Vol 3 Ed 11
Volume 3 Edition 11 Newsletter
FINANCIAL CARE SERVICES
Independent aged care, lifestyle and financial advice for seniors
Volume 3 Edition 11 –30 November 2013
Deeming rates reduced effective 4 November 2013
The DVA and Centrelink deemed earning rates were reduced by a decision of Commonwealth Government Ministers, effective from 4 November 2013.
DVA and Centrelink use your ‘deemed financial income’ rather than your actual financial income for the Pension Income Tests and the aged care Income Tested Fee.
If you are a Single at Centrelink Age Pensioner or DSP recipient then the first $46,600 of your financial investments is now deemed to earn income at 2% per annum and any excess over $46,600 is deemed to earn income at 3.5% per annum.
A reduction in the deeming rates could lead to an increase in the amount payable to a part Age Pensioner. But a lower Income at Centrelink might just push you across to having the Asset Test bite harder than the Income Test and your resulting Age Pension increase becomes smaller than you expected.
If you do earn more than the deemed financial income then the extra income is not counted for the Pension Income Test. Major banks offer Pensioner Deeming Accounts that pay interest as if you were a Single Pensioner with all of your financial assets in this account.
Read more about deemed financial income and the means test limit for Singles and Couples at Centrelink at http://wp.me/p2gAsT-qj
DVA and Centrelink Income and Asset Testing
Centrelink manage the Asset testing for entrants to Commonwealth regulated aged care to ensure that Supported Resident accommodation subsidies are paid only for ‘asset poor’ residents. The ‘assessable asset’ cut-off for Supported Resident subsidy is $44,000 per person for the Fully Supported status and $113,784 per person for Partially Supported status.
Is the family home counted in the ‘assessed assets’ for residential aged care?
Yes if no one is living there.
The home might be an ‘exempt asset’ if your spouse or a close relative or your former long term carer lives there and that person’s main source of income is a Centrelink or DVA Pension.
Read more about Supported Resident status and home exemptions at http://wp.me/p2gAsT-q8
Private company and family trusts are not ignored at Centrelink and DVA
You cannot hide assets from Centrelink or DVA, by transferring ownership to a private company or family trust. Centrelink and DVA, also ‘look through’ family trusts.
Centrelink ask about your interests in private companies and private family trusts, as part of the Asset and Income Assessment process for Pensions or Commonwealth regulated residential aged care. DVA also ask about private company interests and family trusts when assessing any means tested benefits.
Placing substantial amounts of money into a family trust for the benefit of the grandchildren could be treated as a ‘gift’ at Centrelink. More about gifting next month
Many families decide that they do not want to prepare accounts and disclose all of their private company records to Centrelink just to find out that the parents are too wealthy to qualify for any Age Pension. The family might prefer to pay the parents a regular distribution from the private company and only report to the ATO.
Further complications await the family of an aged care entrant who has an interest in a family trust or private company. Read more about the options for residential aged care when the family assets are held in trusts, superannuation funds or private companies at http://wp.me/p2gAsT-qJ.
Hint: Consult Christine at Financial Care Services before starting on the aged care entry process if you have family trusts or private company interests.
If you would like further confidential, independent and professional advice about Centrelink, lifestyle or financial advice, please contact Christine Hopper (03) 9808 0338.
Financial Care Services Pty Ltd
Independent aged care, lifestyle and financial advice for seniors in Melbourne, Victoria, Australia
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299570 (check this at www.search.asic.gov.au/fsr/flb.html)
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252529 (check this at www.search.asic.gov.au/fsr/far.html)
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Disclaimer: The information contained in this newsletter 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.
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