Pension Asset Test Exempt Assets

Pension Asset Test Exempt Assets

by Christine Hopper

Pension Asset Test Exempt Assets

Your Pension Asset Test Exempt Assets are not counted in your Age Pension Assessable Assets. Remember, your Age Pension entitlement is reduced if your Age Pension Assessable Assets exceed the Asset Test Allowance.

At Centrelink, Age Pension Assessable Assets include all that you clearly own together with items that you own indirectly. But there are some Pension Asset Test Exempt Assets.

The Age Pension Assets Test is changing from January 2017. Seniors who lose their Age Pension entitlement as a result of the Asset Test changes will be issued with Health cards. These Health Cards will not be means tested. Thus lifelong Health Cards is the reward for starting an Age Pension in 2016 but losing it under the January 2017 Asset Test change.

Read more about the January 2017 Asset Test Changes and the cut-off levels for an ongoing Age Pension.

Christine at Financial Care Services is familiar with the Age Pension Asset and Income tests.
Contact Financial Care Services for Help with checking your situation against the Age Pension means tests.
Financial Care Services offers Short Consultations for ‘personal financial factual information’ to assess your asset and income position against the Age Pension means tests.

Your home as Age Pension Asset Test Exempt Assets

Your current home could be included in your Age Pension Asset Test Exempt Assets.
The Age Pension Assets Test has different Allowances for Homeowners and Non-Homeowners. Non-homeowners have higher Asset Test Allowances before the Asset Test taper starts.

The rules for Pension Asset Test Exempt Assets allow for different types of home. Your home could be a strata Titled apartment or single level home unit. An independent living unit within a retirement lifestyle community village subject to a loan / lease agreement could still count as your “home” for Pension Asset Test Exempt Assets purposes.

Your home could be part of your Pension Asset Test Exempt Assets if you live in a house on a small lot. The first two hectares of your garden or hobby farm could be exempt from the Age Pension Assets Test. But only if that land is on the same Title as the land with the house on it. Also, your surrounding land might not count as Pension Asset Test Exempt Assets if the land is used commercially.

Additional land on another Title and the extra hobby farm land would not be included in your Pension Asset Test Exempt Assets.
Special rules apply to real farmers with larger rural properties who have been primary producers.

Your relocatable house could be included in Pension Asset Test Exempt Assets

Your home might be a relocatable dwelling that you have permanently parked on a leased lot within retirement community or caravan park.
Before you rush to have your relocatable home included in your Pension Asset Test Exempt Assets you could think about its value. If the market value of your relocatable home is less than the additional Asset Test Allowance for a “non-homeowner” compared with a “homeowner” then you could consider being a “non-homeowner” with your relocatable dwelling counted as an asset at Centrelink.

Ingoing payments for where you live as Pension Asset Test Exempt Assets

You could be a “homeowner” at Centrelink with your ingoing payment for accommodation counted in Pension Asset Test Exempt Assets.

Granny flat arrangements provide the right to have accommodation provided for the remainder of your life in a property owned by someone else. The amounts that you paid in exchange for your granny flat tenure could be treated as Pension Asset Test Exempt Assets.

If you paid a “reasonable” amount as an ingoing payment for your granny flat then your ingoing payments could be part of your Pension Asset Test Exempt Assets. If Centrelink consider that you paid more than a “reasonable“ amount then you might not be allowed to count all of your granny flat ingoing payment as Pension Asset Test Exempt Assets.

Granny flat arrangements can help families support their seniors in the community. Christine at Financial Care Services works with families to design ‘granny flat deals’ that are acceptable to the whole family group whilst minimizing Centrelink problems.
Contact Christine or call her on 03 9808 0338 to arrange a granny flat consultation for your family.

Some charitable retirement villages request an ingoing payment for permanent residency. These ingoing payments are individually assessed according to the new resident’s assets. If the amount of your ingoing payment is less than the additional Asset Test Allowance for a “non-homeowner” compared with a “homeowner” then you could consider being a “non-homeowner” with your ingoing payment counted as an asset at Centrelink.

Cash proceeds from sale of your principal residence as Pension Asset Test Exempt Assets for a year.

For that interim period between settling the sale of your former home and purchasing your new retirement home, you could include the cash house sale proceeds in your Pension Asset Test Exempt Assets.

This money would be included in your “financial assets” for the purposes of calculating your “deemed financial income”. This means that your home sale proceeds are treated as earning interest while you are looking for a new home. Any interest earning money would be counted for Income Test purposes even if it were Asset Test exempt.

Aged care Accommodation Bonds and Refundable Accommodation Deposits are Pension Asset Test Exempt Assets

Any lump sum amounts that you have paid for accommodation for yourself or your spouse, in a Commonwealth regulated aged care facility could be Pension Asset Test Exempt Assets.

Permanent entrants to residential aged care may pay lump sums as a Refundable Accommodation Deposit (“RAD”) to cover all or part of their accommodation costs. Residents who entered aged care before July 2014, could have their Accommodation Bonds counted as Pension Asset Test Exempt Assets.

Only Commonwealth regulated aged care facilities are allowed to take a Pension Asset Test Exempt Accommodation Bond or RAD.

Your former home as a Pension Asset Test Exempt Assets when you enter aged care

Your former home could be a Pension Asset Test Exempt Asset when you are in permanent Commonwealth regulated aged care.

For the first two years after leave home heading for aged care, your former principal residence could continue as a Pension Asset Test Exempt Asset. During this two year transition period, you would be treated as a “homeowner” and your former home could be a Pension Asset Test Exempt Asset. But if you move to a private nursing home or assisted living facility you cannot claim this aged care exemption.

