Hello,
This might be a little off-topic, but have been reading thru the Centrelink website to check the definition of an assessable asset for age pensions, it says “real estate that you own”.
One of my relations has had Centrelink almost wipe out her age pension because they believe she has an RE asset and they even sent a valuer to do a drive-by.But she does not own it, it was her Mum’s house, and when her Mum died the will stated that the house could be used by her brothers for as long as they wanted and when they died or married or no longer wanted it then the house was to be sold and the cash proceeds divided up among all 5 children.
One brother is still living in it and looks like doing so for a long time yet – so she has no title and has no realisable interest, can receive no rents and profits etc and will actually never own it as it must be sold when no longer needed.
Has anybody ever come across this situation? Is there any written definition of an assessable asset that includes this supposed ownership of property when you don’t own it?
Nice of Centrelink to simply chop her pension, no letter of warning, nothing. She got one phone call asking if she owned the property, she siad no, did she earn rent from it, she said no, did she pay the rates on it she said no.
Thanks anyone..
skippygirl
I have never come across that before. I can only assume it is a mistake by centrelink. The only payment she should not receive is rent assistance if she’s not paying rent to be there. Can only suggest you contact centrelink directly.
Originally posted by skippygirl:Hello,
This might be a little off-topic, but have been reading thru the Centrelink website to check the definition of an assessable asset for age pensions, it says “real estate that you own”.
One of my relations has had Centrelink almost wipe out her age pension because they believe she has an RE asset and they even sent a valuer to do a drive-by.But she does not own it, it was her Mum’s house, and when her Mum died the will stated that the house could be used by her brothers for as long as they wanted and when they died or married or no longer wanted it then the house was to be sold and the cash proceeds divided up among all 5 children.
One brother is still living in it and looks like doing so for a long time yet – so she has no title and has no realisable interest, can receive no rents and profits etc and will actually never own it as it must be sold when no longer needed.
Has anybody ever come across this situation? Is there any written definition of an assessable asset that includes this supposed ownership of property when you don’t own it?
Nice of Centrelink to simply chop her pension, no letter of warning, nothing. She got one phone call asking if she owned the property, she siad no, did she earn rent from it, she said no, did she pay the rates on it she said no.
Thanks anyone..skippygirl
The government pension is a payment subject to asset and income test. It is Centrelink’s legal obligation to verify that the person is receiving the correct entitlements from the money entrusted to them by the taxpayers.
The asset test is not limited to real estate in the name of a person, it can be any assets of a company or trust where the pensioner has control over the assets for example, and other situations that are assessed different from the ATO.
The situation you present however is a rather simple one.
Mum passed away and willed the property to her estate.
Full stop, end of story.
The estate is her 5 children who now have control over the asset. 1/5 each. The arrangement that one has the right to live in it is irrelevant to the ownership/control over the asset.If the 1/5th of the property in question is over $153k for a single person or over 217k for a couple of homeowners, or $263k single and $328k couple for a non-home owners, the asset over these amounts reduce pension by $3 for every $1000.
I’m afraid Centrelink does not do this out of spite and does not need to ask for permission to do it. it is it’s legal obligation as a trustee of the taxpayer.
Also, it is the obligation of the peson recieving the payment to inform Centrelink whithin 14 days of any changes in income and assets. If this events took place some time before 14 days, your relative may also be overpayed and in need to return the moneys overpaid.
You must understand the nature of the age pension. It is a safety net for the person whitout any means, it is not a retirement fund._________________________________________
“What you want in your life occasionally shows up…
what you must have… always does.”
……….– Doug FirebaughMay God Prosper you.[biggrin]
Marc…http://www.chosen4u.com/?aceHi Marc
If the property is considered to be hers, wouldn’t it be her own home and therefore exempt from the assets test? Or doesn’t it work like that.I have a letter from Centrelink which states that Council Rates Notices are the documents of proof of ownership and value of a property. They will step out of that method only if they suspect dodgy goings-on.
