Question: Can you refer me to any articles or webinars that you may have presented in relation to obtaining/qualifying for a full or part-pension with Centrelink? If the members are currently on an ABP, can they still qualify? I am aware that there are two tests that apply (1) Income Test & (2) Assets Test. If a couple had an SMSF with assets of say $850K plus other assets outside the fund of say $74K and draw an ABP of say $60K, would they qualify for a part-pension? I am aware that there will be a change on 1 January 2017.

Answer (by Paul Rickard): As you note, there are two tests  – an income test and an assets test.

For the income test, your assets (ABP/super assets of $850K plus other assets of $74K) will be subject to deeming. Currently for a couple, the deemed income is 1.75% on the first $80,600, and 3.75% on the balance. On circa $924K, this is approx. $33,038 pa or $1,270 per fortnight.  Where your fortnightly income is above $288, the pension is reduced by 50c per fortnight for each dollar of income. So, your pension would be reduced by approx. $491 to a max of $826.40 (current max couple pension is $1,317.40 per fortnight).

However, you also need to pass the assets test.

Assuming you are a home-owning couple, the current max assets to still get a part-pension is $1,170,000. Above assets of $291,500, the fortnightly pension payment reduces by $1.50 for every $1,000 of assets. So, your max payment would be approx. $368 per fortnight.

This all changes from 1 January 2017. The threshold for a home-owning couple goes up to $375,000, but the taper rate increases to $3.00 per $1,000 of assets. Under the current max pension of $1,317.40, if your assets are more than $814,000, then you won’t be eligible for any pension. This amount will increase marginally when the pension goes up later this year – however, I don’t think you will qualify.

Question: On July 1 next year, I will be 60 and my wife 61 – we currently have a TRIS/TTR and neither of us are retired – if I retired before that time and my wife didn’t, how is our TRIS/TTR treated? Is my balance/earnings then tax free and hers subject to the proposed 15% tax ? We currently have a 75%/25% split, so would only 25% be subject to taxation, both earnings and CGT?

Answer (by Paul Rickard):If you permanently retire, you will meet a condition of release. Potentially, you could commute your TRIS to a lump sum withdrawal, or stop it, and start another account-based pension. As the latter will be a normal account based pension, then there will be no tax on the investment earnings on the assets supporting it.

For your wife, her TRIS will become subject to tax from 1/7/17 (the investment earnings on the assets supporting it will be taxed at 15%).

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.