As 2016 gallops to a close, it may feel like the changes to the Asset Test for the Aged Pension have just been drawn up. These changes were, however, announced in the 2015 Federal Budget.
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 on part pensions, the pension begins reducing for a single when assets exceed $542,500 and for a couple it is when assets exceed $816,000.For non-homeowners who are single it begins reducing 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:
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.
If you're unsure about how these changes may affect you – and you'd like to know more broadly how to optimise your financial situation – then please contact us to arrange a complimentary consultation.