Age Pension

Understanding how Centrelink assesses income for the income test

Oct 09, 2023

Independent money expert, Nick Bruining, provides a real life example of how Centrelink assessable income is NOT the same as Tax Office assessable income. Image source: Getty

Centrelink assessable income is NOT the same as Tax Office assessable income or actual cash received. It excludes for example, draw-downs from super or payments from an account based pension, interest from bank accounts and share dividends.

What’s included, is the deemed income from financial investments, gross employment income, net rental receipts, foreign pensions and special “defined benefit income streams”.

Under deeming, the first $60,400 of the grand-total of financial assets is deemed to be earning 0.25 per cent per annum and the balance, 2.25 per cent per annum. This total is divided by 26 to give a fortnightly amount that’s included in the income test calculations.

For example, Yvette is a single retiree with $50,000 in bank accounts, $10,000 in shares and $200,000 in an account based pension paying her $385 a fortnight. She also earns $320 a fortnight from her local café, helping out on Sunday mornings, when it’s busy.

Under the income test, she qualifies for a full age pension and when added to her other income, it gives her a grand-total income of more than $49,238 per annum, tax free.

PLUS Yvette also gets a refund of franking credits on her shares and 11 per cent compulsory super of $35.20 a fortnight paid into a super fund and discounts because she holds a Pensioner Concession Card.