Do I need to tell Centrelink if I withdraw my money?

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Gail wants to withdraw a sum of money from a term deposit and wants to know whether she has to inform Centrelink.

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Q. Gail
My husband and I are both on the Age Pension. We have a term deposit which we would like to withdraw $30,000 from when it matures in a week’s time. Do we have to explain to Centrelink what it is for and/or provide receipts? We never seem to get far with inquiries at our local office.

A. Pensioners must advise Centrelink of any changes of $2000 or more in their financial assets. If they add this amount to their bank account, they will need to advise the new balance.

Similarly, they need to advise the department of any changes of $1000 or more to their combined assessable assets – that is, non-financial assets. This includes (but is not limited to) the value of goods, cars, boats, furniture, real estate (including real estate in other countries), personal property, interest in any property, trust or company, and any other right or interest in any other asset (including assets in other countries).

If a pensioner reduces their financial assets by a large amount without buying an asset, the department may ask for details and some form of supporting documentation. This allows the department to investigate if deprivation and/or gifting has occurred.

The gifting rules are designed to stop people giving money away from their assets to gain a higher rate of payment.

If you are just planning on spending the money that you withdraw, what you spend it on is important for Centrelink to know.

If, for example, the money was spent on maintenance or capital work around the family home, it would not be assessed, as the family home is exempt from means testing.

If it was spent on travel, it would not be assessed, as travel expenses are also exempt.

Other non-assessable items include the purchase of a prepaid funeral or investing in funeral bonds up to a value of $12,750.

If the funds were spent on assets such as cars, boats, caravans and furniture for personal use, they would be assessed under the assets test, but would not under the income test as these generally do not produce income. 

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 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 Centrelink Financial Information Services officer, financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

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Written by Ben



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