- Age Pension - either full or part payment
- Commonwealth Seniors Health Card (CSHC)
The changes took effect from 1 January 2015 and may affect your ability to access either of the above social security benefits in the future. Here we take a closer look at the changes.
Effects of changes on Age Pension
A deemed amount of income is now included for Age Pension income and asset means testing. Deeming is the Government’s way of assessing income from your financial investments. Your account-based pension balance is the basis on which your deemed amount will be calculated for Age Pension means testing purposes. The total balance of either your own or yours and your spouse’s collective financial asset pool will be calculated. Deeming rates will then be applied to that total to calculate your deemed amount of income.
Your deemed amount of income can change if the deeming rates are altered. Deeming rates normally change in line with the performance of financial markets. So if your investments are earning more, deeming rates will generally increase too.
These changes apply from 1 January 2015. If at this date you were already receiving both a superannuation pension and the Age Pension, the previous rules will still apply. Prior to 1 January 2015, the Age Pension means test included the amount received less a deductible amount calculated on the pensioner’s life expectancy.
So what does it all mean? Naturally you want to receive the highest possible Age Pension. So be sure to consider the social security consequences of stopping or changing your superannuation pension from 1 January 2015. In many cases, the previous superannuation pension calculation method for means testing will provide the most favourable result.
Effects of changes on the CSHC
Untaxed superannuation income is now included in the income test for the CSHC. Again, deeming is the basis of the CSHC income test. A deemed amount of income corresponding to the value of the tax-free component of an account-based pension will constitute untaxed superannuation income for this purpose.
Prior to 1 January 2015, the CSHC income test thresholds were:
- For singles: an adjusted taxable income of $51,500
- For couples: a combined adjusted table income of $82,400
So what are the implications of these CSHC changes? Once again, if you already held a CSHC and were receiving a superannuation pension before 1 January 2015, the previous rules apply. That is, you will not need to include a deemed amount in your CSHC income test. However, you could be subject to the new requirement to include untaxed superannuation income in the CSHC income test if:
- Your superannuation pension stops after 1 January 2015
- Your superannuation pension changes after 1 January 2015
- Your CSHC ceases even for a short time
Would you like some help to make sense of it all?
Naturally changes to superannuation and social security entitlements can leave you with questions regarding your own individual position. Ganrid & Associates would be happy to help answer your queries and ascertain how the recent changes affect your entitlement to either the Age Pension or the CSHC. Please feel welcome to call us and we will gladly arrange a time to meet with you and discuss your specific circumstances.