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Income and Assets Tests

What are the income and assets tests for Centrelink benefits?

The income and assets tests are designed for use by Centrelink in determining the level of pension, benefit or allowance an applicant will be entitled to under the government’s welfare regulations and legislation.

The tests are both applied in most circumstances. The results from each test is compared and the applicant is paid the least benefit applicable. If the income test allows for a lesser benefit than would the assets test, that result is applied (and conversely, if the assets test results in a lesser benefit, that result applies). One consequence of this rule is that if one of the tests results in no benefit being payable, then you will not receive the benefit regardless of what result the alternative test would have given.

Alert: the Commonwealth Parliament has passed legislation that changes the way the following tests and tapering work as from 1 January 2017. The tapering element will see a reduction of $3 for each $1,000 of excess over the base limit, deducted fro the pension entitlement amount. In a glimmer of hope, health card holders at the time of the effect of these changes may be entitled to hold their card regardless of whether they continue to receive a pension payment after the effective date.

The Income Test (and its application to the Age Pension)

This test measures your income to determine if you are eligible to receive any part of the Centrelink administered Age Pension. Under this test you can earn a prescribed amount of income from other sources before your entitlement to Centrelink benefits is reduced or cuts out. The level at which your benefit begins to reduce varies depending on whether you are single or married (and whether or not you have dependent children). The income that is counted may vary according to your circumstances. To gain an understanding about ‘deemed’ income that should be considered in your calculation, the Deeming article in our website Library will provide some guidance.

The income thresholds generally applicable to the Age Pension are shown in the table below. Income above the lower threshold reduces the pension by 50 cents in the dollar (single) and 25 cents in the dollar each (for couple). [Note that as at September 2009, some transitional ‘rules’ applied to minimise the risk of a benefit recipient being disadvantaged by changes at that time. Refer the note* below the Table for information about this provision.]

Family situation For full pension (pf) For part pension (pf) #
Single Up to $162.00 Less than $1,909.80
Single + one child Up to $186.60 Less than $1,934.40
Couple (combined) Up to $288.00 Less than $2,922.80
Additional children Add $24.60 per child

#These figures may be higher if you receive rent assistance.

*The transitional rate of pension is a special rate for people who would have received a lower pension because of income test changes in 2009. If this applies to your situation, you will remain on the transitional rate while it is higher than the rate you would be paid under the current income test. While you receive the transitional rate, it is compared to the rate of pension you would receive under the current income test. You are no longer eligible for the transitional rate when the current rate of pension is the same or more than your transitional rate. If a social security beneficiary is likely to be disadvantaged by a temporary (or short-term) effect, a Centrelink Financial Information Service Officer will be able to provide guidance on the effects.

The Assets Test (and its application to the Age Pension)

This test measures your assets to determine if you are eligible to receive any part of the Centrelink administered Age Pension. Under this test you can own/ control a prescribed level of assets by value, before your full entitlement to Centrelink is reduced or cuts out. The level at which your benefit begins to reduce varies depending on whether you are single or married and whether or not you own your own home.

Your Age Pension entitlement is affected by the level of your assets, test according to the ranges in the following Table. For every $1,000 of assets above the lower limits, your fortnightly pension reduces by $1.50 per fortnight. [Under the 2016 Federal Budget, this amount will decrease at the higher rate of $3.00 per $1,000 – but from proposed higher asset bases.]

Family Situation
For full pension
For part pension
Single $202,000 $  788,250
Partnered (combined) $286,500 $1,170,000
Single $348,500 $  937,250
Partnered (combined) $433,000 $1,319,000

There is a number of asset categories that require special attention when considering the application of the Assets Test: we refer you to the Assets page on the Human Services website.

Do the income and assets tests apply to benefits and allowances other than the Age Pension?

The income and assets tests do apply to a range of pension, benefit and allowances paid under the Human Services legislation and administered by Centrelink. Some of the more familiar benefits affected include: Wife Pension; Widow B Pension; Bereavement Allowance; Carer Payment; and Disability Support Pension.

There is range of consequences for each of the benefits administered by Centrelink that can be affected by the application of the Income and Assets Tests. For detail about affects in any particular circumstance, we recommend that an appointment be sought with the Centrelink Financial Information Service Officers.

How can Continuum Financial Planners help?

Whilst it is the goal of most of us to be financially independent throughout our lives, circumstances sometimes arise that mean that this will not be attainable. Even with the best intentions, if adequate investment hasn’t been able to accumulate, or adequate insurance unable to be put in place – in time, the social security safety net is designed to provide support when those circumstances arise.

The experienced advisers at Continuum Financial Planners Pty Ltd are able to work with you to ensure that the best outcome from your financial circumstances can be planned and attained: if too late in your own situation, then most likely in the guidance and advice to members of your family. Our key services include investment advicepersonal risk (life) insurancesretirement planningsuperannuation and estate planning strategies. We welcome your contact to arrange an initial meeting to discuss how we may be able to assist: phone our office on 07-34213456; or complete the Contact Us form on our website – and your will receive a courteous, prompt response.

We acknowledge the resources of Securitor Financial Group Limited in drafting the basic form of this article: it was extracted from the Support Information to advice document templates provided by them as at January 2010. The information is reviewed regularly and has been most recently updated in August 2019.

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