Eastern Shore Sun OCTOBER 2021 25
A FINANCIAL MOMENT BALANCING ACT Hank Jongen General Manager Services Australia SERVICES Australia works hard to pay Australians the right amount according to their circumstances. The beginning of the new financial year is an important time for families and students who get a payment from us. This is when we do annual income reviews for Family Tax Benefit, Child Care Subsidy, Youth Allowance and ABSTUDY. Most families who get Family Tax Benefit and Child Care Subsidy have their payments based on their estimated income for the current financial year. Now that the 2020/21 financial year has ended, Services Australia has begun comparing your estimated income against
your actual income for the year. The process is called balancing. There are three possible outcomes from balancing: • No change – you got the right amount. • Top up – you’ve been underpaid for the financial year and we’ll pay you the right amount. • Overpayment – you’ve received more than you’re entitled to and will have an overpayment that you’ll need to repay. If you get an overpayment, you don’t have to pay it all back at once. Most people pay it back over time and Services Australia will work with you to find a plan that suits your circumstances. To start the balancing process, you need
to either lodge your 2020/21 tax return or tell Services Australia if you don’t need to lodge a return. Once you’ve lodged your tax return, you don’t need to do anything else. The ATO will give us your tax details and we’ll balance your payments. In September each year, we also make sure we are paying people on Youth Allowance or ABSTUDY the right amount by checking their parents’ income. If you have children under 22 who receive ABSTUDY or Youth Allowance, you may get a request from your child to provide your income details. We send letters out to the person getting the payment, so it’s important that your child passes the letter on to you as soon as possible. The letter outlines
how to tell us about your income. Once you give us this information, Services Australia will use it to
work out your child’s payment rate. If you don’t give us the information, your child’s payment may stop.
If we didn’t send a letter, you don’t need to worry. It means we already have the information we
need. Have a great day. See you next time.
The Centrelink Age Pension – making sense of it all. Damian Gibson Financial Adviser, Elevate Wealth Solutions CENTRELINK can be confusing at the best of times. When terms like Asset Test, Income Test and Deeming Rates are thrown around it adds another layer of confusion altogether. It also doesn’t make it easy when the tests and rates are forever changing. Here we will cut through the jargon to make some sense of it all. Apart from being the right age, your eligibility for the Age Pension is determined by how much your assets are worth (the asset test) and how much income you get (the income test). The test that delivers the lower amount of Age Pension is the test applied to you.
ASSET TEST This test assesses the value of the assets you and/or your partner own. Common assets assessed include, but are not limited to, superannuation, real estate
(excluding your family home), household contents, cash, shares, cars, boats and caravans. Centrelink assesses the market value of your assets and applies it to the test. To receive the full Age Pension your assets must be below $270,500 if you are a single homeowner, or under $405,000 for a couple who own their home. If however, the value of your assets are above these thresholds, then you still might be eligible to receive a part Age Pension. A common question that gets asked is “How much money can I have in my bank before it affects my pension?”. Your bank account balance counts towards your asset test. Centrelink assess the money in your bank exactly the same way as they assess your other assets. If your assets are above the full Age Pension threshold, the amount you receive will gradually reduce by $3 per fortnight per $1,000 of assets. The greater the value of assets you have, the less Age Pension you re-
ceive until it completely cuts out when your assets exceed $593,000 for a single homeowner or $891,500 for a couple who own their home. As the value of your assets change, the amount of Age Pension you receive can change as well. For example, if the value of your superannuation fund falls in value from volatility, you might be eligible to receive a higher level of Age Pension.
your income exceeds these thresholds then you still might be eligible to receive a part Age Pension. If your income is above the full Age Pension threshold, the amount you receive will gradually reduce by 50 cents for every $1 you earn per fortnight until it completely cuts out when your fortnightly income exceeds $2,115 for a single or $3,237.20 for a couple (this does not consider the Work Bonus).
INCOME TEST This test assesses the level of income you and/or your partner earn. Common sources of income assessed include, but are not limited to, employment income, rental income, and deemed income from your financial assets. Centrelink assesses your income and applies it to the test. To receive the full Age Pension, your fortnightly income must be below $180 a fortnight if you are a single, or under $320 a fortnight if you are a couple. Like the asset test, if
DEEMING RATES Money in your bank, and other assets such as term deposits, shares, and your super are all classed as financial assets. These financial assets are considered by Centrelink to earn you a certain amount of income using deeming rates. As such, if you have $50,000 in a term deposit earning you one per cent interest, Centrelink deems this money to earn a certain amount by applying their deeming rates, not the rate of your term deposit. The deemed income
from your financial assets are then applied to the income test. The deeming rate for singles is 0.25 per cent for the first $53,600 of your financial assets and 2.25 per cent on any amount more than $53,600. For couples, a rate of 0.25 per cent for the first $89,000 and 2.25 per cent on any amount more than $89,000 will be used to calculate the assessable deemed income from your finan-
cial assets. For example, if single person held $80,000 in a bank account and $56,000 in shares these financial assets would be deemed to earn you approximately $1,988 per annum by Centrelink. This deemed income would then be applied to your income test. Deemed income does not apply to the asset test. As time goes on, the value of your assets and
income change. It is important to update Centrelink of any changes to ensure you are receiving the appropriate rate of Age Pension. A Financial Adviser can help ensure you are maximising the amount of age pension you are entitled to receive. Please contact us if you would like to ensure you’re receiving the right age pension.
