Volume 8 Edition 11 Financial Care Services Newsletter

Online at Permalink: https://financialcareservices.com.au/newsletters/vol-8-ed-11/

Financial Care Services, the specialist adviser to seniors in transition to new lifestyles

Volume 8 Edition 11 – 30 November 2018

But what if I do not want to retire at age 65 or ever?

The Age Pension age represents the minimum age at which a typical senior is considered no longer able to work enough hours to generate the income needed for a modest standard of living. However, there is no requirement that you must leave the workforce at any particular age.

Total retirement could be bad for both your mental health and your financial wellbeing.
Money is not the only reason for continuing to work beyond Age Pension Age. Being active in the paid or volunteer workforce provides opportunity for social engagement, learning new skills and contributing to your family and community. Some seniors want to retire from the conventional paid workforce to be available to care for their extended families. Minding the grandchildren and taking older seniors to medical appointments can be more personally rewarding than having a paying job. Continuing to work for payment or as a volunteer is good for your own mental health.

When Age Pensioners continue in the workforce

Continuing in the paid workforce and receiving a part Age Pension is possible for seniors who have only modest assets and little other income.
Yes, if you choose to continue in the paid workforce after reaching your Age Pension Age you might still be eligible for some Age Pension. The impact of your work income on your Age Pension payment rate depends on who you work for and how you work.

Working in your own business or as a ‘sole trader’

Any profits you generate from your own business count as income for the Age Pension Income Test.

As a business, you are expected to prepare annual accounts and submit an income tax return. You then have an income and expenditure statement for the financial year and a statement of assets and liabilities at the end of the financial year. These annual statements show you where your business is going financially. The information from these statements is used as the basis for your income tax return to the Australian Taxation Office “ATO”. Centrelink usually accepts the same information as a basis for means testing your Age Pension rate for the following year.

Your ‘business income’ will count in full for your Age Pension Income Test. That is, the profit or ‘net income of your business’ becomes part of your assessable income for the Age Pension Income Test.

If your business makes a loss you could have a ‘nil’ amount of ‘business income.’ But Centrelink does not allow you to claim a negative amount of business income or to offset a business loss against other income.

Similarly, your ‘business assets’ are included in your assessable assets. Beware Centrelink has tight rules about offsetting personal loans to your business for Asset Test purposes.

Profiting from your hobbies

In general, any financial reward from your hobby activities is not counted as income for the Age Pension Income Test. But if you are generating significant profits from hobbies then you could be classed by the ATO as operating a business.

Working in a family business

The Age Pension Income Test includes both your own income and the income of your domestic partner or spouse. Therefore any payment you receive for helping out in your spouse’s business is ignored; Centrelink has already counted the net income of the business in your assessable income for the Income Test.

Your wages for working in a business operated by another family member counts as assessable income. If the family business treats your wages as an employee payment, then Centrelink will also treat those amounts as real income for the Age Pension Income Test.

Age Pension Work Bonus for working as an employee of an unrelated entity

The Age Pension ‘Work Bonus’ is available to Age Pensioners who work for unrelated businesses. Some seniors return to their previous employers and work as casuals or short term contract employees to cover for busy spells and regular employees taking leave. Other seniors find new jobs with different employers.

The Work Bonus allows for the first $250 per fortnight of income earned from working as an employee of an unrelated entity, to be excluded from your assessable income for the Age Pension Income Test. Age Pensioners can save Work Bonus allowances to use later in the year.

Over a Centrelink year of 26 fortnights, you could have $6,250 of wages excluded for Income Test purposes. You could be earning wages from working a few days each fortnight and/or working several days per week for a short period.

2018 Federal Budget announcement of widening the type of employment eligible for the Work Bonus

The government is considering extending the Work Bonus to self-employed seniors. The challenge will be defining ‘income from work’ to allow real self-employed workers and sole traders, to benefit from the Work Bonus without opening the scheme to retirees who just manage their own investments.

Financial Care Services your independent adviser

Financial Care Services is an independent advisory service specialising in retirees of modest means and aged care entrants. Our core values include working with clients in claiming DVA and Centrelink entitlements.

The team at Financial Care Services are here to answer your Age Pension questions and guide your understanding of aged care costs. Help with Centrelink challenges is available from Financial Care Services, the specialist adviser to seniors in transition to new lifestyles.

To arrange an appointment for further confidential, independent and professional advice about DVA, Centrelink, lifestyle or aged care issues please contact Christine Hopper 03 9808 0338.

Financial Care Services charges fees based on the work involved in advising you about pensions and aged care fee solutions.
To make an appointment for confidential, independent and professional advice about aged care, retirement lifestyle, granny flat or Age Pension issues please contact Christine Hopper or call +61 3 9808 0338.

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Christine Hopper
Financial Care Services Pty Ltd
Independent aged care, strategic lifestyle and Social Security advice for seniors in Melbourne, Victoria, Australia
Telephone – call +61 3 9808 0338
Email – contact info@financialcareservices.com.au
Address – mail to 172 Warrigal Road, Camberwell Victoria 3124
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Disclaimer: The information contained in this newsletter is of a general nature only and does not constitute “financial advice”.
All eligibility for Commonwealth benefits will be determined by Centrelink or DVA, based on your personal position as documented and the legislation and Regulations in force at that time.