Q: How are lifetime pensions such as SASS assessed for the CSHC? My PAYG states a taxed element of $23,915 and deductible amount of $7,232. I am over 65 years old.
Lifetime pensions are included in Services Australia’s annual income test calculations for the Commonwealth Seniors Health Card (CSHC). The important point to note is that the test considers your adjusted taxable income plus deemed income from investments, not just your actual taxable income or your actual investment income.
Deemed income includes the balance of your account-based pension assets such as the SASS. The current deeming rate is 2.25% for assets above $56,400 for singles and $93,600 for couples. Your SASS balance will be deemed to be earning this amount of income for the purposes of the CSHC income test, regardless of whether it is earning more or less.
The current annual income test thresholds for CSHC eligibility are listed below. Your income must be under these limits to pass the CSHC income test.
|Couples living together
These thresholds will be revised on 20 September. The government has proposed that the threshold limits for singles and couples living together be increased to $90,000 and $144,000 respectively, but the legislation has not yet been passed.
You can use PensionHelp’s CSHC calculator as a guide to determine your income test eligibility for the CSHC before you formally apply to Services Australia.
In addition to meeting the income test threshold, you must meet all of the other CSHC eligibility criteria:
- You must have reached your Age Pension eligibility age (but not be receiving it). The current Age Pension eligibility age is 66 years and 6 months. It will rise to 67 from 1 July 2023.
- You must be living in Australia and an Australian citizen, permanent visa holder or a special category visa holder.
- You must not be receiving any payments from Services Australia or the Department of Veterans Affairs.
- You must have a tax file number.
- You must prove your identity.
Q: My wife and I have had CSHCs for many years. This year our taxable income will exceed the limit because a stock that we hold was privatised. I believe that our CSHC will be stopped this year because of this one time capital gain. I would appreciate it if you could advise me whether I need to apply for the CSHC next year or it will automatically be sent to us because our taxable income will return to normal and below the limit.
As current CSHC holders, you and your wife have an obligation to formally advise Services Australia of any change to your combined income within 14 days of it changing. This includes increases as well as decreases, as it can determine whether or not you exceed the CSHC income test threshold for couples. You also both need to make sure that all your details are up to date in myGov.
The current annual income test threshold for CSHC eligibility for couples is $92,416. Your combined income must be under these limits to continue to be eligible for the CSHC.
This threshold will be revised on 20 September. The government has proposed that it be increased to $144,000, but the legislation has not yet been passed.
If you do exceed the threshold that’s in place when your income changes, your CSHCs will be cancelled as soon as you advise Services Australia.
If your income drops in the following year and enables you to once again fall within the latest CSHC income test thresholds at the time, you will most likely need to formally reapply to Services Australia for your Cards. The only exception is if you reapply within 26 weeks of your CSHCs being cancelled. If you can do this, you fill out this re-claim form instead of reapplying.
Q: When Centrelink refers to your tax return, does it refer to your latest tax year (i.e. 2021–22)?
Yes, that should generally be assumed. However, there may be instances where they require one or more tax returns from a previous year or years. If you are unsure, it’s best to check with Centrelink directly.
If you are no longer required to submit tax returns due to your income being too low, then Centrelink may want to see an earlier return (depending on the nature of the query).