A number of changes that might affect retirees and pre-retirees came into effect on 1 July.
Age pension age
The pension age increased to 66 years from 1 July. It will increase further in upcoming years – to 66½ years from 1 July 2021 and to 67 years from 1 July 2023.
Age pension income and assets test changes
Revised income and assets test thresholds took effect from 1 July.
The new disqualifying income limit for singles is $2026.40 (up from $2024); couples combined $3100.40 (up from $3096.40); illness-separated couples combined $4012.80 (up from $4008.80).
The new disqualifying asset limits for single homeowners are $572,000 (up from $567,250); single non-homeowners $782,500 (up from $774,250); couple combined homeowners $860,000 (up from $853,000); couple combined non-homeowners $1,070,500 (up from $1,060,000).
Work Bonus
Since 1 July, both employed and self-employed pensioners over the age pension age and Veterans’ Affairs pension recipients over the qualifying age are able to earn up to $300 a fortnight through work before this income is assessed by the pension income test. The maximum Work Bonus accrual amount increased from $6500 to $7800.
The Work Bonus was set at $250 when the scheme was introduced in 2011 and had not been changed since then.
Pension Loans Scheme
The Pension Loans Scheme (PLS) was expanded on 1 July, with the available fortnightly loan plus pension amount increasing to 150 per cent of the maximum rate of fortnightly Age Pension.
Lifetime income products
New means-testing rules were introduced by the Department of Human Services (DHS) on 1 July to assess lifetime income stream (LIS) products.
The following rules apply to products bought from 1 July 2019:
- an income test will assess a fixed 60 per cent of all product payments as income
- an assets test will assess 60 per cent of the nominal purchase price until the life expectancy of a 65-year-old male (currently age 84) – or a minimum of five years – and then 30 per cent for the rest of the person’s life.
Superannuation accounts
New laws took effect on 1 July, requiring super funds to report and pay inactive low-balance accounts to the Australian Tax Office (ATO).
This change was in accordance with new Protecting Your Super legislation, which was designed to ensure that people with multiple accounts were protected from having their total super balance eroded by fees and insurance premiums charged by each superannuation provider.
Insurance premiums associated with inactive accounts have been or will be cancelled after 1 July.
In addition, fees are now capped at 3 per cent per annum for accounts with $6000 or less at the end of the financial year and fund members can switch super funds without paying a penalty as exit fees are banned.
Tax time
Tax returns completed by individuals need to be lodged by 31 October, or later if completed by a registered tax agent. To work out whether you need to complete a tax return, visit the Australian Tax Office.
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