Social Security Frequently Asked Questions

DHS

Social security rules can sometimes be complex and difficult to source. Here we provide answers to some of the social security means testing questions frequently received by our advisers.

Q1. I qualify for the age pension and have recently made a capital gain upon disposal of an investment property. Will Centrelink assess the capital gain as income?

No. Capital gains from the sale of property are not assessed as income for Centrelink purposes.

However, if you invest the proceeds from the property in financial investments Centrelink would then apply deeming on the current balance of the investment.

Q2. Can members of a couple each have a funeral bond valued at $12,250 (purchased after 1 July 2015) exempt under the assets and income tests, or is the limit $12,250 per couple? What if the funeral bond purchased is more than the exempt threshold?

Each member of a couple can invest into a funeral bond valued at up to $12,250 in their own name without it being subject to the assets or income tests. Therefore a maximum amount of $24,500 can be exempt by purchasing two funeral bonds.

If the initial investment amount of the funeral bond exceeds the exemption threshold, the entire value of the bond will be assessed as an asset and deemed under the income test.

Q3. What is an appropriate amount to be used to estimate the value of personal use assets such as home contents? What about motor vehicles?

Centrelink will generally assess (single or partnered) personal effects and household contents as being $10,000 unless advised of a different amount. However, Centrelink also accepts a lower estimation of the market value unless it appears significantly undervalued, in which case Centrelink will ask to validate the valuation. Normally “market value” is the price at which a willing buyer and a willing, but not anxious seller, would reach agreement. Similarly, Centrelink will accept estimation of market value of any motor vehicle unless it appears significantly understated.

Q4. I lent $100,000 to my son who is paying below market rate of interest. How does Centrelink assess this loan?

Centrelink treats loans made by a pension recipient as a financial asset irrespective of whether they are to a related or unrelated party. The value of the loan is assessed as an asset under the assets test. The entire amount is subject to deeming under the income test. The actual amount of interest repaid is not treated as income for income test purposes.

 

 

Source: FirstTech Technical Team