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Should the family home be included in the assets test? Should working pensioners pay lower tax? Should the income and assets test be combined?
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Not sure what you mean by 'pay tax on your pension'. That is not mentioned or implied anywhere. What I DO object to is the govt constantly braggging that seniors can earn $300 per fortnight in any type of work, without it affecting your pension. (wow - $150 a week, thar's around 5 hours). Yes, pension may not be affected, BUT what they very conveniently don't tell you is that you have to pay tax on both your pension AND your income. Is simply not worth it. I was recently offered a 2 day a week job, but my accountant said it simply wasn't worth it. I'm not going to get some work simply for the sake of having something to do.
A friend of mine on the Aged Pension does occassional dog minding at her own home and can easily make $70 a day (minding 2 dogs overnight). Not every day/week, but that little extra when it does come in, really makes a huge difference. I am seriously looking into this, just have to cost a new fence.
Should the family home be included in the assets test? The family home is already considered under the asset test. Those owning a home have a lower level of asset value than those who don't own a home when the eligibility for an age pension is considered. The family home should never be considered as the values vary from state to state, city to country and suburb to suburb. Finding the right balance to establish a median figure would be almost impossible.
Should working pensioners pay lower tax? No, all Australians should be treated equally.
Should the income and assets test be combined? No idea how this would work without more details. As either the asset test or the income test can preclude an applicant from receiving an age pension how would combining them help anyone?
Hit the nail on the head there Horace.
Hit the nail on the head there Horace.
Home owners Don't Receive Additional Payments For Rates, Maintenance etc.
The Cost of Buying The Home In The First Place .
Renters have Rental Assistence as well as Higher Asset Allowence.(Should be One or the Other)
Not envy, Just Fact.
Depending on your level of Income Pensioners already have a Tax Concession to help them keep more of the earnings if working part-time or casual etc. The Seniors and Pensioners Tax Offset.
A Senior Australian (i.e. a person over age pension age) may be eligible for a Senior Australian and Pensioner Taxation Offset (SAPTO). For a single person, the offset of $2,230 effectively reduces tax payable to nil where the taxable income is less than $32,279 pa for 2018/19. If their taxable income is greater than this, the offset is reduced as taxable income increases and ceases completely at $50,119. A Senior Australian (i.e. a person over age pension age) may be eligible for a Senior Australian and Pensioner Taxation Offset (SAPTO). For a member of a couple, the offset of $1,602 effectively reduces tax payable to nil where their taxable income is less than $28,974 pa each for 2018/19. If their taxable income is greater than this, the offset is reduced as income increases and ceases completely when their taxable income reaches $41,790. The unused offset of one member of a couple can transfer to the other member to reduce their tax payable. Calculators are available on the Australian Taxation Office website at www.ato.gov.au.
My home was bought with money we had already paid tax on, home owners are already penalized over $200,000 in the "assets" allowance.
Every single one of Australian old age pensioners paid 7.5% extra tax to fund our pensions when we reached 65 years. Now we are being told we are on welfare.
In my opinion there should be no income and assets tests. Everything we own has already had tax paid on it.
Every Australian should receive a universal pension and if they also have a private income then they pay tax if their income is over the limit for non-taxable.
And while the government is doing that they should flatten out tax on all income to 10%, this is for both citizens anbd multinational corporations, the taxation system is far too complicated and most multinational or large corporations currently pay little or no tax. Small businesses and citizens seem to be the only ones paying a fair amount of taxation.
Hit the nail on the head. What a nice dream, but your dealing with polititions that are well cared for in their retirement. They need the pensioners to help pay for their luxurious retirement. Why do you think pensioners are always being hit? an easy mark that can't fight back and are dying off due to the stress generated by the Govt when they keep moving the goal posts. And they still call it the Golden Years. ha!
https://keithpitt.com.au/news/misconceptions-about-national-welfare-fund-and-aged-pension
Well put, AutumnOz, and so true.
Good comments, AutumnOz, although some minor details can be debated e.g. instead of 10%, I would think 15-20% tax on Income is more reasonable after allowing maximum tax-free deductions for local expenses only. Also, Universal Age Pension with NO tests, other than Age (65 yrs) and Residency (say 15 yrs) should also be clarified.
In addition to helping YLC formulate a combined submission from YLC members (based on the Survey responses), I would also strongly recommend that all clear-thinking people such as yourself MUST also make direct Submissions to the Retirement Income Review, as the more submissions the better, otherwise as Billy has noted, they would prefer to ignore Retirees if there are only a few submissions from them. They must understand the widespread dissatisfaction and the strong need for change.
For Submissions, the process is quite easy, simply go to the Link below (search for it if the link doesn't work), go to the Consultation Paper sub-page therein (read the attached paper if you like to understand how they are currently drifting). In the Consultation Paper web page, you will see all instructions how to make Submissions via Email or Hard Copy, deadline is 3rd Feb 2020.
https://www.treasury.gov.au/review/retirement-income-review
Of course the home should be included in the assets test. The problem lies more in the level of assets allowed. Were this to be raised to say $2 million the vast majority of pensioners would be able to stay in their homes and have sufficient assets to draw a small income.
Clearly the current system is grossly unequal. Those unfortunate enough to own or part own a home worth say $150k are treated the same as those that own a home worth $10 million. And what is more, those with minimal value dwellings are also those who live further from necessary services thus upping their living costs.
So what if a low value house owner owns more than one property. Rules around income deny them much opportunity to take huge advantage of this. Of course income rules could also be loosened – more self-sufficient pensioners and less drain on government coffers as the populations age.
Of course the home should be included in the assets test. The problem lies more in the level of assets allowed. Were this to be raised to say $2 million the vast majority of pensioners would be able to stay in their homes and have sufficient assets to draw a small income.
