Volume 9 Edition 6 Financial Care Services Newsletter
Online at Permalink: https://financialcareservices.com.au/newsletters/vol-9-ed-6/
Financial Care Services, the specialist adviser to seniors in transition to new lifestyles
Volume 9 Edition 6 – 28 June 2019
Significant changes to individual’s Age Pension entitlement from Small changes in Age Pension rules.
Just a small increase in Age Pension Age
The effective minimum age for starting an Age Pension will increase by six months on 1 July 2019.
Active involvement in the workforce can provide social connections and better mental health as well as financial benefits. The average period of healthy working life increases for each successive generation of Australians. Consequently the Age Pension Age for being considered too old to support yourself from work earning alone also increases gradually.
The last of the Australians born in 1953 have now reached their Age Pension Age of 65 years and 6 months.
Their younger siblings are deemed to be healthier and fit to work for longer. Thus the next cohort who were born in 1954 will have to wait until they attain their new higher Age Pension Age of 66 years to be old enough for an Age Pension.
Two more increases in the Age Pension Age have already been legislated. Thus the Age Pension Age will be 67 years for Australians born after 1956.
These increases in the Age Pension Age mean that no one will reach their Age Pension Age during the second half of 2019, 2021 or 2023.
With an expansion of the Age Pension Work Bonus scheme
Many senior Australians want to continue working beyond their Age Pension Age. Seniors can continue to be active in the paid workforce well beyond Age Pension Age.
The government supports Age Pensioners’ ongoing workforce participation with the Age Pension Work Bonus scheme. Initially the Work Bonus scheme only applied to the first $250 per fortnight of wages, salary and fringe benefits, from employment with an unrelated business.
The Work Bonus scheme is being expanded as from July 2019. The expansion has two parts.
Firstly, the amount of an Age Pensioner’s earnings from work that can be ‘disregarded’ for the Income Test is increased.
The Work Bonus allows for the first $300 per fortnight of earnings from work to be disregarded for the Age Pension Income Test as from July 2019.
The Work Bonus may be ‘saved up’ for later use. But you are not allowed to have more than $7800 of ‘saved’ Work Bonus. You will forfeit any saved Work Bonus in excess of twenty six fortnights, one year’s worth of Work Bonus.
Secondly, the acceptable types of ‘work arrangement’ is extended to include the Age Pensioner’s earnings from self-employment, such as a sole trader.
Work Bonus can only be used for earnings from actual work that involved personal effort.
As from July 2019, you can claim Work Bonus for earnings from real work with a family business, partnership or as a sole trader.
You could expect Centrelink to ask you to verify that you actually put ‘personal effort’ into earning your work income. The ‘business accounts’ that you maintain for income tax purposes might be acceptable to Centrelink as evidence of your income after deducting your business expenses, for the purpose of assessing your Age Pension Work Bonus.
You would expect Centrelink will be checking that you actually put in real personal effort to earn the money that your clients pay you. Income earned from managing your investments, superannuation funds and family trusts will not be allowable for the Work Bonus.
Single Touch Payroll reporting of your employment income to Centrelink
The ‘Single Touch Payroll’ reporting becomes compulsory for all employers from July 2019. Yes even if you just employ yourself through a private company structure. Larger employers started Single Touch Payroll reporting last year.
Single Touch Payroll is a system for reporting every detail of each payment to an employee directly the Australian Taxation Office, “ATO”. All employer superannuation contributions and the voluntary superannuation contributions deducted from employees’ pay will also be reported via the Single Touch Payroll system.
The ATO will then inform Centrelink of your recent wages and salary payments. But wait, once the Single Touch Payroll system is established using your TFN, it needs to be properly linked to the Centrelink computer system that knows you by your CRN. You will need to continue reporting your earnings from employment to Centrelink until Centrelink tell you to stop sending in that information.
Eventually you might not need to update Centrelink about your last payslip, Centrelink would already have the information from the ATO. Then your Age Pension would be adjusted promptly by Centrelink after allowing for your Work Bonus.
The ATO would also inform Centrelink of your partner’s employment income. Your Age Pension payment rate could be adjusted promptly to allow for any change in your partner’s earnings even if your partner is too young for an Age Pension. This linking of your partner’s TFN to your Centrelink CRN could be an administrative challenge that takes time to work smoothly.
July 2019 Indexation adjustments to Age Pension Means Test Allowances
Small increases in the Asset and Income Allowances in the Age Pension means tests are expected for July 2019. The next Financial Care Services Newsletter will include the new Allowances and the new cut off levels for any Age Pension.
Christine at 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 Christine Hopper at Financial Care Services, the specialist adviser to seniors in transition to new lifestyles.
Christine 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.
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