Seven rules explained
If it’s true that a picture is worth 1000 words when it comes to understanding, then our plain English answers to our member’s Centrelink questions also comes very close.
In the past few weeks the very knowledgeable Steven Sadler (who heads up the Retirement Essentials Customer Service Team) has helped many of our members to understand their rights and obligations. In some cases, they’ve been able to claim further entitlements. Our members are always keen to know more about what to expect from Centrelink, how the rules might be interpreted and the ways they can reap higher entitlements by making small adjustments to their money management.
This week we’ve selected seven of the most common questions Steven was asked last month, and today we are sharing them in a Q&A format. Read on to learn how our members were assisted to navigate the somewhat confusing Centrelink rules.
How gifting works:
Can I appeal the ruling?
Jim: Centrelink’s so called ‘gifting’ being added to assets is an extremely complex, difficult and inhumane matter.
Is there a genuine appeal process? Does the department or the Minister have discretion in cases where ‘gifting’ is arguably not done to unreasonably qualify for the assets/income tests?
Steven: Hi Jim, thanks for seeking clarity on how gifting works. Technically, yes, there are some scenarios where gifting can be appealed however it is very limited. For example if you have literally no other assets or income to live off and the gifting is the only asset being counted against you, then you can try to appeal it however even then there are hoops to be jumped through. If you explain your situation to Centrelink the staff will clarify whether the gifting can be exempt or not, you do not need to escalate the matter or get your local MP involved. Read more about gifting here.
Income from work:
At what point could I lose my pension?
Geoff: I am currently receiving a part Age Pension. How much am I allowed to earn from part-time work each fortnight before I do not qualify for my part Age Pension.
Steven: If you are single then you can earn up to $2,155 per fortnight but if you are in a relationship then you and your partner’s combined income needs to be less than $3,298 per fortnight. Always remember though, the deemed income from you and your partner’s (if applicable) financial assets is included in your total income assessment, not just employment income. Read our most recent updates on deeming here.
My Age Pension application:
How long should it take?
Jennifer: I submitted my complete Age Pension documentation on 9 March and have still not received any information from Centrelink. How long should this take?
Steven: Hi Jennifer, as you didn’t lodge your claim using our service, we cannot comment on the progress of your application specifically. However if everything was submitted correctly on 9 March, then you definitely should have heard from Centrelink by now. I recommend you call the Age Pension line on 132 300 as soon as is convenient for you.
My asset ruling:
Should I have been knocked back?
Judith: I applied for the Age Pension but it was declined because I gifted three lots of $10,000 to my nieces and nephew when I sold an investment property 10 months before I applied for the Age Pension. I was told this $30,000 would be counted as part of my financial assets for the next three years. Is this correct?
Steven: Hi Judith, you are correct regarding your gift impacting your Age Pension. We actually wrote a separate article clarifying the gifting rules that you can read here.
Changes in income and assets:
Do I have to advise?
Dee: If my bank account savings, super and shares have all decreased since I first applied for a part Age Pension, do have to lodge a new claim, or just send them all of the up-to-date information?
Steven: Hi Dee, thanks for joining the conversation! Yes, you should provide Centrelink with updated statements for each of your assets so that the values can be updated and your pension recalculated.
Making an application:
Can I just talk to someone instead of applying online?
Trevor: Is it possible to actually make an appointment to discuss applying for the Aged Pension rather than the online Centrelink procedures?
Steven: Hi Trevor, thanks for seeking clarity. If you wish to book an appointment with Centrelink then, from our experience, this is not possible. If you visit your local branch, they will likely sit you down at one of their computers to complete the online application yourself. Here at Retirement Essentials we do offer Phone Applications whereby you can book in a day/time for us to call you and we will go through the application with you. There are fees involved to use our service as we are a private company. We will send you an email separate to this comment with further details for you to consider or you can book a consultation.
Backdated Age Pension income:
How is this applied?
Hugo: I am presently applying for the Age Pension and have been told numerous times that my pension will be backdated to the date I applied. Is this true or false?
Every time I submit details I have to chase them as it just sits in the system !!!
