Exempt Pension Income

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2 Comments

  1. Tony

    Hello, In 1989 my parents purchased a joint lifetime reversionary annuity for $30,000. The income stream was determined as 7% of the invested amount growing by 7% per annum. Mum passed away in 2016, but Dad is nearly 91, and the reverted annual income to him now amounts to $14,000 and growing. The ATO treats his income payments as non assessible, but I am confused on how Centrelink aged pension would treat it. Is his aged pension income assessed on the deeming rules based on capital invested (his share $15,000), OR by reducing the gross annual payments by the deduction amount that relects a return of purchase price? And exactly what would that mean to him?

    Reply
    • Chris Strano

      Hi Tony,
      The annuity would not be deemed. The Centrelink assessable income would be the actual income received minus the calculated deductible amount, which is based on the purchase price of the annuity, life expectancy at commencement and any residual capital value (RCV). The annuity provider can provide you with a Centrelink Schedule containing all of this information, which can be provided to Centrelink and/or used to complete any ‘details of income stream’ forms. The Centrelink Schedule will also include the capital value to be assessed for Centrelink purposes.

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