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As the New Year kicks off, it may feel like the changes to the Asset Test for the Aged Pension have just been drawn up – however these were actually announced back in the 2015 Federal Budget. As a trustee, you may be asking yourself, “what does this really mean for me – and what are my options?”
If you are over 65 and in receipt of a full or part Aged Pension, then you need to be aware that for every $1,000 owned above the assets test free amount your pension will be reduced by $3 (this was previously reduced by $1.50 for every $1,000).
The thresholds that apply are dependent on whether you are single or a couple, own your own home or not, and are either in receipt of a full or part pension.
For those on full pensions and are single homeowners, the pension starts reducing when assets reach $250,000. For couples it is when their assets reach $375,000. For non-homeowners, it is $450,000 for a single and $575,000 for a couple.
For single homeowners on part pensions, the pension begins reducing for a single when assets exceed $542,500 and for a couple it is when assets exceed $816,000.
For non-homeowners who are single it begins reducing when assets exceed $742,500 and for couples, when assets exceed $1,016,000.
The market value of most of your assets is taken into account when calculating your Age Pension. This includes, but is not limited to, things such as:
For some trustees, there will be little or no effect at all. They had always planned that their SMSF would provide them with their income stream in retirement. For other trustees these changes may impact on their spending patterns and the quality of life they are looking at in retirement.
Contact our Financial Advice Specialists today to review your situation, explore your options and help you plan for a comfortable and secure retirement.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
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