Steven: Hi Hugo, this is a good question to ask, as the answer is not as straightforward as you would think. If you lodged your claim via physical forms handed in over the counter then you are correct that once you claim is approved, you will be back paid to that original date the forms were handed over, as if you were approved on Day One. This is regardless of the time it takes Centrelink to approve your claim or if you need time to collate your supporting documents after handing the initial forms in.
It works a little differently if you lodged your claim digitally via your online Centrelink account. If you lodge your claim online you must also provide all necessary supporting documents with the claim itself before Centrelink considers it “lodged” and your backpay starts.
Please keep your questions and comments coming in. We love to hear from you and try to publish and answer a good selection every week.
Best wishes
The team at Retirement Essentials
I wish to check entitlements
Hi Barry, there are a number of different ways we can help you depending on your needs. We will send you an email separate to this comment with the different services we offer.
My husband and I receive a part pension from Centrelink. We also have income from a UK pension paid quarterly in pounds sterling, and from my sole trader micro business (with an unpredictable revenue). As a result, our bank savings account amount can fluctuate regularly and considerably, both up as well as down. What amount of balance fluctuation would make it necessary for me to report it online to Centrelink? $2000? $5000?
Hi Rose, this is a great question that comes up often! Centrelink’s position is:
“It is optional to notify us of a small change to your:
Car, boat, real estate or personal effects of $1,000 or less.
Shares, investments, bank balances or loan of $2,000 or less.”
So technically any variation +/- $2,000 in your bank accounts should be reported however a certain amount of common sense should be applied. If you are up $5,000 this week due to revenue from your sole tradership BUT about to have $4,000 worth of bills come out next week, ultimately the net change is only +$1,000 so I wouldn’t go through the hassle of updating either event despite both of them technically being large enough to report.
Hi, I’m on a full aged pension, do I need to keep centrelink up dated with my bank savings an super accounts, if they are not increasing.
Jen.
Hi Mx J Peck, thanks for your question. If there are no changes to your balances then there is no obligation to update Centrelink. Having said that the data Centrelink has for you could be a year or more old so it might be worth requesting an Income and Asset Summary from Centrelink so you can see what values they have on file for you vs what the truth is today.
Dear Steve,
Thank you for your work. Retirement Essentials is a superb company, as it is so helpful, practical and so full of knowledge and wise advice.
A question… as my house could be miraculously paid off soon. If that happens and I became a home-owner (with a house worth about $700 000AUD), could I still receive a full pension?
May the Lord bless you and keep you and yours…
Gratefully,
Marshall
Hi Marshall, thank you for your very kind feedback. As a home owner the house you live in is NOT counted in your assets test so you do not need to worry about it’s value impacting the amount of pension you receive.
hi i have sold an investment properyy with a capital gain this financial year. i an 75 and my partner is 69 we intend to apply for the age pension next financial year. how will my calital gain effect the spplication.
regards Dee
Hi Deirdre, congrats on the profit from selling your property! When you apply for the Age Pension Centrelink assess your position as of the day you apply moving forward. Therefore the only impact the profit from your sale has is that the money is (presumably) sitting in your bank account. The fact that the money was a capital gain from the sale of an investment property does not have any impact on your claim. As such, you may not have to wait until the new financial year to apply, you may be eligible now! I recommend you use our free, online calculator HERE to check if your are already eligible
Centerlink reduced my pension 3 times after 11 on the pension without any reduction.
On the top of this they created a debt ( ROBDEBT)
Without any answer or explanation.
Complaint many times , sent a written form about the explanation about all those deductions
No answer received.
Contacted the Ombudsman man for an investigation 3 months already no answer from that agency either.
What can be done?
Looking forward
Hi, I’m on a part aged pension. My question is re – gifting. If I withdrew say $20k from my bank account and give it in cash to my son. Would Centrelink ask or investigate where that 20k has gone.
If ever they ask I could just say I went shopping or went gambling etc…
Any repercussions in doing this?
Cheers,
Jo
Hi Mx J Verzosa, thanks for your question! Centrelink do not have any access to your bank account so no they would not be immediately alerted to the transaction or “investigate” it so to speak. However as Centrelink are currently assessing this $20k as part of your assets, any amount you gift will be a reduction so declaring the gift actually increases your pension.
