There is an issue that is rapidly approaching that very few taxpayers are considering. It relates to how Centrelink count income when calculating Govt age pensions. At present super balances are exempt from the deeming test and don't count to income. New rules are here
From January Centrelink will apply the deeming rules to pension account balances and add that income to determine eligibility to age pension etc. Now there is a catch to this issue.
- A account based pension in place already remains excluded
However if its changed then a new pension may commence and it will be counted.
Many people may trigger a permanent loss of benefits without realising. Overpaid benefits will occur if this happens.
First point - This ONLY affects those who currently can access a Centrelink benefit or may get a part pension later. If you are sufficiently wealth to not get any age pension there is no issue.
Second point - For those who do receive any age pension then this issue will potentially affect EVERY super member receiving a TTR or account based pension IF THEY ALTER THE PENSION after January.
- They commute to accumulation to add to balances (pension refresh, reset, rollback etc are terms in common use)
- They rollover to a new fund and start a new pension
- New contributions MUST NOT BE ADDED to an existing pension so strategies to consolidate pensions may harm people.
- Starting a new pension from new contributions
- Those people who are aged 60+ who have accumulation accounts - Not a pension account. Time is ticking.
Importance of not seeking Accountant advice for super pension strategies is evident in this issue. Especially SMSFs who may rely on the year end. It will be too late. Accountants cant advise on pensions and benefit access. This is a benefit of the combined experience of financial planning and tax working together.
From January Centrelink will apply the deeming rules to pension account balances and add that income to determine eligibility to age pension etc. Now there is a catch to this issue.
- A account based pension in place already remains excluded
However if its changed then a new pension may commence and it will be counted.
Many people may trigger a permanent loss of benefits without realising. Overpaid benefits will occur if this happens.
First point - This ONLY affects those who currently can access a Centrelink benefit or may get a part pension later. If you are sufficiently wealth to not get any age pension there is no issue.
Second point - For those who do receive any age pension then this issue will potentially affect EVERY super member receiving a TTR or account based pension IF THEY ALTER THE PENSION after January.
- They commute to accumulation to add to balances (pension refresh, reset, rollback etc are terms in common use)
- They rollover to a new fund and start a new pension
- New contributions MUST NOT BE ADDED to an existing pension so strategies to consolidate pensions may harm people.
- Starting a new pension from new contributions
- Those people who are aged 60+ who have accumulation accounts - Not a pension account. Time is ticking.
Importance of not seeking Accountant advice for super pension strategies is evident in this issue. Especially SMSFs who may rely on the year end. It will be too late. Accountants cant advise on pensions and benefit access. This is a benefit of the combined experience of financial planning and tax working together.