Centrelink decisions are subject to appeal.
Originally posted by oshen:Hi Marc
If the property is considered to be hers, wouldn’t it be her own home and therefore exempt from the assets test? Or doesn’t it work like that.Only in a few cases is an asset exempt from the asset test, one of this cases is, if the person lives in the property. However according to the original post this is not the case.
My guess is that since the inheritance was never declared, as a consequence of a dob in the person may have been wrongly assumed to have inherited the whole of the property. Centrelink is probably not aware of the existence of 5 people in the will, since for 1/5 of the asset to “almost wipe out the pension” the asset should be at least 153,000 + 100,000* = 253,000 x 5 = $1,265,000 , and more than double that amount if the pensioner in question is married and not a home owner. But this is speculation of course.
* to lose $300 off the pension.
_________________________________________
“What you want in your life occasionally shows up…
what you must have… always does.”
……….– Doug FirebaughMay God Prosper you.[biggrin]
Marc…http://www.chosen4u.com/?aceOriginally posted by enduser:I have a letter from Centrelink which states that Council Rates Notices are the documents of proof of ownership and value of a property. They will step out of that method only if they suspect dodgy goings-on.
Centrelink decisions are subject to appeal.
The only means Centrelink uses to value a property is the office of the Australian Valuation Office, yet a person can provide a private valuation by a RE agent and it may or may be not accepted.
The land value stated on a council rate notice is useless for the purpose of valuation, yet may be useful to show who is on the title.
Income and assets are reviewed at regular intervals ideally every year. However properties have gone without a review for 5 years or more in some cases and when time comes a valuation may reveal increases of 2 or 300 %. I have seen a property in Vincentia valued at $80,000 and reviewed for a new value of 1,200,000. Far from being a product of “dodgy going on’s”, updating income and assets is a necessity to keep a welfare system healthy. Once more, remember our pension system is welfare, a safety net… and not a contribution based retirement system._________________________________________
“What you want in your life occasionally shows up…
what you must have… always does.”
……….– Doug FirebaughMay God Prosper you.[biggrin]
Marc…http://www.chosen4u.com/?aceHi Marc,
The asset test is not limited to real estate in the name of a person, it can be any assets of a company or trust where the pensioner has control over the assets for example, and other situations that are assessed different from the ATO.
The situation you present however is a rather simple one.
Mum passed away and willed the property to her estate.
Full stop, end of story.
The estate is her 5 children who now have control over the asset. 1/5 each. The arrangement that one has the right to live in it is irrelevant to the ownership/control over the asset.If the 1/5th of the property in question is over $153k for a single person or over 217k for a couple of homeowners, or $263k single and $328k couple for a non-home owners, the asset over these amounts reduce pension by $3 for every $1000.
Oh dear…this is not good news. The Mum did will the house to her estate for all 5 children. Two of the brothers were appointed her legal representatives and the title went into their name as the “legal representatives of Mrs X”. So the other 3 have no control over it at all. They can’t sell it they can’t rent it, nothing until the brothers die or marry. One of these brothers who is the legal representative is living in the house and will do so until he dies. There is no rent, nothing (but that is not a problem, just a fact).
There is no company or trust unless by way of the will some trust is deemed to have been created. Marc do you think this still makes it an RE asset for my relative (one of the other 3)?
The property is land value only – at the very most $350K – the house itself is condemnable as the brother living in it has never done any maintenance, that’s another story. A supposed 1/5th share of this only tops out at $70K and they are a married couple, homeowners. A little bit of super but nothing else.
Their pension was cut to $11. They are beside themselves.
What can we do???
Skippygirl
All’s well that ends well!
After a visit to the local Centrelink office, and handing them copies of the will and the title to the said property, Centrelink are correcting the asset list for my relative and restoring her pension payments.
Having no right to any rents or profits or any sort of income until the brothers pass on or marry means it is NOT an assessable asset.