You are allowed to gift $10K per year up to a max $30K in 5 years. If you gifted $20K to your son half of it would be considered allowable for the first year afterward and the remaining $10K would only continue to be considered an asset for the 2nd year. Therefore a gift of $20K is actually a reduction in your assets of $10K in year 1 – meaning your pension would go up. Then the next year when the remaining $10K is considered allowable your pension would increase again.
Believe the answer is incorrect as centrelink sees this as shifting assets, and will review your pension income and as such they will count the earned income on that gift amount. Be cautious
Hi Mx J, thank you for keeping us honest! I can confirm that only amounts gifted in excess of the “disposal free areas” ($10K in one year and/or $30K in five) are assessable. So yes the extra $10K gifted in year one will still count as an asset and therefore have income deemed on it (even though Mx Verzosa would no longer have the money) however the $10K that you are allowed to gift is not counted as an asset nor does it have income deemed from it.
Another way of considering it is if Mx Verzosa was to gift $10K one year and then again the second year, this would effectively achieve the same pension outcome. That is, a small increase in pension year 1 and then another small increase in year 2. The key point is that you cannot gift $20K in one go and have the pension increased based on a $20K reduction.
HI Steve, We have the opportunity to live interstate for 12 months and would like to rent our house to cover the rent interstate. Any tips on how Centrelink may view this?
Hi MaryAnne, thanks for getting involved in the conversation! This is a trickier situation then you would think. The greater risk is not the amount of rent you receive, it is the fact that you are renting out your former primary residence. Centrelink will likely change how they assess you from being a home owner to a non-homeowner. This means the house you rent out will be counted as an investment property (as it is no longer your primary residence) and it’s value is added on to your existing financial assets. This could cause far more impact on the amount of pension you receive, potentially even get your pension cancelled depending on how much your house is worth. As a non-home owner you do have a higher asset threshold ($1,140,000 vs $915,500) which will help cushion the impact but it all depends how much your house is worth.
With the volatility of the share market at the moment , do I have to report my new super amount or can Centrelink see it and adjust my pension accordingly. Thanks John
Hi John, thanks for reaching out! Centrelink only get updates from your super company twice a year (March and September). If your balances are changing dramatically in between those updates then yes you would have to update Centrelink. Having said that it is not always easy to get interim statements from Super companies and you do need to be able to prove the current balance to Centrelink. Sometimes it is easier to just wait for Centrelink to get the update and do it for you.
My partner will be applying for a CSHC card on 1st
July due to the thresholds being moved. She is not eligible for a pension as I currently work full time. My question is I have been putting voluntary contributions into my super from my bank account this year. Will this money be deemed when she applies for it. Also I am thinking about retiring in 2023 sometime and are thinking about putting a considerable amount into super from bank account to lower assets to maximize pension for my partner when the time comes. Will this affect her application for pension and will this be deemed. I cant access my super until I am 60 so just wondering if it makes a difference to deeming as I cannot access this money yet. I have a few years to go before I can access this money. Cheers……..
Hey Steve, my name is also Steve, two Steves can’t make a wrong! Firstly, regarding the CSHC thresholds, the proposed increase to the threshold needs to go through Parliament before they can be brought in. As Parliament is not sitting until late July the increase will not go through on July 1 as many had hoped. It is possible the thresholds may not increase until September as this is when they would ordinarily be reviewed.
Secondly, when applying for the CSHC the only super that is deemed is account based pensions. What you have described sounds like an accumulation account. These do not come into calculation for CSHC so so you not need to be concerned about deeming or voluntary contributions when applying for the CSHC.
Lastly, when your wife applies for the Age Pension the key thing with your superannuation is whether it is in pension phase or accumulation. If you are under age pension age AND your super is in accumulation then it is exempt from the assets test. That means there is no deeming nor is the balance included in the assets test. You do need to meet BOTH criteria though, under Age Pension age AND super in accumulation. If you are of age or you start to draw down then the balance is both deemed and included in the assets test for your wife’s pension.
Hi Steve – Just a followup on this question.
If I (or the original poster) was under age pension age but over 65 and was drawing a pension from super but also had part of the super in accumulation phase how would centrelink treat that in the assets test? Would the test only look at the pension phase funds and ignore what was in accumulation or look at the combined pension and accumulation phases funds?