Clearly the current system is grossly unequal. Those unfortunate enough to own or part own a home worth say $150k are treated the same as those that own a home worth $10 million. And what is more, those with minimal value dwellings are also those who live further from necessary services thus upping their living costs.
So what if a low value house owner owns more than one property. Rules around income deny them much opportunity to take huge advantage of this. Of course income rules could also be loosened – more self-sufficient pensioners and less drain on government coffers as the populations age.
They may start at $2 million but they will never be able to resist lowering the value as money comes rolling in. The family home is allready Means Tested, enough is enough.
The governments incompetence is no valid reason for using Retirees as cash cows, to be milked whenever they have a monetry shortfall.
If they can't plan beyond the nextvelection, they should not be in power.
Agree with your first two paragraphs Mr Fox.The concern about the government treating the assessable asset value of your house fairly is a real one.Unless the value is indexed and determined according to a relevant factor such as council rates,future governments will just keep chipping away like vultures.
Not sure what you mean in your last paragraph,but a low value landowner who owns other property is no different to a low value landowner with a large cash account or high super.The additional property can be sold and converted to cash.
Agree with your first two paragraphs Mr Fox.The concern about the government treating the assessable asset value of your house fairly is a real one.Unless the value is indexed and determined according to a relevant factor such as council rates,future governments will just keep chipping away like vultures.
Not sure what you mean in your last paragraph,but a low value landowner who owns other property is no different to a low value landowner with a large cash account or high super.The additional property can be sold and converted to cash.
A universal pension should be paid to all citizens when they reach pensionable age (if they get that far in life) and this amount based on at least 50% of the average household income of this country or equivalent to the minimum wage/hr x 40 hrs/wk x 50 weeks/year. This universal pension amount is to be tax free. Any other additional income from investments/shares/cash deposits/positive rental income should be taxed at the present rates.
Those who do not own their own home should have rental subsidies or be public housed (e.g. like single mums).
The above is account for those who have been disadvantaged in (part or all of their) life due to poor health/disability, lack of education, industrial accidents, occupational health problems, widows who have spent the productive years of their lives (no pun intended!) bringing up children (and future taxpaying citizens).
There are those who do physical work who (1) cannot continue doing so after 50 -55 years old and (2) do not earn enough to contribute sufficiently into superannuation to ensure a decent superannuation balance when they retire.
It is a (bad) joke that that the present pension payment is 10-15% of my salary when I was working as a professional engineer and in the 2nd highest tax bracket.
……..But let’s consider the option of the value of a home above $1.5m being taken into account in the Age Pension asset test. This would affect at most 143,000 pensioners — mostly part-pensioners — out of almost two million.
So about 7 per cent of age pensioners would be affected, mostly in Sydney and Melbourne. Almost all age pensioners elsewhere in homes of comparable standard and position would be unaffected…….
……Of course, one of the downsides of reverse mortgages is that the loan amount compounds across time. Given the high interest rates charged and the possibly lengthy duration of the loan, the impact is substantial. Consider a loan of $120,000 taken out at the age of 65. Twenty years later, the principal will have grown to $400,000, payable when the property is sold. Were the rate of interest to rise by two percentage points, the principal would be more than $650,000….
https://morningmail.org/assets-test-family-homes-will-never-be-included/
Interesting podcast for those thinking of going into a nursing home.
https://www.agedcareguide.com.au/information/nursing-home-costs
“Should the family home be included in the assets test? Should working pensioners pay lower tax? Should the income and assets test be combined?”
Depending on where the family home is and it’s value in relation to other similar houses in the area, then it should be included in the assets test. My personal opinion is “working pensioners” should be treated the same as everyone else for tax purposes. I don’t have a firm opinion on combining income and assets because it would mean assessing someone twice?
I know this question was not asked but will venture to say, pensioners who own a home and have some assets are doing quite well from many accounts I hear. My concern is for those pensioners who do not own a home, who struggle to meet rent payments, medications and general living costs, these are the people we should be giving priority to.
Including homes in the asset test will knock many people off the pension and force them to sell their homes. Meanwhile they will have nothing to live on while their home is on the market. And then when they do sell they will have to rent and live off the money from the sale until they are below the asset limit again because if they buy another house they are back to square 1. It would be cruel to include the home as an asset.
I do not agree with testing the family home at all. But if it is, it is the purchase price that should be considered, not the current value.
The test should be about the purchase price in relation to the median price at the time of purchase in that area. An owner should not be penalized just because a bunch of yupies have moved into their area and driven prices up.
You could have a $100,00 house sitting on a block you paid $40,000 for but this now worth $2 million. This does not indicate that you are wealthy.
If you are going to means test homes it has to be done properly and sensibly.
Kicking people out of their homes because of the perceived value will not help first home buyers, they can't afford them. It will just go towards building the portfolios of wealthy investors.
It won't even help the budget, it will result in more people planning on utilizing government pensions.
We are asked to fill in these surveys by YLC quite often but never hear if anyone wins the prizes, has anyone won yet?
No idea ... does anyone know where the winning participants are posted?
You've got to be joking pay tax on your pension You can't live on the pension Now what were they wanted to do go and live on the streets or go and live outside there are big apartments and houses with the only the MPs are on it is ridiculousnow what were they wanted to do go and live on the streets or go and live outside there are big apartments and houses with the money the MPs are on it is ridiculous on the pension scheme that got is ridiculous you serve your country in the British forces and you basically say soon as you come out of the army you're on the streets and if you got a punishable TAC2 on it also do is look after the rich bollocks to the bloody Pensioners I am sick to death of MPs bankers wankers bankers check the money big balls is big pair big pensions I'd like to put every one of them on the street and get the working class into the parliament then we might be able to start living again