You’ll need to update your browser so you can continue to log on to your online banking from 28th February. Update now.

Close

Guidance

How the 2017 assets test changes might affect you

How the 2017 assets test changes might affect you

Assets test changes come into force from 1 January 2017 and could make a difference to anyone who qualifies for the age pension.

If you are currently 65 or over (the age pension age at present), to qualify for the age pension payment from the Federal Government you have to undergo tests regarding how much you earn – an income test – and what you own – an assets test.

The amounts you earn or own can determine your eligibility for a full- or part-age pension. The test that produces the lowest result is the one used to determine your rate of age pension.

The assets test includes the value of most assets you own, excluding your home. Under the test, if your assets are within the assets test free area, your age pension is not reduced. For every $1,000 of assets that you have above the assets test free area, your age pension reduces by $1.50 per fortnight, until it reaches nil.

The assets test free area and the assets taper rate – the rate at which pensions are reduced - will increase from 1 January 2017.

The assets test free areas for a full pension will increase to:

  • $250,000 for a single homeowner (previously $209,000)
  • $375,000 for a homeowner couple (previously $296,500)
  • $450,000 for a single non-homeowner (previously $360,500)
  • $575,000 for a non-homeowner couple (previously $448,000)

A new taper rate of $3 per fortnight for every $1,000 above the new assets test free areas will apply. This effectively doubles how quickly your age pension reduces as your assets increase under the assets test.

What assets are included?

  • Property, excluding your home
  • Motor vehicles, boats, caravans
  • Financial investments such as bank accounts, managed funds and shares
  • Superannuation, if you're over the age pension age
  • Superannuation pensions and annuities (note, certain pensions and annuities purchased before 20 September 2007 may be partially or fully exempt)
  • Business assets
  • Household contents and personal effects, such as clothes or jewellery

Things to consider

For some people, the changes might mean an increase in the amount of age pension you receive after 1 January 2017, although some will remain the same and some pension payments will reduce, or be cut off entirely, under the changes.

Strategies to reduce assessable assets may be up to twice as effective under the new rules compared with the current rules.

If you are thinking of investing or have investment strategies mapped out to help provide an income in retirement, you should talk to a financial planner to discuss how the assets test changes might affect you.

You might need to consider:

  • Replacing lost income
  • Putting in place strategies to manage your assessable assets

You might want to think about whether you will need to work for more years before you retire or if you need to adjust your budget for the lifestyle you wanted to achieve in retirement. 

What does it mean for health entitlements?

If you lose your income support payment (for example - the age pension) as a result of the assets test changes, the government will provide you with a Health Care Card.

If you are over the age pension age, you will also get a Commonwealth Seniors Health Card. Both cards will not be subject to the usual income test requirements.

These cards offer discounts on prescription medicines and other medical expenses, and a range of private and State Government health, household, transport, education and recreation concessions.

These laws are subject to change you should talk to a professional adviser for the most up-to-date information. No person of the Commonwealth Bank group of companies, accepts responsibility for any loss suffered by any person arising from reliance on this information. This is not financial product advice and does not take into account any individual’s objectives, financial situation or needs. Any examples are for illustrative purposes only and actual risks and benefits will vary depending on each investor’s individual circumstances. You should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law. Commonwealth Financial Planners are representatives of Commonwealth Financial Planning Pty Ltd ABN 65 003 900 169 AFSL 231139 a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 (the Bank).