Commonwealth Seniors Health Care Card Income Test

Commonwealth Seniors Health Care Card Income Test

by Christine Hopper

Commonwealth Seniors Health Care Card is available to Australian residents who have attained Age Pension Age but do not qualify for an Age Pension.

Commonwealth Seniors Health Care Card Benefits

The Commonwealth Seniors Health Care Card provides the same Medicare and PBS pharmacy concessions as the Commonwealth Pensioner Concession Card.

Holders of the Commonwealth Seniors Health Care Card are entitled to receive a quarterly payment in lieu of any Pensioner Concessions on telephone and energy bills. A Single Commonwealth Seniors Health Care Card holder received a maximum payment of $304.25 in September 2013.  ‘Couples living together’ at Centrelink receive a lower amount per person.

Commonwealth Seniors Health Care Card Means Test

There is no Asset Test for the Commonwealth Seniors Health Care Card.
Applicants for the Commonwealth Seniors Health Care Card must satisfy an Income Test. For the purposes of the Commonwealth Seniors Health Care Card Income Test, your ‘adjusted taxable income’ is checked against the flat limits.

The Income limits for the Commonwealth Seniors Health Care Card Income Test are not subject to indexation. The Income limits for the Commonwealth Seniors Health Care Card have not been increased since the Commonwealth Seniors Health Care Card was introduced.

To qualify for a Commonwealth Seniors Health Care Card, a Single at Centrelink person’s ‘adjusted taxable income’ must not exceed $50,000.
A member of a couple living together, as defined by Centrelink, can be eligible for a Commonwealth Seniors Health Care Card provided that the combined ‘adjusted taxable income’ of the couple does not exceed $80,000.
A member of a couple at Centrelink who are ‘separated by illness’ would not lose their Commonwealth Seniors Health Care Card until their combined ‘adjusted taxable income’ exceeds $100,000.
Read more about Personal Circumstances or who is treated as a Couple at Centrelink at http://www.financialcareservices.com.au/christine-hopper-insights/personal-circumstances-at-centrelink-or-dva/

Commonwealth Seniors Health Care Card Income Test Income is ‘adjusted taxable income’

For the purposes of the Commonwealth Seniors Health Care Card Income Test, adjusted taxable income is the sum of

  • Taxable income, as in your Income Tax return
  • Foreign income, any income from overseas that is not reported in your Income Tax return
  • Total net investment losses, you must add back the expenses you claimed in your Income Tax return in respect of your investments
  • Employer provided benefits also known as reportable fringe benefits, and
  • Reportable superannuation contributions, any salary sacrificed superannuation contributions your employer makes on your behalf.

Remember that the Commonwealth Seniors Health Care Card Income Test relates to the combined income of the couple at Centrelink so you must include the income of your partner.
If you have just retired, in your application for a Commonwealth Seniors Health Care Card you may use an estimate of your adjusted taxable income for the current financial year rather than your actual income for the last financial year when you were working full time.

So what does adjusted taxable income look like for a Commonwealth Seniors Health Care Card applicant ?

If you are still working – non-cash employment benefits count as adjusted taxable income
Any reportable fringe benefits provided in respect of your employment are also included in your adjusted taxable income. Remember any remuneration for being a director of a company or trust, is treated like an employment benefit.
Reportable fringe benefits are employer provided non-cash benefits such as a home telephone, health insurance premiums or private use of a car. Maybe you are receiving some benefits rather than all cash as remuneration for working part time.
If you work as a caretaker or on-site manager, any subsidised rent and/or ‘free’ electricity, could also be counted as reportable fringe benefits and thus be part of your adjusted taxable income.

If you are still working – salary sacrificed superannuation contributions count as adjusted taxable income

If you are still working a little then your adjusted taxable income would include any additional superannuation contributions that you asked your employer to pay in lieu of salary. The compulsory Superannuation Guarantee amounts that your employer must pay into your superannuation account are not included in your adjusted taxable income.

