4 minute read
FINANCE
Hank Jongen General Manager Services Australia
HELLO everyone.
If you’re receiving payments from Services Australia and own your principal home, you are defined as a homeowner.
You have a lower asset limit, and generally your home is an exempt asset and won’t be looked at under the assets test.
How does Services Australia assess your principal home if you’re away from it for a while for a holiday, or to look after mum or dad?
For temporary absences, everyone can be away from their home for 12 months before it becomes an assessable asset. In most circumstances, after 12 months you are defined as a non-homeowner, you are assessed with the higher asset limits, and your home is an assessable asset.
There are different rules for people who leave their home to either receive care from someone or provide care to someone.
If you have to leave your home due to illness and move to enter a care situation, the value of your principal home is an exempt asset for Services Australia’s assets tests for two years from the date you entered care.
Care situations include moving into an aged care facility, or moving in to live in a private residence to receive a substantial level of care for at least 14 consecutive days.
This means that if you have to leave your home to live with your adult child so they can provide substantial care for you, your home can be exempt from the assets test for two years.
The same rule applies if you have to leave home to provide care to someone in their home. So if you leave home to provide a substantial level of care to mum or dad at their place, then your home won’t be treated as an asset by Services Australia for two years either.
However, if you’re away for more than two years, you will then be assessed as a non-homeowner, you’ll be assessed under the higher asset limits, and your home will be an assessable asset.
If you rent your house out while you’re absent, that doesn’t change how it’s assessed under the assets test.
But remember, the net rental income is assessable immediately under the income test and could affect your rate of payment. You need to let us know if you’ve started to receive rental income within 14 days.
See you next month.
Federal Election 22 – What’s in it for you?
Damian Gibson, Partner and Financial Advisor, Elevate Wealth*
THE Labor Party, led by Anthony Albanese, has won the 2022 Federal Election.
During the election campaign Labor made several election commitments to entice voters. Labor’s commitments included, but were not limited to, changes to social security and superannuation.
Below is a summary of key of the proposed reforms, and the opportunities which they present.
Freezing deeming rates
The Government has stated that it is committed to freezing deeming rates from 1 July 2022 until 1 July 2024.
Deeming rates are used to calculate an assumed rate of income based on your financial assets. Consequently, if deeming rates are kept on hold it has the potential to benefit those who receive an income-tested pension. Current deeming rates and thresholds are shown below:
Deeming rate Single Couple
0.25% First $53,600 First $89,000
2.25% Above $53,600 Above $89,000
Increasing eligibility for the Commonwealth Seniors Health Card (CSHC)
The CSHC is available for self-funded retirees who are ineligible for an Age Pension, if they meet the associated income test. The Government has proposed to increase the income test so that more Australian’s can access the CSHC.
Under this measure it is estimated that an additional 50,000 Australians will be eligible for the CSHC. Proposed changes are summarised in the following table:
Deeming rate Single Couple
0.25% First $53,600 First $89,000
2.25% Above $53,600 Above $89,000
Extending the exemption on home sale proceeds
Currently, if you sell your home the proceeds you receive are exempt from the asset test for 12 months for social security purposes. The exemption only applies to the portion of the proceeds intended for use for a new primary residence.
The Government has proposed to extend the exemption from 12 months to 24 months. This will provide social security recipients with more flexibility and time to plan ahead when selling their home.
Expanding the Home Downsizer Contribution
The outgoing Liberal government recently legislated a change to the Home Downsizer Super Contribution. This change reduces the age at which a super fund member can use this contribution from 65 to 60.
From 1 July 2022, the Government want to lower the age further from 60 to 55. If legislated, this change extends several contribution and strategic opportunities to an even greater number of individuals.
As always, there are important conditions and requirements that need to be met before applying these financial strategies. If you think the above proposals could impact you, ensure you get in touch with our office and make the most of the opportunities available.
Information in this article is of a general nature only and has not been tailored to your personal circumstances. Information in this article reflects our understanding of relevant regulatory requirements and laws etc as at the date of issue, which may be subject to change. Please seek personal advice prior to acting on this information.
Damian Gibson
