There may only be 14 sleeps to go until Christmas Day is upon us, but did you know that in 21 sleeps new legislation comes into effect that will see Centrelink deem account based pension income when clients apply for income support payments?
Existing clients will have their account based pension income ‘grandfathered’ meaning it will be excluded from the new rules.
Existing clients who move from one payment type to another, for example if moving from a carers payment to the age pension, will have their account based pension income grandfathered from the new legislation as long as they have been in receipt of an income support payment continuously since before 1 January 2015. However, certain events will result in their account based pension becoming deemed, for example consolidation or change of providers of their account based pensions. It is recommended they seek professional advice before making any changes to existing account based pensions.
New clients can still submit a claim for income support and if they start ‘receiving’ their income support payments before 1 January 2015, their account based pension income will also be ‘grandfathered’.
However, for new clients with account based pensions seeking income support from 1 January 2015, their account based pension income will be deemed and will no longer be subject to a deductible amount which was based on the capital value and the client’s relevant number to reflect a return of capital over their lifetime.
Non account based income streams such as fixed term or lifetime annuities will not be subject to deeming, and this can be a good alternative strategy for some clients.
Your income and assets need to be within the income and assets test thresholds to receive at least some income support payment. If you’d like to know more about the new Centrelink rules and how they may impact you, give us a call on 1300 887 528 or come and see us in East Kew for financial planning.
