What Centrelink can do
And what it can’t
Robodebt, or to give it its full name, The Income Compliance Program, ended nearly 5 years ago in November 2019. The scheme was designed to recover money owed to Centrelink by people who had received more in payments than they were entitled to receive. This sounds reasonable in theory unfortunately, however, it used a computer algorithm and income averaging to calculate individual debts. It also implemented a system known as reverse onus which meant that it was up to the individual to prove they didn’t have a debt rather than the Government having to prove you did have one. Thousands of people were wrongly accused of being overpaid and this caused severe distress to those people and their families as well as to Centrelink staff tasked with enforcing the system.
One of the key reasons for over payments was the relationship status of claimants. Services Australia had used password ‘crackers’ and metadata to check Centrelink users’ relationship status. It seems this was in order to determine if welfare recipients who claimed to be single were actually in a couple relationship.
Why does this matter, you may wonder?
Two singles will receive more than a couple’s payment (combined). But it is against the law to falsely claim single status.
It seems that the Centrelink’s use of phone passwords to scrutinise messages to determine relationship status was directed toward those clients it believed to be making fraudulent claims, thus triggering a criminal investigation.
Robodebt is thankfully behind us so you may well ask why am I writing about this now. Well the reason is some of our readers remain concerned at the surveillance powers of Centrelink which continue to ring alarm bells. It’s easy, as a recipient of government benefits, to feel powerless in the face of a large bureaucracy. You are not powerless. In fact, as the recent enquiry into Robo-debt revealed, ultimately Centrelink clients have rights and can exercise them. Today we explain the details of what Centrelink can do – and what it cannot.
We asked the Head of our Customer Service Team, the unflappable Steven Sadler, to share the main concerns that Retirement Essentials members have about what Centrelink might and might not do.
He nominated the following five assumptions about Centrelink and we have provided some detail on each one so you can understand what can legally occur.
Customers often assume that Centrelink:
- Accesses copies of their Australian Tax Office (ATO) records directly from the ATO
- Monitors their bank accounts in real time
- Knows all customers income and assets detail associated with private companies, trusts and Self Managed Super Funds (SMSFs)
- Delays applications in order to discourage applicants from persevering
- Can access your super fund balances
What really happens?
Your tax records
Centrelink does not access your tax records. What it can do is match data with the ATO so that if you understate income to Centrelink, then this is likely to be discovered and a ‘please explain’ sent to you. Centrelink will only do this if you have lodged a claim for them to assess.
Bank accounts
This typically only occurs in cases of suspected fraud when more detailed information will be sought, although Centrelink does from time to time randomly select people to provide additional information. This is very different to accessing your bank account balance in real time which Centrelink does not do.
Further income and asset detail
Again, because people assume that Centrelink receives copies of Tax Returns or Notices of Assessment, they think all their income and asset information has been provided. This assumption is common in the case of those who are self-employed, have an SMSF or a private company or trust, as they have submitted such information to the ATO. It has not been automatically passed across to Centrelink. Data matching with the ATO, again, may highlight any discrepancies.
‘Go-slows’ on applications
The process of checking information for an Age Pension or concession card can be very complicated. There is identity verification, residency status, earnings, assets and other aspects which all need to be checked and verified. Assuming this will take just a week or two – that the ‘machines’ will crunch the numbers – is wrong. Often applications need to be escalated as the detail is too complex for the frontline staff or call centre personnel. As with many things in life, this process is neither as quick nor as easy as it seems.
Super fund information
Super funds and life insurance companies are required to provide updated information to Centrelink twice a year (usually at indexation time in March and September). This enables Centrelink to more accurately ‘deem’ earnings on balances and to understand when amounts are in decumulation, i.e. being drawn down in an income stream. Often super funds will need to provide a Centrelink schedule for applicants to share or funds can provide directly to the agency.
The fine print at Services Australia
The main sources information provided to Services Australia comes from:
- the Australian Taxation Office (ATO)
- the Department of Employment and Workplace Relations (DEWR)
- other sources to match income information reported by people who get a payment.
