YOURLifeChoices subscriber Guy, would like to know what effect withdrawing money from his wife’s superannuation would have on his Age Pension.
I am a pensioner and I get Centrelink payments as single. My wife will be 60 shortly and is on Newstart doing volunteering work. We have superannuation in my wife’s name which would be available on her 60th birthday if we so wish.
With the financial crisis, we lost quite a bit of our super investment but because it was not a large amount to begin with, we have left it where it is. Unfortunately, we have a bit of maintenance to do on the house which would cost us a bit so we thought of withdrawing $10,000 from our superannuation.
What would be affected if we withdraw that amount? Will my wife will have a Newstart payment affected? Will she have to pay tax? Will I have my pension affected as well?
A. Provided by Centrelink
Without knowing all the details about your personal circumstances it is difficult to determine exactly how withdrawing this amount from your partner’s super will affect your payments. Generally speaking, lump sum withdrawals from a superannuation fund are not assessed as income. Depending on what a customer uses the withdrawn amount for, further assessment may be necessary. If the withdrawn amount is used to purchase an assessable asset, the relevant income and asset assessment will apply. For example, if the money is placed in a bank account, the account balance is an asset and is subject to deeming. But if the withdrawn amount is then spent, you should notify Centrelink of the new account balance and there should be no further assessment necessary.
I note that you say you receive the ‘single’ pension payments. I am wondering if you have advised Centrelink you have a partner? If you have a partner, your combined income is assessed under the income and assets test. It is important to advise Centrelink if you have a partner in order to avoid incurring a debt as a result of receiving the incorrect rate of payment. I suggest that you make an appointment to speak with a Centrelink Financial Information Services officer before you make any decision on withdrawing from your wife’s super. You can make an appointment by calling 13 2300.
With regards to whether your wife will pay tax on any withdrawal will depend on the proportion of tax-free and taxable components to her super. For more information on how super benefits are taxed, you should contact the ATO on 13 10 20. or you can find out more from the ATO website by clicking YOURLifeChoices simple shortcut.