The rate of payment for pensions is calculated by Services Australia using both an asset and an income test. The test that results in the lower rate (or nil rate) will apply.
Asset test
Property or items you or your partner own in full or part or have an interest in are assets. Services Australia look at the type and value of any assets you and/or your partner own in and outside of Australia.
The value of your assets is what you’d get if you sold them at market value. Services Australia deduct any debt you owe that your asset is security for, from its market value. They may also deduct an unsecured loan from the value of an asset if you borrowed the loan specifically to purchase the asset.
Assets include things like:
- financial investments
- home contents, personal effects, vehicles and other assets
- real estate annuities, income streams and superannuation pensions
- sole traders, partnerships, private trusts and private companies.
To receive a full pension, assets must be less than:
|
Status |
Homeowner |
Non-homeowner |
|
Single |
$268,000 |
$482,500 |
|
Couple combined |
$401,500 |
$616,000 |
|
Illness separated, couple combined |
$401,500 |
$616,000 |
|
One partner eligible, combined assets |
$401,500 |
$616,000 |
Assets over these amounts reduce pension by $3.00 per fortnight for every $1,000 above the amount (single and couple combined). To receive a part-pension, assets must be less than:
|
Status |
Homeowner |
Non-homeowner |
|
Single |
$585,750 |
$800,250 |
|
Couple combined |
$880,500 |
$1,095,000 |
|
Illness separated, couple combined |
$1,037,000 |
$1,251,500 |
|
One partner eligible, combined assets |
$880,500 |
$1,095,000 |
Income test
The tables below illustrate the income free areas (the amount of income you can have before payment is reduced) and indicative income limits (income at which payment is reduced to nil) for pensions.
Income up to the income free area has no effect. Income above the income free area reduces the rate of pension by 50 cents in the dollar (single), and 25 cents in the dollar each (for couples).
|
Status |
Income free area |
Income limit |
|
Fortnight |
Fortnight |
|
|
Single |
$178 |
$2,083.40 |
|
Couple combined |
$316 |
$3,188.40 |
|
Illness separated, couple combined |
$316 |
$4,126.80 |
Income test – Deeming
Deeming rules are used to work out income from your financial assets. Deeming is a set of rules used to work out the income created from your financial assets. It assumes these assets earn a set rate of income, no matter what they really earn. Services Australia adds this to your other income and apply the income test to work out your payment rate.
The main types of financial assets are:
- savings accounts and term deposits
- managed investments, loans and debentures
- listed shares and securities
- some income streams
- some gifts you make.
If you’re single, the first $53,000 of your financial assets has the deemed rate of 0.25% applied. Anything over $53,000 is deemed to earn 2.25%.
If you’re a member of a couple and at least one of you get a pension, the first $88,000 of your combined financial assets has the deemed rate of 0.25% applied. Anything over $88,000 is deemed to earn 2.25%.
If your investment return is higher than the deemed rates, the extra amount doesn’t count as your income.
Income test – Work Bonus
Employment income is subject to a Work Bonus for eligible pensioners over Age Pension age. The Work Bonus reduces the amount of employment income or eligible self-employment income that Services Australia applies to your rate of pension entitlement under the income test.
You have a $300 Work Bonus available each fortnight, which can accrue up to $7,800 per year. When your Work Bonus eligible income is less than $300 a fortnight, the entire amount of ‘assessable’ income will be reduced to zero.
When your Work Bonus eligible income is more than $300 a fortnight, Services Australia use your Work Bonus to reduce your assessable income by $300. They will then apply the income test to your income amount.