Centrelink rules in action
An easy win
We don’t know what we don’t know. And this can seem really unfair if we miss out on something purely because we had no idea it was available.
This can happen if Centrelink counts your land as an asset, but there is the possibility that it should be exempt. This was the case with Lorraine and Sam who contacted Retirement Essentials to check their options.
Sam has just reached Age Pension age, so his super will now be assessable. They were concerned about the negative effect this could have on their income.
Lorraine is older than Sam and already on an Age Pension. She currently receives a full Age Pension entitlement as they just scrape under the asset test threshold with existing assets, but Sam has $350,000 in an accumulation superannuation fund which will now be assessed. They reached out because they want to understand the impact to their situation now that Sam’s super is assessable. Lorraine doesn’t have much super. Most of their assessable assets come from $370,000 asset value in the land surrounding their home. They live in a house on 10 hectares of land and because they own horses, downsizing is not an option for them.
Retirement Essentials’ adviser, Nicole, asked how long they had been there, as they mentioned that a few of their paddocks were used for agistment of neighbour’s animals. She was able to identify that they qualify under a rule where, if you’ve been on a property for 20 years and are using any part of it to produce an income, then you can get the land exempted. When Lorraine applied for this exemption four years ago, they had only been there for 18 years and so they did not qualify. But now, as they’ve been there over 20 years, they are able to apply to have the land asset reviewed for exemption.
So, even though Sam’s super is now assessable, they have been able to get the land asset of $370,000 exempted and they will both receive a full Age Pension going forward. They would have been approximately $350,000 over the lower asset test threshold, but because of the change they are receiving $1,050 per fortnight more Age Pension than they would have if they hadn’t asked us to check their options.
The lesson in this situation is that knowing the rules and asking Centrelink to review your entitlements is an important part of ensuring you receive your maximum payments.
And one more thing.
Having the land ‘used for income’ doesn’t mean that the land has to be actively farmed. It can be a very limited operation, even running at a loss (for example occasionally breeding horses, or have people pay to store caravans in the lower paddock, etc.). If it’s particularly scrubby or unusable you can actually apply to have it classed as ‘having little or no scope to earn income from the land.’ Note that with this last point you still need to satisfy the 20-year rule first or the land will still be viewed as an asset.
Obviously double checking on detail was a profitable exercise for Lorraine and Sam.
Now they have a much better understanding of their asset position and what Centrelink is looking at in their particular circumstances. Knowing the rules has resulted in an easy win.
If you have a niggling doubt that perhaps there is more to your situation that could result in higher benefits, talking with one of our advisers will allow you to uncover all the rules that may work in your favour.