What about you?
Do you have any other concerns about the provision of information?
Or eligibility?
One of the consequences of the Robo debt period is that many people ‘over declare’. They are so afraid of making a mistake that they overestimate their wealth or circumstances and end up with less than they are entitled to receive. We can help in a number of ways.
- Firstly you might want to book one of our Age Pension Consultations. These consultations cost $155 and can help answer your questions in regards to the rules, how they affect you and your entitlements.
- You can also get advice on how to maximise your entitlements.
And finally, don’t forget you can always check the Retirement Essentials Age Pension Eligibility Calculator for quick answers to hard questions. It’s free and 100% private.
thank you for this info it is very helpful
A little confused, data requires access to files so in fact data matching must indicate they look into files and sift through it human and or software orogram. Of course they are looking at your files
I live with my daughter and only buy a few groceries plus other stuff for the house . I have a mobile phone . Will
I be entitled to the Pension Supplement in addition to the Aged Pension ?
Hi Saummiya, if you are eligible for the Age Pension then yes you will automatically receive the Pension Supplement also.
Thank you for the info, I think after the robodebt debacle many are concerned about Centrelink’s competency. (With justification)
Also their lack of empathy is concerning in being willing to assist. Either from being just too busy or no care no responsibility?
My question, Hubby is 68 on half (single)/couples pension. Our assets according to Centrelink are looked at as combined because we are married which is fine. My super is still in accumulation mode so although declared to Centrelink not actually an asset against his pension at this stage. What I want to know is does Centrelink look at and want records/accountability for my spending of my super before I retire. Am I accountable to them because of his pension? Or am I only accountable once I reach retirement age?
Hi Susan, thankfully because your super is not assessable you do not have to keep Centrelink updated about it’s balance until you turn Age Pension age.
hi, how do centrelink treat the draw down monthly amount of super you take to live off. Does centrelink reduce your Aged pension on this? say you draw down 36000. say you get $19000 from aged pension combined?
Hi Marise, thankfully Centrelink do not assess your drawdowns from super as income as this would be unfair. It would be like saying that money you withdraw from an ATM is income. Centrelink assess superannuation as an asset based on the total value whether it be in accumulation or pension mode.
Hi Steven –
My super fund (Australian Super) says on its Website – that if Super is in pension mode – that 60% of it is assessible by Centrelink – is this correct.
My Super fund also says that the compulsory drawdown from Super in pension mode is also assessible at 60%
Here is copy and paste direct from their website
Super tip
One of the benefits of longevity products is that they are Age Pension-friendly. Only 60% of the initial purchase price counts towards the Age Pension assets test until you reach your average life expectancy (currently 85 for a 65-year-old male and 88 for a 65-year-old female) and 30% thereafter. By comparison, 100% of the current balance of an account-based pension is included in the asset test. Also, only 60% of income received from a lifetime pension counts towards the Age Pension income test, compared with deemed income based on the balance of an account-based pension.
Hope you can clear this up – thanks
Hi Claire, what your super fund is advising is correct, the reason for the difference is they are referring to a different product. As per their own wording “by comparison, 100%… of an account-based pension is included” so they are talking about a separate product which is assessed differently.
Hi Steven, very new to this and preparing to apply for the aged pension. I have an investment property valued at approx $190k with a mortgage of $105k receiving gross rental income of $330/week. How does Centrelink assess the income? Will it be assessed on gross weekly income or nett income at tax time?
Hi Brenda, the simplest way to think about it is in terms of gross income. Centrelink do allow some deductions but not nearly as many as the ATO so it is better to base your calculations off the higher gross amount.
Hi do you know how they go about confirming/valuing foreign assets?
Thanks
Glenn
Hi Glenn, it depends on the type of asset because some things such as bank accounts can have statements provided with relative ease whereas other assets such as real estate are more difficult to determine.
Thank you, Steven.
Nice to know that it is not ‘Big Brother’.
