Topic 10 Social Security

Question 1

Age Pension rates

• The current Age Pension rates including pension and energy supplements per fortnight are:
• for a single – $________
• for a couple (combined) - $________
• Two tests are used to determine pension entitlements – the ________ and ________ Tests
• each test is applied and the one which produces the _________ pension entitlement is the applicable test

Answer 1

Age Pension rates

• The current Age Pension rates including pension and energy supplements per fortnight are:
• for a single – $894.40
• for a couple (combined) - $1,348.40
• Two tests are used to determine pension entitlements – the Assets and Income Tests
• each test is applied and the one which produces the lowest pension entitlement is the applicable test

Question 2

Age pension qualifying age

• The Age Pension is funded by the Australian government from taxes, and itself is subject to income tax
• The minimum Age Pension qualifying age is _____ years and ____ months
• Please note: Age pension age will rise by six months every two years, reaching the age of _____ years by 1 July 2035.*
• Please also note: the applicant must be an Australian resident for a total of at least ____ years*

Answer 2

Age pension qualifying age

• The Age Pension is funded by the Australian government from taxes, and itself is subject to income tax
• The minimum Age Pension qualifying age is 65 years and six months
• Please note: Age pension age will rise by six months every two years, reaching the age of 70 years by 1 July 2035.*
• Please also note: the applicant must be an Australian resident for a total of at least 10 years*

Question 3

Assets test thresholds

- Asset Test limits for the full Age pension:

• single homeowner – $_________
• single non-homeowner – $__________
• Couple (combined) homeowners – $_________
• Couple (combined) non-homeowners - $__________
• Pension payment is reduced by $___ per fortnight for every $_______ above this limit
• Pension is no longer payable if the value of assets equals or is higher than the following upper limits:
• single homeowner – $________
• single non-homeowner – $________
• couple (combined) homeowners – $_________
• couple (combined) non-homeowners - $_________

https://www.superguide.com.au/accessing-superannuation/age-pension-asset-test-thresholds

Answer 3

Assets test thresholds

- Asset Test limits for the full Age pension:

• single homeowner – $253,750
• single non-homeowner – $456,750
• Couple (combined) homeowners – $380,500
• Couple (combined) non-homeowners - $583,500
• Pension payment is reduced by $3 per fortnight for every $1,000 above this limit
• Pension is no longer payable if the value of assets equals or is higher than the following upper limits:
• single homeowner – $552,000
• single non-homeowner – $755,000
• couple (combined) homeowners – $830,000
• couple (combined) non-homeowners - $1,033,000

Question 4

Assets included in the Assets test - continued

• Account balance of superannuation account owned by the _________ of an Age pension
• Account balance of superannuation account owned by the ________ who is of Age pension age
• Account balance of superannuation account in ______________ owned by the spouse who is ______________
• superannuation funds in accumulation phase owned by the spouse who is ___________ age are _____________
• Reduced purchase price of annuities owned by the recipient of an Age pension, spouse or both
• exemptions apply to qualifying income streams/annuities

Note:What is your Age Pension age?

Answer 4

Assets included in the Assets test - continued

• Account balance of superannuation account owned by the recipient of an Age pension
• Account balance of superannuation account owned by the spouse who is of Age pension age
• Account balance of superannuation account in pension phase owned by the spouse who is under Age pension age
• superannuation funds in accumulation phase owned by the spouse who is under Age pension age are exempt
• Reduced purchase price of annuities owned by the recipient of an Age pension, spouse or both
• exemptions apply to qualifying income streams/annuities

Question 5

The Income test thresholds

Income test for pensions - Australian Government Department of Human Services

Standard pension income test and cut-off points

Question 6

The deeming rules

• The _______________ of the benefit income from financial assets is assessed by a deemed rate
• Examples are:
• assets held in __________ and ________accounts (effective since 1 January _________ )
• bank, building society and credit union accounts, __________, _______accounts
• _________
• __________ investments
• _______ and securities, loans and debentures
• ______, silver or platinum bullion
• ________ income streams
• ___________ assets

Answer 6

The deeming rules

• The net market value of the benefit income from financial assets is assessed by a deemed rate
• Examples are:
• assets held in superannuation and pension accounts (effective since 1 January 2015)
• bank, building society and credit union accounts, term deposits, cheque accounts
• cash
• managed investments
• shares and securities, loans and debentures
• gold, silver or platinum bullion
• short-term income streams
• deprived assets

Question 7

Main exclusions from the Assets and Income tests

• ___________ and up to ___ hectares of land on a single title – exempt from Assets and Income tests
• Amounts in ____________ funds and RSAs (the ___________ phase) where the person owning the investment is ______________ age – exempt from Assets and Income tests
• Qualifying ____________ /annuities – exempt from the Assets test, but included in the Income test

Please note: the land area may be ______ for rural applicants,

if the applicant has had a long-term (20 years) continuous attachment to the land and house.

Please also note: the main residence is included in the Assets Test calculation, and is capped if the pensioner lives permanently in aged care accommodation (a 2 year transition period applies), or is fully assessable if the pensioner lives in a retirement village. Some exemptions apply.

Answer 7

Main exclusions from the Assets and Income tests

• Family home and up to 2 hectares of land on a single title – exempt from Assets and Income tests
• Amounts in superannuation funds and RSAs (the accumulation phase) where the person owning the investment is under Age pension age – exempt from Assets and Income tests
• Qualifying income streams/annuities – exempt from the Assets test, but included in the Income test

Please note: the land area may be greater for rural applicants,

if the applicant has had a long-term (20 years) continuous attachment to the land and house.

Please also note: t_he main residence_ is included in the Assets Test calculation, and is capped if the pensioner lives permanently in aged care accommodation (a 2 year transition period applies), or is fully assessable if the pensioner lives in a retirement village. Some exemptions apply.

Question 8

Assets test exempt income streams – additional material

• ________ % Assets Test exemption applies if the product was purchased prior to 20 September 2004
• ________ Assets Test exemption applies to all products bought after 20 September 2004 and before 20 September 2007
• Please note: for the income streams to qualify for the ________________, they must meet all the required characteristics specified in Sections 9A or 9B or 9BA of the Social Security Act.*

Answer 8

Assets test exempt income streams – additional material

• 100% Assets Test exemption applies if the product was purchased prior to 20 September 2004
• 50% Assets Test exemption applies to all products bought after 20 September 2004 and before 20 September 2007
• Please note: for the income streams to qualify for the Assets test exemption, they must meet all the required characteristics specified in Sections 9A or 9B or 9BA of the Social Security Act.*

Question 9

Assets included in the Assets test

• _____________, including cash, bank accounts, listed shares and securities, managed investments and loans
• ____________, ___________ and other ________ assets such as arts, motor vehicles, caravans and motor bikes
• __________assets
• The value of any _________ (other than the principal ___________)
• Gifts above $____________ per _________ year or $___________ in any _______ consecutive years
• > these gifts will be treated as ‘________ assets‘ and will be considered under the Assets Test (the ________ value) and Income Test (the _______ rule) for the duration of 5 years

Answer 9

Assets included in the Assets test

• Financial investments, including cash, bank accounts, listed shares and securities, managed investments and loans
• Personal items, house contents and other lifestyle assets such as arts, motor vehicles, caravans and motor bikes
• Business assets
• The value of any real estate (other than the principal residence)
• Gifts above $10,000 per income year or $30,000 in any five consecutive years
• > these gifts will be treated as ‘deprived assets‘ and will be considered under the Assets Test (the market value) and Income Test (the deeming rule) for the duration of 5 years