Rules do differ for Veterans’ Affairs pensioners
A recent question addressed putting an inheritance into a superannuation accumulation fund to avoid the Centrelink income and assets test. You said adding the money to super seemed an “appropriate strategy’’ as the writer was already close to the lower asset test threshold and receiving the full age pension. I was under the impression money in super in either an income stream account or an accumulation account was counted as assets or income once one was of age pension years. Please clarify.
The partner of a Veterans’ Affairs (or DVA) age pension may also be entitled to a partner service pension from age 60 if certain criteria are met. The question I answered related to a couple where he was 73 and she was 61. In this case, money invested in super in her name would remain an exempt asset until she attains age pension age (or age 67). As the couple were receiving income support from DVA, the rules differ slightly to those applied by Centrelink. For Centrelink income support recipients, all assets are assessable once you attain age pension age.
A Bill was passed allowing a single person with income of less than $90,000 to be eligible for a commonwealth seniors health card. I have a self managed super fund and my annual drawings from it are always less than $90,000. According to SMSF rules, I have to draw a minimum percentage of account balance as at June 30 the previous financial year. There is no purchase price for my SMSF income. My application for a seniors health card has been rejected because question 19 on form SA330 which asks for a purchase price doesn’t apply to SMSFs.
If your SMSF is in “pension phase”, then there has to be a purchase price and date. The latter is the date you started the allocated pension (moved to pension phase). The form you refer to asks for the “date of purchase” (question 16) and “purchase price” (question 19). Your accountant/ tax adviser or fund auditor should be able to tell you this or point you to the correct records. Question 23 asks for the “current account balance” – the balance on the date you apply for the health card. This is likely to be different from the purchase price. If you apply for the health card, Centrelink will deem the value of the portfolio, not assess your actual income for income test purposes. This will also be the case for other investments.
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Brenton is a director and an authorised representative of Goldsborough Financial Services Limited. His advice should be considered as an opinion. Readers should consider engaging their own personal financial adviser. Questions and answers may have been edited for length.