Impacts to Government Age Pension eligibility
Downsizer contributions are added to your super balance. They are included in the assets and income test and could impact your eligibility for the Government Age Pension.
The income and assets test
The Government uses an income and assets test to see if you're eligible for the Government Age Pension.
Your eligibility will depend on:
- An assets test. This is the value of your assets
- An income test. This is the income you receive from all sources. This includes income from financial investments such as your super.1
1 Centrelink use the deeming rules to work out how much income your financial investments produce. These rules assume your assets earn a set percentage of income. This may be different to what they actually earn.
You have flexibility to buy, build or renovate your new home
Your home is not included in the assets test. But if you sell your home, part or all of the proceeds maybe exempt for up to 24 months. The good news is if you plan to use the proceeds to buy, build or renovate another home, you have time.
The proceeds are also 'deemed' in the income test. They are assessed as income from financial assets. This may affect the amount of government benefits you get. Find out more about the income and asset tests.
Things to consider
- You must not have previously made a downsizer contribution
- Your home must be in Australia
- Your home cannot be a caravan, houseboat or other mobile home
- You must be eligible for at least a partial capital gains tax exemption on the sale of your home
- You must provide the fund with a downsizer form either before or at time of contribution
- Downsizer contributions will count towards your transfer balance cap if used to start a retirement income stream
- You can find more information about the transfer balance cap on the ATO website.