From 1 January 2015 Centrelink will change the way they assess peoples eligibility for income support (which includes, pensions and low income health care cards, among other support). They will align the income test treatment of account-based superannuation income streams with the deemed income rules currently applying to other financial assets.
Currently under the income test for account-based income streams, income received is reduced by an amount reflecting the return of capital. As most people are generally only withdrawing their minimum annual amount, they have little to no income being assessed for the income stream and, accordingly, higher rates of income support and social security are received. Under these amendments, however, people will generally be assessed on higher levels of income and accordingly will receive lower rates of income support payments and social security.
There are grandfathering rules, under which individuals who are entitled to some form of income support and hold a superannuation-based income stream prior to 1 January 2015, will generally continue to be assessed under the previous rules for those income streams, unless they change to a product that is assessed under the new rules.
If you think you may be entitled to some form of income support, please contact us as soon as possible to discuss your circumstances and to determine, in conjunction with your financial planner, whether you can take steps now to ensure you are covered under the grandfathering provisions.
This article was written by Bianca Hamilton, a CA qualified Senior Accountant. Bianca spends her time out of the office enjoying the beach and outdoors with her husband, Bill, and their beautiful 8 month old daughter, Eden.