Income or asset test?

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Norma understands how her Age Pension payment is assessed, but is unsure when it switches from being assessed under the income test to the asset test.

Q. Norma

I have never been able to understand when you cross over to the asset test asset from the income test when your Age Pension payment is assessed. For example: If I have a lot of savings and I am over the income limit, I understand I start to lose some pension. I understand that when I have over a certain amount of money in the bank it becomes asset tested. But what happens if I do not have very much in savings but have, say, an expensive car and jewellery worth a lot more?

A. As you report any changes in your income and assets, Centrelink will carry out periodic assessments under each test. Should this assessment result in you receiving a lower payment under the test through which you are not currently assessed, then this is the payment you will receive.

For example:

Under the income test, a single age pensioner can earn $162 per fortnight (excluding work bonus) in income from shares, investments, interest etc. before their Age Pension is affected. For every dollar over this amount, the Age Pension payment will be reduced by 50 cents. So, if an age pensioner earns $182 a fortnight, their pension payment will be reduced by $10.

Under the asset test, a single age pensioner (who owns their own home) can have $205,500 worth of assets before their Age Pension is affected. For every $1000 over this amount, the Age Pension payment will be reduced by $1.50. So, if an age pensioner has $220,500 in assets, their pension payment will be reduced by $22.50.

This will result in the Age Pension being paid under the asset test method.

For details of what is included in the income and asset test, visit

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Written by Debbie McTaggart


Total Comments: 18
  1. 0

    What if you have an asset which generates some income, like an investment property? Will both asset and income test be applied to that?

  2. 0

    What if you have a defined benefit super income that puts you over the income limit for a full pension but the value of the DB puts you over the assets limit. Does that mean that I would be penalized twice? ie aged pension reduced because of the income and also reduced because the value puts me over the allowable asset limit?

    • 0

      ron – excellent question – I am lead to believe that DFRDB (military defined benefit pension) is exempt – not sure about judges, politicians and others.

  3. 0

    My friends father left his house to her and her brother. The brother was living in the house at the time of his passing and continues to do so . She cannot sell the house or derive income from it . Does this impact the asset test for her aged pension?

    • 0

      Yes. One of the gross unfairnesses of the system is that so-called ”assets” that generate no income and cannot be sold (even assets that are technically worthless in today’s market for various reasons) are still assessed at absurdly high values. We had land that couldn’t be sold or used because council stuffed up in planning and there was no driveway access, but Centrelink assessed it at $380,000.

    • 0

      Surely if she owns half the house her brother should be paying her rent.

    • 0

      I would have thought that an asset can only be judged an asset, if the value of that asset can be realised. If the asset cannot realise any value, then surely the asset is a liability – and is not an asset at all! Just saying.

  4. 0

    You say that one can earn $162 per fortnight in income from shares, investments, interest etc. before their Age Pension is affected. Does this figure of $162 also apply to income actually earned from working in a real job?

    • 0

      Yes Vibes. It applies to any sort of income ie employment, bank interest, share dividends etc

    • 0

      Vibes, not quite what RJ said. You can also have $250 a fortnight from job income by the Work Bonus. You can have both. If you have no income from shares you can earn $250 + $162= $412 a fortnight before you have any reduction in pension. The work bonus accumulates up to $6500 if you don’t use it. In my case I got a short term job after four years as a pensioner and the first $6500 plus the $162 a fortnight I earned did not affect my pension at all.

    • 0

      Thanks Theo1943. Didn’t know about the Work Bonus.
      It’s explained here:

    • 0

      I have a full pension and work bonus since 2009 and is great to reduce your income I have been working until 2014 and my pension has never been reduced because of the work bonus $250 x fortnight.
      Now that I am on Overseas holidays my pension is reduced to a min allowed after 6 weeks but is Ok I can enjoy my holidays pretty well for a long time no worries.
      If you are working you must join the work bonus option go to the link that RJ has showing

  5. 0

    is tax payable on annuity payments from a superfund ? I am over 65 with a plan to retire on monthly payments from my superfund benefit account , if payments exceed $ 18000 in a year do I pay tax on anything over 18k ?

  6. 0

    Cade. I retired in February last year. I have income from an allocated super pension, also from the age pension and also from working 2 days each week. All of this has to be declared to the taxman, and I would have thought that this would also apply to income from an annuity (but I am NOT sure). I avoid paying tax because I still have an accumulation account (as well as my pension account) with my super fund, and I pay enough into this to avoid tax. It is tax deductible, and reduces my total income to below the tax-free threshhold.

  7. 0

    Any test should be designed to accommodate every Party’s inability to balance the budget in any given year!
    Should the Party be unable to balance the budget then the Asset & Income Test should be automatically adjusted so that the Government of the day does NOT have to pay anyone anything at all!!!
    THAT IS WHAT THEY (the Party machines want) DESIRE….to tax you but offer no return of service to anyone other than themselves!!!!
    Vote ALL the Party Machine Puppets OUT OF OUR Parliament and restore the Government to the system as it was designed to be!
    Elect an Individual to represent you in your Parliament that has NOT sold out to the Party Machine Club of Pigs at the Trough…. whilst minimising any payment to anyone whatsoever!!!!
    They want to Privatise EVERYTHING….including ALL Welfare!!!!
    We are NOT America…..We are Australia…..and We have a different Value system than anyone else in the World!!!!
    WHY?? Because we are young and we do NOT Follow like sheep what others do!!! We are capable of picking out what is best for us and what is NOT!!!
    Stop them turning us into Little America!!!!
    Vote the lot of them out of OUR Parliament… for an Independent…..that has not sold out to the Party machines!!!

  8. 0

    A great deal is being discussed about present assts and income.a critical issue that will impact on many pensioners is the changes that will take place in January 2017.
    For many of us affected detailed information about these changes is needed to plan ahead. For example at what point does assessment change from asset test to income test??
    Based on the present deeming rules would a single person with 250000$ receive the full pension if assessed under the income test??



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