If you are receiving superannuation benefits – untaxed superannuation pension payments count as adjusted taxable income

Once you have attained age sixty years, any payments from a funded superannuation arrangement are tax free. Thus payments from allocated pension accounts and superannuation funds do not usually count as part of your adjusted taxable income.

But ‘unfunded’ superannuation benefits count as taxable income even if the amount does not generate a tax liability. Most private sector and public offer superannuation benefits have accrued from contributions and investments income that has been taxed. But some funds, particularly PAYG Commonwealth and State government sponsored funds, have not accumulated enough after-tax money, superannuation benefits from these funds might include an unfunded portion which is also known as ‘untaxed’ superannuation.
Former public sector workers please be aware that you must include any ‘unfunded’ or ‘untaxed’ superannuation pension payments in your ‘taxable income’ and hence in your adjusted taxable income.

If you have investments – all of your gross investment income counts as adjusted taxable income even if you own a negatively geared property.

Your Income Tax Return would show your gross investment income and the expenses that you incurred in earning that income. If your costs of holding an investment exceed the income that you received from that investment you might have recorded a loss for income tax purposes. But the whole of your investment income must be included in your adjusted taxable income.
You might have an investment loss for income tax purposes from a negatively geared investment. But the adjusted taxable income includes the full gross income from your investment. Therefore, you must add back the ‘investment loss’ when calculating your adjusted taxable income.

Foreign Income counts as adjusted taxable income

If you have investments outside of Australia then you must include in your adjusted taxable income any investment income that is not taxable in Australia.
If you receive business or investment income from overseas that does not need to be reported on your Australian Income Tax return, you must count it for your adjusted taxable income.

Claiming the Commonwealth Seniors Health Care Card

Centrelink manage claims for the Commonwealth Seniors Health Care Card. You can obtain a Commonwealth Seniors Health Care Card claim form from Centrelink or download it from http://www.humanservices.gov.au/spw/customer/forms/resources/sa296-1303en.pdf.

You also need to read the Information Booklet at http://www.humanservices.gov.au/customer/forms/ci010

Remember that Centrelink want to know about yourself and your partner even if your partner is too young to claim a Commonwealth Seniors Health Care Card.  Beware that failure to update your Personal Circumstances at Centrelink could result in overpayments of Seniors Supplement benefits.  Overpayment of benefits means a debt at Centrelink  which would need to be repaid.

The claim form requires you to disclose your Tax File Number and an estimate of your ‘adjusted taxable income’ for the purposes of the Commonwealth Seniors Health Care Card Income Test.
You also need to establish your identity and prove to Centrelink that you are an Australian resident. Current and previous clients of Centrelink would have already been allocated a Customer Reference number or ‘CRN’. If you do not yet have a CRN then you need to show an Australian Birth Certificate or current Australian Passport. Australian Citizenship or entry visa could be used. Then you need to show that you are living in Australia using your real name.
Thus your Claim for the Commonwealth Seniors Health Care Card requires a visit to a Centrelink office.

Hint  Download the Claim form, read the Information booklet and Complete your Claim for a Commonwealth Seniors Health Care Card at home.

Then choose the bank account that is to be credited with your Seniors Supplement, collect all of your supporting documents and you could be ready to  visit Centrelink.

If you would like further confidential, independent and professional advice about Centrelink, lifestyle or financial issues please contact Christine Hopper (03) 9808 0338.

Financial Care Services – call (03) 9808 0338
Disclaimer: The information contained in this website is of a general nature only and does not constitute “financial advice”. You should obtain your own personal financial advice before investing any money or moving in to any retirement village, lifestyle community or aged care facility. Financial Care Services is licensed to provide financial advice to individual clients based on their personal situations. © 2013 Financial Care Services Pty Ltd. All rights reserved.
To make an appointment for professional advice, call Financial Care Services
(03) 9808 0338