Improving eligibility for Centrelink legally

Not a day goes by without Muirfield Financial Services being asked some form of question about how best to structure, or hide, money to protect and improve a Centrelink benefit.

The question usually stems from the sale of a house, receipt of an inheritance or some other catalyst.

While the term “hiding money” brings thoughts of illegal activity to mind, there are legitimate strategies available to preserve or enhance eligibility for a Centrelink benefit.

The most effective strategy is adding money to superannuation. Superannuation in accumulation phase is not assessed until Age Pension age is reached, varying on a persons year of birth.

By adding money to the superannuation fund of a younger member of a couple, the older partner can benefit from an increased Age Pension payment.

A similar strategy can be implemented for someone who retires before reaching Age Pension age and needs support from Centrelink.

There are restrictions around adding and accessing money from superannuation, therefore the strategy should be discussed with a qualified financial adviser before making any changes.

 

Other less generous yet effective strategies include:

Gifting – people can gift $10,000 per annum and a maximum of $30,000 in any rolling five-year period. If these gifting limits are exceeded in any way, you will be assessed as though you still have the money or asset

Prepaid funeral – prepaid funerals and funeral bonds up to the value of $15,500 are not assessed by Centrelink. Buying one of these may assist in improving the benefit, and

Spend it – the home is not assessed by Centrelink therefore spending money on renovations and maintenance could help improve the Centrelink payment. Spending money on things such as clothes or a holiday may also be helpful.

Muirfield Financial Services are not suggesting to become financially irresponsible, however, keeping this in mind is important, particularly if on the cusp of eligibility for a benefit.

It is also important to discuss the “elephant in the room”. Hiding money under the bed is not a viable strategy. Firstly, the cost of living is rising and if money sits idle, it is effectively losing value and purchasing power.

In addition, as people grow older and develop dementia, hidden money is often forgotten about.

Most importantly, if not declared, hiding money is fraudulent and can result in having to repay money received and criminal charges.

The strategies and advice mentioned above is of general nature only. Muirfield Financial Services strongly recommend people chat to one of their advisers to discuss these matters and apply them to personal circumstances. For more information, head to muirfieldfs.com.au