Now that borders are opening around Australia, Brian and his wife are planning to live life on the road but are not sure how their living situation is assessed by Centrelink.
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Q. Brian
My wife and I have always loved travelling around Australia and our plan for retirement has always involved buying a caravan and just driving from place to place, stopping at different locations around the country and chasing the sun. Unfortunately, COVID put those plans on hold this year, but now that border restrictions are starting to ease around the country it is back on our agenda.
We are unclear, however, as to what the pension implications are of living out of a caravan. Could you please explain how Centrelink will assess our living situation?
A. There are a couple of Centrelink rules that apply to retirees accessing the full Age Pension and other benefits if they have a caravan park address.
If you own your current home, what you do with it will matter as it sounds like your caravan will become your place of primary residence. That means that your bricks and mortar home will be assessed under the assets test and possibly the income test if you decide to rent it out while you are on the road.
In these situations, Centrelink will apply the income test to any rent you are earning and the assets test to the home. As the house is no longer considered the primary place of residence, it becomes an asset and, depending on its value, will likely reduce the amount of Age Pension you receive.
If you decide to sell your home to fund your new lifestyle, you will have to think carefully about what you do with the money as Centrelink will factor in any extra cash into their decision on your Age Pension.
The money from the sale of your home will be treated as an asset and, if you invest it, it will also have deeming applied and the rate determined will also be applied in the income test.
Even if you sell your bricks and mortar home and replace it with a caravan, you will still be assessed as a homeowner.
There are provisions within the Social Security Guide that allow customers to temporarily vacate their homes for a period of 12 months without it being assessed as an asset.
· As long as the customer is intending to return to their property, it will continue to be classified as their principal home, and is exempt from the assets test.
· After a 12 month temporary absence the home is no longer considered the customer’s principal home and is assessed as an asset.
· If the customer resumes occupancy of the principal home within 12 months and subsequently vacates the home, a new 12 month period begins.
· The customer does need to have resumed living in the home (not just a brief return) in order to restart a new exemption period.
· If the customer rents the home in their absence, any income generated is assessable under the income test.
Caravanning groups have long campaigned for retirees who own a mobile home as their primary residence to be assessed as non-homeowners, but this has fallen on deaf ears from governments of both persuasions.
Have you ever considered selling up and moving into a relocatable home? Do you currently enjoy the nomad life on Australia’s roads? Would you recommend it to others? What pitfalls have you discovered?
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Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a Centrelink Financial Information Services officer, financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.
