Changes to the assets test for Centrelink Age Pensions from 1 January 2017
As the end of the year is drawing rapidly to a close it may feel like the changes to the Asset Test for the Aged Pension have just been drawn up, however, these were announced in the 2015 Federal Budget.
As a trustee, you may be asking yourself, “what does this really mean for me – and what are my options?”
“Small changes to the Centrelink assets test can have a significant impact on Age Pension entitlements.”
Firstly, let's look and see who these measures apply to.
If you are over 65 and in receipt of a full or part Aged Pension, then you need to be aware that for every $1,000 owned above the assets test free amount your pension will be reduced by $3 (this was previously reduced by $1.50 for every $1,000).
The thresholds that apply are dependent on whether you are single or a couple, own your own home or not, and are either in receipt of a full or part pension.
For those on full pensions and are single homeowners, the pension starts reducing when assets reach $250,000. For couples it is when their assets reach $375,000. For non-homeowners, it is $450,000 for a single and $575,000 for a couple.
For single homeowners with a part pension, the pension cuts out when assets exceed $542,500 and for a couple it stops when assets exceed $816,000.
For non-homeowners who are single the pension ceases when assets exceed $742,500 and for couples, when assets exceed $1,016,000.
What assets are included in the threshold?
The market value of most of your assets is taken into account when calculating your Age Pension. This includes, but is not limited to, things such as:
- Property (excluding your home)
- Motor vehicles, boats and caravans
- Financial investments
- Superannuation if you’re over Age Pension age
- Business assets
- Household contents and personal effects
For some trustees, there will be little or no effect at all. They had always planned that their SMSF would provide them with their income stream in retirement. For other trustees these changes may impact on their spending patterns and the quality of life they are looking at in retirement.
“Understanding how your assets are assessed is essential to protecting retirement income.”
Commonwealth Seniors Health Card
For those pensioners who lose their Age Pension entitlement on 1 January 2017, all is not lost! You will be issued with a Commonwealth Seniors Health Card and this card is exempt from the usual income test requirements indefinitely.
How can we help?
If you are concerned that the Government’s changes to the Aged Pension are going to affect you, please feel free to give Martin van der Saag or Cayle Petritsch a call to arrange a time to meet so that we can discuss your particular requirements in more detail.
About the author
Marius Fourie - Director & Business Advisor
As Director and Business Advisor, Marius uses his accounting expertise and empathetic skills to work directly with business owners and help them feel at ease with their finances.
Marius saw a common need in clients that just wasn’t being met by accounting providers.
That need was for clear, open communication and streamlined accounting services that didn’t come padded out with any unnecessary features.
Business owners just don’t have time to compare different accounting firms to see which one has the best packages with the best inclusions (many of which they would pay for but never use).
Key Takeaways
The Assets Test Became More Restrictive
The increased taper rate means Age Pension payments reduce faster as assets increase.
Some Retirees Lost Pension Entitlements
Changes resulted in reduced or cancelled Age Pension payments for certain asset levels.
Asset Structure Matters
How assets are held and used can influence Centrelink outcomes.
Driven by our values
Effortless and Seamless
On-Boarding Process
Intuitive and Knowledgeable
Direct Expert
Access
Useful and Articulate
Financial
Reporting
Forward
Thinking
Compliance Solutions
Streamlined
Tech
Integrated and Automated
Frequently Asked Questions
What changed to the Centrelink assets test from 1 January 2017?
The changes increased the taper rate, meaning Age Pension payments reduce more quickly as assessable assets rise above the threshold.
Who was most affected by the assets test changes?
Retirees with moderate asset levels were most impacted, as some lost part or all of their Age Pension under the new rules.
Does the family home count under the assets test?
Your principal residence is exempt, but other assets such as savings, investments and superannuation (once in pension phase) are generally assessed.
Can financial planning help manage the impact of the assets test?
Yes. Strategies may help improve retirement income efficiency, but they must be considered carefully and comply with Centrelink rules.
Should retirees review their Centrelink position after these changes?
Absolutely. Reviewing entitlements helps ensure you understand how the rules affect your pension and overall retirement income.
f my assets are fairly low, will I be better off under the new Centrelink rules?
Possibly. Some retirees with lower asset levels may actually receive a higher pension, because the asset thresholds were adjusted as part of the changes.
North Advisory’s Reviews 
On 
Flo Mitchell
4 weeks ago
Changed to this company in 2019 from former accountant and love their approach of organizing everything for me face to face with Xero set up plus being able to call as much as I need for set annual fee. They also picked up on something that was not done correctly by my former accountant and saved me $4k for this.
Timothy Cummins
A month ago
They the truly the best, Martin and Judy are so experienced, knowledgeable & professonal, also quite like speaking with Rose : ) all people are so lovely!
Michael Iera
2 months ago
Positive, Responsiveness, Quality, Professionalism, Value
Michael Iera
2 months ago
Excellent company in regards to service and professionalism. Very experienced in dealing with complex matters. Highly recommended.
Reach out we are here to help
Recognising the uniqueness of each business, we specialise in customised accounting services crafted to meet your specific needs and drive business growth.
Don’t hesitate to contact us if you’re ready to streamline your financial management with tailored solutions. Your business’s success is our primary focus. Fill in the contact form or call us to book an initial 30-minute chat.
Suite 6, 11 Oaks Avenue
Dee Why, Northern Beaches
NSW 2099
Australia