Your former home as a Pension Asset Test Exempt Asset when you stay in aged care long term

Your former home could continue to be counted in your Pension Asset Test Exempt Assets and you would continue as a “homeowner’ at Centrelink beyond two years with two conditions. Firstly, you must be paying for your accommodation in Commonwealth regulated aged care by daily payments. Secondly, your former home must be rented to continue as a ‘homeowner’.

This exemption cannot be claimed if you paid the full cost of your aged care accommodation by an Accommodation Bond or a RAD equivalent to your full agreed Accommodation Room Price. Also, you cannot claim your former home in your Pension Asset Test Exempt Assets if you entered residential aged care before July 2014, as a ‘fully supported resident’.

Aged care financing is complex. Once you sell the former home of an aged care resident you cannot revert to the rental option.

Before you sign a Resident Agreement for a family member to enter residential aged care consult Christine at Financial Care Services.
Christine could illustrate the costs of aged care living and how renting or selling the former home could provide the cash to pay for your preferred aged care.
Contact Christine or call her on 03 9808 0338 to arrange an aged care consultation.

Advance provision for your funeral are Pension Asset Test Exempt Assets

You could pre-purchase a cemetery plot and/or a prepaid funeral and the whole expenditure would be treated as Pension Asset Test Exempt Assets. Showing the receipt to Centrelink could clarify that such large sums withdrawn from your financial assets have been used to purchase Pension Asset Test Exempt Assets. Without a paper trail, Centrelink might conclude that you have invested the money or gifted it.

If you want to procrastinate regarding your funeral, you could purchase funeral bonds. Your executor could then assign the funeral bonds towards the cost of your funeral. They might appreciate knowing about your funeral bonds and your funeral preferences. Your estate collects any excess of the value of your funeral bonds over the cost of your funeral. Therefore Centrelink has limits on the number and value of funeral bonds that an individual or couple, can count as Pension Asset Test Exempt Assets.

Superannuation accounts as Pension Asset Test Exempt Assets

Before you attain your Age Pension Age, your superannuation accounts could be Pension Asset Test Exempt Asset. But this exemption does not apply to any superannuation accounts in drawdown phase.

You could benefit by having superannuation in accumulation accounts treated as Pension Asset Test Exempt Assets if you are under your Age Pension Age and eligible for the Disability Support Pension (“DSP”).

Your partner might receive a higher Age Pension or DSP, if you keep your superannuation accounts in accumulation phase and not start an allocated pension until you attain your Age Pension Age. Once you attain your Age Pension Age all of your superannuation accounts will count for the Pension Asset Test.

Income Streams purchased long ago could be Pension Asset Test Exempt Assets

Until September 2004, lifetime annuities were treated as Pension Asset Test Exempt Assets. Some lifetime annuities purchased in the next three years were granted partial exemption from the Assets Test.

If you are still receiving regular payments under a lifetime annuity contract that was purchased before September 2007, you could have part of that annuity value counted in your Pension Asset Test Exempt Assets.

These annuities are counted as ‘income streams’ at Centrelink.

Your interest in a deceased estate could be Pension Asset Test Exempt Assets

You could be waiting for the executors to distribute the estate according to the Will. While you are waiting for your inheritance to paid to you that property and/or money could be Pension Asset Test Exempt Asset for determining your Pension rate.

Once you receive your inheritance it will count as part of your Assets at Centrelink. If the executors take years to sort out and distribute the estate then Centrelink could start counting your potential inheritance for Pension means test purposes.

Avoid a surprise bill for over-payment of your Pension when Centrelink backdate the inheritance.  Consult Financial Care Services for  checking the potential impact of your inheritance.  Financial Care Services offers Short Consultation for provide ‘personal financial factual information’ about how much Age Pension or DSP you could get provided that you satisfied the age (or Disability) and residency conditions for a Pension.

If you think that your Pension could be impacted by an inheritance you can contact Christine or call her on 03 9808 0338 to arrange a Short Consultation, 45 minutes in person or by telephone and/or email to discuss your Pension.
The fee for a Short Consultation for ‘personal financial factual information’ is $99. Please ask for a special ‘short personal financial factual information consultation’ when you book your appointment.

Clients who are unable to attend the Financial Care Services office in Camberwell are welcome to Contact us via email to arrange for a Short personal financial factual information Consultation.
You can start the Short ‘personal financial factual information’ Consultation by emailing for the Financial Care Services Financial Services Guide and the Financial Care Services Age Pension Data form.

More Pension Asset Test Exempt Assets

Centrelink allow for some more Pension Asset Test Exempt Assets in special situations. If you have become entitled to a payment or income from a trust then you could ask Centrelink if your entitlement could be treated as Pension Asset Test Exempt Asset.

Financial Care Services your independent financial adviser

Financial Care Services is an independent financial adviser focused on the needs of seniors in transition. Our clients are considering the potential for accessing Age Pensions on retirement. Our advice is valuable when seniors are moving into retirement lifestyle village communities or residential aged care.

Christine could also assist you with collating your personal data, checking your income and asset values for a Pension and completing the Centrelink forms for you to sign. Normal hourly rate consultation fees apply for assistance with personal data collation, completing Centrelink forms and attendance at a Centrelink office with you.

If you would like further confidential, independent and professional advice about Commonwealth means testing, Centrelink, lifestyle or financial issues please contact Christine Hopper.

Disclaimer.

These Insights are a general over view based on our understanding of the Social Security and DVA Pension arrangements. Individual entitlements to Social Security and DVA benefits are determined based on your actual situation as documented to Centrelink or DVA.
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