Hi Hilton, great to see one of our older articles still helping people out now! In the situation you have raised Centrelink would assess the pension account as an asset and apply deeming rates to it to determine income however the portion that remains in accumulation would still remain exempt, only the pension account becomes assessable.
Hi,
I have a question my husband will be coming up to retirement soon, but the time this happens we will have our house paid off and extra money in the bank which we have received through inheritance but, we want to use part of the money for fixing our house and travelling do we need to keep receipts for us to still receive the pension also, going out to clubs or dinner extra do we need to keep track on how much money we use everywhere or can we take out money anytime without any hesitation. Regards Berenice.
Hi Berenice, thanks for reaching out with a great question! It is a good idea to keep receipts/invoices for larger transactions such as renovations but not smaller things such as dinners. Having said that it is only important to keep the evidence if you plan to update Centrelink on the reduced balance of your account and get your pension recalculated. This is because if you show Centrelink that you balance has reduced by a large amount in a short period of time, they will ask for evidence where the money was spent to ensure you did not use it to buy other assets.
If you are not concerned about the pension and simply wondering if Centrelink will proactively check your accounts and/or ask questions about your spending, they will not. Centrelink only update your bank accounts as often as you give them statements.
We own a 1 acre property in Queensland. We wish to sell & purchase large acreage in Tasmania therefore becoming mortgage free. Will we loose our pension if we own over 2ha of land?
Hi Karen, sounds like exciting times ahead! Owning over 2ha of land does not instantly disqualify you from receiving any Age Pension but some of that land will be considered an asset and it’s value included in your asset test. The value of your house and the surrounding 2ha will be exempt but the value of any land outside of that radius is assessed. For example, your total 6ha property could be worth $1m however the house and surrounding 2ha may soak up $800K of that total meaning the remaining 4ha only adds on $200K to your assets.
My wife and I currently receive the Age Pension and have both commenced an Account Based Pension with our accumulation benefits in our SMSF (approx. $550k combined).
We have taken $50k out in pension payments this FY and wondering how this would impact our Age Pension? Also, would we be better advising the accountant to make some of that $50k lump sums, rather than 100% pension payments? Cheers Jon.
Hi Jon, thanks for seeking clarity. Centrelink class ABPs as assets and assess you based on the total balance available in the account. Therefore whether you take $50K in pension payments or lump sums, it ultimately makes no difference to Centrelink or your Age Pension as you will still end up in the same position of having $50K less in the account.
As you have a SMSF the onus is on you to update Centrelink on the balance as it changes. From that perspective drawing down as a pension would likely be simpler as you can give an updated member statement once each year when you do your new financials for the SMSF. If you were to drawdown via lump sums then technically you should notify Centrelink of the reduced balance after each lump sum.
Can I officially retire? What is required for officially retiring? If so can I claim the pension (or part of) as I should be eligible for the pension as I turn 66&1/2 in December 2022.
However I work part time (22.5 hrs per week and probably will do so for the foreseeable future) and my partner works 4 days per week) she is under pension age and will be for a number of years).
Thanks Guy
Hey Guy, thanks for seeking help with planning your retirement! For you and anyone else who would like to have a discussion with someone they can trust about retirement we do offer advice consultations.
Our Retirement Advice Consultations are designed to help you better understand your needs and goals in retirement and some of the actions you can consider to help you achieve those goals. The consultation can be either online or via phone call, goes for up to 45 minutes and costs $150.
CLICK HERE to book now.
My 86 year old mother receives a part pension, and income from my deceased fathers superannuation and has money invested in a managed fund portfolio. Is providing Centrelink with her annual tax return sufficient for verifying her income and calculating the amount of pension she is paid.
Cheers
Mark
Hi Mark, great work helping your mother to manager her Centrelink responsibilities! I’m sorry to say that supplying an annual tax return will not be sufficient to make sure she is getting the right amount of Age Pension. Based on the financials you mentioned she would need to provide a statement/balance sheet for the managed portfolio as Centrelink will want to know the total balance invested and the breakdown of how it is invested. Although you haven’t mentioned bank accounts I presume she has some and Centrelink have no access to these so it is best to provide bank statements as they are received. The superannuation should be updated automatically every March and September by the super fund itself.