I appreciate the clarifications.
God bless you
You’re welcome Marshall, glad you found the article helpful 🙂
Great article . Thank you. It was helpful to understand how Centrelink treats drawdowns from super.
Hi Steven
Apologies if I ask a question everyone knows the answer to as I am new at this….
We recently received approval for my pension which was assessed on the amount of income and assets at the time of the application. Part of the income is our saving account which is used to supplement the pension. So my question is, when we no longer have the amount of cash asset does Centrelink adjust the pension amount OR do we need to submit a further application or review of our initial application?
Hi Michael, thank you for your kind approach but it’s a good question to ask as not everyone knows how it works. Centrelink will receive updates from your superfund (presuming it is not self-managed) on the balances twice a yeah in March and September so they will know about those changes but that is all. Contrary to popular belief Centrelink do not have a line of communication with your bank to get updates on bank account balances so you need to let them know of changes as they occur. It is a good habit to get into though because other asset values will change like cars will depreciate in value every 6 months so good to check and update everything Centrelink has on file about you.
When I complained to my federal MP that I thought I was being underpaid, the person I spoke with said that it is likely because Centrelink is able to access your super balance at any time, and that it had likely increased. Now I am worried that this could be incorrect information. What do you think? I don’t want big brother on my case after potentially being given the wrong information. Now I think I have been switched from Assets Test to Income Test. However I will immediately send through an update of my financial circumstances, which is certainly not helped by bank and superfund who don’t bother to keep me informed at appropriate times. My superfund only sends through an annual statement 3-4 months after the end of the financial year. This is not good enough.
Thanks for explanation on draw downs, I receive a fortnightly pmt but was reluctant to draw down a bigger amount for household repairs as I thought it would affect my pension ,
Thank you very much for this information. That will make many of us a good slept.
What do you mean by ‘password crackers’? Do you mean that Centrelink has the right to remotely access your mobile phone, then download all your text messages then make a human decision, based on the text messages, as to whether you are having sex with a person? (Assuming that is the definition of a ‘couple’ since it is the main thing differentiating a platonic relationship from a sexual relationship). Isn’t that a massive invasion of privacy? A very good reason to NOT have a mobile telephone. They can be intercepted. And now with so many hackers, get rid of them!
Hi when you say center link looks at rental income differently than ATO ,what are these differences?
Thanks
I own an apartment that I live in. Presently I work part time & report my income to centrelink every fortnight . When I resign from work I will be traveling & house sitting & putting my apartment in the holiday letting pool for a year. How do I report the income to centrelink that I receive every month from people holidaying in my apartment? Some months I will earn more than others ( ie : school holidays etc )?
Hi Rosemary, the easiest way to do this is by submitting a Profit & Loss Statement to Centrelink because you will likely have some expenses such as cleaning that will offset some of the holiday income.
If I understand correctly, Centrelink can update its records regarding superfunds and pension funds. This explains why our age pension payments were reduced, when overall they were increased. The superfund is doing alright at the moment.
Money in the bank is not monitored, so if we withdraw and spend a large amount, we have to update our details manually.
How does it work with shares/ETFs? Centrelink have a record of the number of shares/units owned, but they vary in value. Are we obliged to update these manually?
Thanks
Hi Marge, you are correct about superfunds updating Centrelink but not the banks. Regarding shares Centrelink will automatically check the ASX and revalue them accordingly but they do need you to let them know if you buy/sell any shares.
What about shares and ETFs? Their value changes with time. Does Centrelink follow these changes, or they have to be declared manually?
Thanks
Hi Marge, Centrelink have access to the ASX so they can update the value of shares but they do this infrequently so if there is a significant shift you may wish to manually update them. Otherwise the main thing Centrelink needs to know is if you have bought/sold any shares.
Hi I had to find this article and forward to a friend as he told me Centrelink asked for his bank details and told him in real time what the balance was. This was in respect to applying for a pension for the 1st time so based on this, they can in fact, access your bank details. The balance they provided was correct.