If you use a part of your principal home for business only, that will be included in your assets test - land or buildings. Centrelink advises you need to contact them within 14 days of selling the home.
When you sell your home, the proceeds are exempt for up to 12 months if you plan to use them to buy, build or renovate another home. The proceeds are 'deemed' in the income test — they are assessed as income from financial assets. This may affect the amount of government benefits you get.
Depending on the amounts involved and your other assets you could be putting yourself over the maximum asset test limit and may lose your pension entitlements. Also, you will be 'deemed' to be getting income from the 'deprived asset' and this may put you over the income limit for the income test.
Is my home considered an asset? Your home is not counted as an asset when calculating pension or payment, but it does affect how your pension or payment is assessed under the assets test. If you are a homeowner your asset value limit is lower than someone who does not own their residence.
How Centrelink knows your assets without you telling them. Centrelink has multiple data-sharing agreements with government organisations like the ATO, Medicare, PayG and more. This helps them to maintain a view of your assets, and in certain circumstances they may apply additional scrutiny to individuals.
Tell Centrelink
This is really important. You must tell Centrelink with 14 days of receiving the lump sum. If you don't, you could be overpaid, and you will need to repay the money to Centrelink. This could be particularly difficult if you take a long time to tell them and have already spent the money.
Assets include any: financial investments. home contents, personal effects and vehicles. real estate, annuities, income streams and superannuation pensions.
Principal home sold from 1 January 2023
The maximum assets test exemption period is 36 months. Sale proceeds to be used to secure a new principal home will be deemed at the lower rate only. Any extra sale proceeds held in a financial asset will be subject to the regular deeming rates.
We use current market value when we assess your real estate. This is different from how state and local governments value properties.
Sign in to myGov and select Centrelink. Select MENU from your homepage. Select Income and assets, then Income and assets details and Manage income and assets.
You report capital gains (profits) and capital losses in your income tax. You then pay tax on your capital gains at your income tax rate. It is not a separate tax. Instead, the ATO says capital gains are added to your income tax and can increase the amount of tax you need to pay.
The Work Bonus income bank is useful for pensioners who wish to work, particularly those who undertake intermittent or occasional work. Note: from 1 December 2022 to 31 December 2023, a one-off, temporary credit of $4,000 applies to Work Bonus income bank balances.
The Department of Social Services reviews these limits and cut off points in March, July and September each year. Your assets include any property or possessions you own in full, in part, or have an interest in.
What you do with lump sums may affect you under the income or assets test. It doesn't matter if the lump sum is exempt.
Capital gains
Sale of real estate may result in a capital gain. A capital gain is NOT treated as income for social security income support purposes. If a capital loss is made it CANNOT be offset against other income amounts.
Contrary to popular belief, Centrelink does not in fact have access to your bank account and doesn't monitor it when working out your payment rate. Instead, the rate of payment you receive from Centrelink is based on the assets and any work income you specified the last time you gave them your financial information.
Centrelink has very wide powers to thoroughly investigate deposits that have been made into your account. For example, it has the power to obtain your information from other government agencies as well as accessing information from banks, building societies and credit union accounts.
What we mean is – while Centrelink don't have the power to spot check your personal bank account, they do conduct cross checks with other Government agencies and use data-matching to check that we're all doing the right thing. These processes help them identify and investigate any cases of possible welfare fraud.