Rental housing crisis:
Swipe right for income
A recent suggestion by NSW Premier Dominic Perrottet has sparked debate about Age Pension income and how Centrelink treats rental income.
Speaking at the Sydney Summit conference in early February, the Premier expressed support for the idea of using technology for matching older Australians who have a spare room in their homes, with younger people finding the current rental market too expensive.
The idea had been floated by Sydney-based SGS Economics and Planning, a data solutions company which proposed the use of an App to match the needs, preferences and dispositions of potential homeowner-student combinations.
Of course it’s not the first time that such an idea has been floated, but as people-matching technology gets ever more sophisticated, it may be that the time is right to see if it works for this type of house sharing as well.
There’s a catch, of course, as the Premier noted. Given the recent $4000 increase in the Centrelink Work Bonus, it’s tempting to think that extra income from rental won’t be an issue. But it will. Under current rules, Centrelink will count rental payments as additional income which can be assessed for any Age Pension entitlements. So taking in a boarder may not lead to extra income at all. Instead, it could mean the loss of income you already receive. Confused, you could ask one of our age pension specialists.
(A short explainer on income is shared below)
Premier Perrottet called upon the Federal Government to ‘take a look’ at the provisions within current legislation (including taxation), for those receiving rental income.
The potential benefits of this scheme are not just financial. It could also help shift the dial on what can be a time of increasing loneliness for some older Australians who live on their own and have infrequent social interaction. Additionally, an exchange of services or skills is entirely possible, with language practice or tuition, meals, household chores and home maintenance all up for barter. It is also a housing proposal which uses existing stock, so the wait time for extra social housing to be built would be overcome, at least for some who need a roof over their heads.
Which income is affected by the Work Bonus?
The Work Bonus is applied to employment and self-employment income. This includes:
- working in and outside Australia
- paid leave while still employed
- director’s fees
- self-employment, that involves active participation.
Income which is not covered by the work bonus includes
- leave after you’ve ended your employment
- self-employment, that doesn’t involve active participation
An active participation assessment is required before a decision is taken to use the Work Bonus for income from
- sole traders
- private companies
- private trusts.
What is active participation?
This refers to work that involves effort (which is the opposite of income from passive involvement)
Examples of work involving active participation cited by Services Australia include:
- lawn mowing
Active participation does not include managing an investment portfolio or rental properties owned by you, a family trust or a family company.
One last thought.
Why, whenever this idea is floated, do policy makers always seem to wish to pair older and younger people? It can work well in many cases, for sure. But why not older homeowners with older renters? For instance, some of the 500,000-plus women aged over 55 in danger of becoming homeless? There seems to be some automatic thought that older people are just sitting around waiting for someone younger to help alleviate their penury or loneliness. Quite often people enjoy quality contact with someone from their own age group. Someone who knows Paul McCartney had a gig before Wings, for instance. Maybe even someone who won’t do an eyeroll when you forget how to use the remote control? Now that’s special companionship indeed.
What do you think?
Has Premier Dominic Perrottet highlighted a genuinely useful solution for those struggling to make ends meet? If so, would you jump on board?
Do the Centrelink concerns discourage you?
And if you did rent that spare room, would you prefer a young, older or similar age boarder?
You can also talk to one of our Advisers about how any additional income might affect your entitlements and what you might be able to do to maximise your entitlements.