Centrelink Q&A: How will shares affect the Age Pension?

Font Size:

David has had a big share market win but is now worried about his pension payment.

•••

Q. David
We are full pensioners with no assets except for $40,000 in a savings bank account. I recently had a share tip from a friend and purchased 50,000 shares at $0.17 with some of those savings. These shares are now worth $0.47 cents and I don’t understand what the position is with Centrelink. Of course, if I sell all the shares there is quite a bit of profit or, if I just sell enough shares to recoup my outlay, where do I stand? Also, what happens if these shares continue to rise?

A. Both shares and any money held in a savings account are treated the same by Centrelink and are assessed under the income and assets test.

Under the assets test, the value of the financial asset is assessed and under the income test, the deemed income is counted.

Centrelink considers account-based investments, market-linked investments and some income streams to be financial investments.

Market-linked investments include: managed investments; shares and securities; bonds; notes and debentures; and superannuation if you’re over the Age Pension age.

For the assets test, Centrelink assesses income streams using their current account balance, while for the market-linked investments, it uses not their face value but their net market value – that is, the last trade or sale price of the investment, minus any loan.

When calculating the income from your investments, Centrelink applies the deeming rules. The deeming rules use the gross value of your investments to calculate the amount of deemed income that will be included in the income test.

Centrelink revalues market-linked investments, shares and securities each March and September.

It either:

  • gets the new values from the latest unit prices it has, or
  • asks you for the latest values.

The current asset test limit to receive the full age pension for a home-owning couple (combined) is $394,500, and as you are still well under this limit, I don’t think that you have too much to worry about, even if the shares continue to rise.

If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.

Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice. from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

Join YourLifeChoices today
and get this free eBook!

Join
By joining YourLifeChoices you consent that you have read and agree to our Terms & Conditions and Privacy Policy

RELATED LINKS

How is our pension assessed if we add more land?

Vivienne and her husband want to know whether they should buy or lease extra land.

How does Centrelink assess a lump-sum loan repayment?

Will your Age Pension be affected by a lump-sum loan repayment from one of your children?

Pension boost is unlikely to help many older Australians

Freedom of Information documents reveal the change to deeming rates is insignificant.

Written by Ben

4 Comments

Total Comments: 4
  1. 0
    0

    it’s interesting how centrelink assess my shares to be valued at the current share price yet if I cash them in I would lose a hefty amount due to capital gains tax. They are reducing my part pension by using a cash value I will never achieve.

    • 0
      0

      How would they know that about each individual though?

    • 0
      0

      Assuming that you get dividend income, That income is based on the total number of shares, not some reduced amount due to an anticipated capital gains tax. Should you sell and pay CGT then your assets are valued at the new, after-tax, value.

      Makes sense to me.

  2. 0
    0

    Hello everyone feel free to reach out to Mr barry on Barrysilbert540 @ gmail . com if you need help or guidance on how to recover your lost fund using good strategy and how profitable trades is been done. And also if you want to recover your lost funds using his masterclass strategy he can help you. I’m earning $10,250 weekly using his masterclass.. you can also reach him out on whatsapp + 4475 0829 8691. you can also reach out on this email expert.traders4u @ gmail. com.


FACEBOOK COMMENTS



SPONSORED LINKS

continue reading

Travel News

Travel refund problems a 'dreadful, dreadful situation': ACCC boss

Travel-related consumer complaints have risen by 500 per cent since January 2020, with thousands of Australians unable to get refunds...

Aged Care

Whistle-blower family welcomes aged care recommendations

When Barb Spriggs found her husband lying on the ground of the Oakden aged care facility with two nurses standing...

Medication

How do different painkillers work?

It's easy to assume the only difference between painkillers is their strength. Or that any painkiller you can buy without...

Food and Recipes

Cinnamon and Honey Breakfast Jars

"If you have to be up early and you need something speedy, this is the perfect go-to breakfast," says Bake...

Aged Care

It starts with the fundamentals: adequate staffing, adequate food

There have been 22 public reports and inquiries related to publicly funded aged care in Australia since 1997. Will this...

COVID-19

Government reveals details of unit established to bust vaccine myths

With 300,000 doses of the AstraZeneca COVID-19 vaccine arriving in Australia on Sunday, the rollout is starting to speed up,...

Finance

Making it easy to buy Australian

Research shows that since the pandemic an overwhelming number of Australians want to buy locally produced products to support the...

Finance

What your car costs - the surprising costs of driving a ute or SUV

Recent research by Finder shows Australians could be paying thousands of dollars more than necessary to keep their car running....

LOADING MORE ARTICLE...