The assets test includes all assessable assets, both those held inside Australia and those held overseas. It can also include assets not held directly in the client’s name but also those held in their spouse’s name or through a private trust or company structure. Assets are generally assessed at net market value (ie. the value they can be sold at less any debts secured against that asset) but some assets may be specifically exempt. For example, the person’s superannuation is exempt if the person is still under age/service pension age.
What they do is they look at the type and value of any assets you own in and outside of Australia. The value of your assets is what you’d get if you sold them at market value. They’’ll deduct any debt you owe that your asset is security for, from its market value.
They include most real estate you own in your assets test, financial investments, and Business assets. Clients can have a certain level of assets before the maximum pension starts to reduce.
This asset test threshold depends on whether the client is a homeowner or a non-homeowner and also whether they are single or member of a couple. If the client is a member of couple, all combined assets are included (even if only one applies for a pension). If a client is a homeowner, the following table shows the assets test thresholds effective until 19 September 2020.
There are some assets they don’t assess.
For example:
- your principal home and surrounding land up to 2 hectares on the same title
- some properties larger than 2 hectares on the same title – read more about rural customers and primary producers
- your principal home, if you vacate it for up to 12 months or 2 years if entering a care situation
- granny flat rights where you pay more than the extra allowable amount
- any property or money left to you in an estate, which you can’t get for up to 12 months
- accommodation bonds paid on entry to a residential aged care facility.
These assets are also exempt:
- Australian superannuation investments that aren’t currently paying a pension – this exemption applies until you reach Age Pension age
- some income streams depending on when you purchased them
- a cemetery plot and a prepaid funeral, or up to 2 funeral bonds, that cost less than the allowable limit
- aids for people with disability
- money from the National Disability Insurance Scheme for people with disability
- a Special Disability Trust, if it meets certain requirements.
There are limits to how much your assets can be worth before they affect your pension amount.
Most pensions and allowances have asset limits. They use these limits to work out if your assets will affect your payment rate. They calculate the payment rate under both the income and assets tests. The test that results in the lowest rate, or nil rate, will apply. Your limits are higher for pensions if you get Rent Assistance with your pension. They also update assets test limits in January, March, July and September each year.
Here in Pension Solutions we provide administrative support for assessments like these. We know that engaging with any large organization can seem daunting and stressful, so that’s where we can help. Get in touch with us by submitting your contact info thru our website or call 1300 025 521 between 8:00AM-6:30PM Monday through Friday.
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