Better still, this asset had been recorded unbeknownst to her for the last 6 years, so she can make a submission to be reimbursed the lost pension payments caused by this incorrect data!! Yippee. Is she happy or what?
Cheers
skippygirl)Hi,
you know it’s really weird, but when it comes to claiming centrelink payments for children, we were told that our IP would not be counted as an asset, and the rent was not counted as income. My husband and I both earn a decent wage, and I didn’t think I was entitled to anything, but centrelink coughed up $3000 at tax time.
So when I read that they reduce some poor persons pension to virtually nothing, then I know that the system is completely nuts!
LandtLandt
I think it depends on what sort of payments you are claiming. There is not much counted for the Family payment, but the are much stricter for everything else.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
landt64,
I’m very surprised that your rents weren’t counted as income. Terry is right in that it depends on what paymetns you were claiming, but I am still surprised.
When we did the form we included all income incluidng rents, however, they also took into account expenses eg. the interest, so the added income wasn’t much anyway. But the forms we completed definitely asked for all income including rents.
Thankfully, our rents make us over thelimits now so have lost all payments and I can tell you, it’s the best thing that ever happened, the freedom to not have to report every single change in finances etc.
Go for freedom, it’s much easier!
PK
Family payments have two components and both are income tested. Neither is asset tested.
Part B has NO income test for primary earner in a couple or sole parent. Secondary earner is income tested and reduced by 30c per dollar above ~$2000 per year. Part A income test starts at ~$32,000 combined income and reduces the payment 30c pe rdollar until it reaches the base rate.
Base rate is paid until income reaches ~$83,000 plus 3,300 per child after the first, and will then reduce 30c per dollar above the threshold until it is nil.
Under this formula to recieve nil family tax benefit A base rate, a couple with 3 children must earn aprox. 127k“What you want in your life occasionally shows up…
what you must have… always does.” . . . . . Doug Firebaugh
May God Prosper you.[biggrin]
MarcHi PurpleKiss,
I’m with you on this one. We’re aiming to be earning enough so that we don’t have to rely on any Centrelink payments. The only reason we looked into it this year was that the extra payment of $600 per child came in with the budget, and i thought I might as well see if I’m entitled to it. I gave centrelink all of our details, and with the rental income we went well over the amount at which payments should have been cut off, but we were assured that the rental income would not be assessed. Hey I’m happy. I pay my taxes, and I figure they’ll take it back with Capital gains anyway.
Landt.Originally posted by skippygirl:All’s well that ends well!
After a visit to the local Centrelink office, and handing them copies of the will and the title to the said property, Centrelink are correcting the asset list for my relative and restoring her pension payments.
Having no right to any rents or profits or any sort of income until the brothers pass on or marry means it is NOT an assessable asset.
Better still, this asset had been recorded unbeknownst to her for the last 6 years, so she can make a submission to be reimbursed the lost pension payments caused by this incorrect data!! Yippee. Is she happy or what?
Cheers
skippygirl)To cut both pensions down to $11, the asset recorded must be around $400,000 for a homeowner and around $500,000 for a non-home owner. If you say the property is worth $350,000 and of that only 1/5 is, or will be your relative’s asset, then the whole thing is a mistake and has nothing to do with the will. Like I said, someone jumped the gun and adjudicated the whole lot of the property to her.
$70,000 will not affect the pension either way, if they record it (as they should if they do their homework), or if they do not, because they read the will that state no rent etc (even when in fact such is irrelevant).
I am sorry your relative had to go through that. There are many thousands of owners of holiday houses who keep the family holiday place in their own name and find themselvs whithout a pension because of that.
Unfortunately millions of people in Australia think that by paying taxes they are contributing to a retirement fund.
I so whish we had a state funded retirement plan like in the rest of the world, and not a welfare plan for the indigent and then … nothing“What you want in your life occasionally shows up…
what you must have… always does.” . . . . . Doug Firebaugh
May God Prosper you.[biggrin]
Marc
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