Will a loan affect my Age Pension?

Rosemary recently received a tax refund but is unsure if she needs to report it to Centrelink; and, if she loans her son money, will her Age Pension be affected?

Q. Rosemary
I wonder if you could tell me if my income tax rebate needs to be reported to Centrelink as income. I retired on 31 May and subsequently was given a full Age Pension the following fortnight, in mid-June. This rebate of $3300 was for the 2016–2017 tax year – earned before I was given an Age Pension. 

Also, to help my son with a house purchase, I will be lending him $15,000, of which he will eventually pay back $10,000. Will this affect my Age Pension? 

A. Your tax rebate information will be made available to Centrelink direct from the ATO. As a one-off lump sum payment, your refund will not be counted as income. However, depending on what you do with it, it may be considered a financial asset and deemed to earn income. You should contact a Centrelink Financial Information Services officer (FISO) to confirm your position. 

Under the Centrelink gifting rules, you can gift $10,000 each financial year, to a maximum of $30,000 over five years. Any additional amount you gift will be considered a deprived asset. Therefore, if you gift your son $15,000 this year, your assets will only be reduced by $10,000. 

Any loan you make to a family member is considered an asset until it is fully repaid, and therefore will have little or no effect on your Age Pension. However, you should always confirm your circumstances with a Centrelink FISO. 

Related articles:
Should I lend my son money?
Centrelink assessment of gifts

Written by Debbie McTaggart

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