asset and a home loan is not taken into account, it makes sense to use your superannuation at some point to pay off the home loan to maximise your eligibility for the age pension. You should, however, seek professional advice first.

QI have an SMSF with two members. I am of age-pension age and drawing an allocated pension and my wife is not yet of age-pension age but is also drawing an allocated pension. Under the assets test does Centrelink ignore all of my wife's money in the fund when assessing my eligibility for a pension?

AUnder the assets test all of an individual's or couple's assets are counted, with two exceptions. The first and biggest is the exemption granted to the value of a person's home that is not included as an asset. The second is the value of a person's superannuation when they are under age-pension age and not receiving a pension from the fund. This will mean if your wife continues to receive a pension from the fund the value of her superannuation will be counted. Your eligibility for the age pension could be increased by her ceasing the pension, you taking a lump sum and your wife contributing this is a non-concessional contribution. Any shortfall in income could be made up by your wife taking lump sum super payments.

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