How asset-tested pensioners can boost their pension by $60 a fortnight — starting this week

Starts At 60 readers who are asset tested part-pensioners can use the next few days to boost their pension by up to $60 per fortnight for life.

Under Centrelink’s poorly understood gifting rules, the end of the financial year marks a reset point for the annual “gifting limits”.

Only those on an asset tested part pension would benefit significantly from the strategy and only to the point where you receive the full rate of pension.

For a single, that full pension amount is currently $1,149 per fortnight and for couples, $866.10 each or a combined $1,732.20 per fortnight.

The gifting or deprivation rules were established to prevent people from deliberately divesting themselves of assets and resources in order to get more from the social security system.

Under the gifting rules, an individual or couple can legitimately reduce their assets by a maximum of $10,000 per financial year with a maximum of $30,000 over a rolling 5 year period.

The date of the gift is used to determine two things.

Once the gift is made, the 5 year clock begins to tick. At the end of the 5 years, the gift “drops-off” the Centrelink system.

That means that if you gave away $100,000 today, the assets Centrelink use to determine your entitlements would reduce by $10,000. The remaining $90,000 stays in Centrelink’s systems as though you still have it for 5 years. The $90,000 counts under the asset test and is counted as a financial asset under the deeming system.

In essence, you don’t lose any pension, you just don’t get any more than the permitted amount and of course, you’ve lost the use of the asset.

5 years to the day in 2030 however, the $90,000 drops off the system and if you are an asset tested pensioner, your pension jumps by up to $270 per fortnight.

The second significance of the date is that the annual $10,000 git limit is per financial year. That means that you have a few days left to gift $10,000. If you’re an asset tested pensioner and once Centrelink is notified, that alone would see your pension lift by $30 a fortnight for life. In effect, that’s like a 7.8 percent return on you money for life, more than you’ll receive as interest in any bank account.

And because July 1 heralds a new financial year, you can repeat the $10,000 gift and see another $30 per fortnight increase.

When notifying Centrelink, you’ll need to clearly identify the dates the gifts were effected.

If you have MyGov access to Centrelink services, you can do the first notification today once the gift has been made and the second on July 1.

The $10,000 limit applies to singles and is the combined limit for members of a couple. It doesn’t need to go to an individual and can be split up.

The easiest way is to gift money. You can gift assets like shares and property, but this will trigger capital gains tax issues because a gift, whether or not you receive anything, is a disposal under the CGT rules. The disposal value is the market value of the asset and in the case of real-estate or other unlisted assets, independent valuations will be required.

Finally, this has the added bonus of you being able to see the benefit of the gift. Something that won’t happen if your loved ones receive the benefit after you’re gone.

IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.