How a withdrawal could affect your benefits
Different Centrelink benefits can have different types of means testing. This factsheet will give a high level overview of the following Centrelink benefits:
- Newstart Allowance
- Disability Support Pension
- Family Tax Benefits
Warning: This is a guide only, Centrelink is complex and you may need further assistance to understand how your situation will impact your benefit, we can help you with this.
The first important thing to understand is that the approval of your TPD claim will NOT impact your Centrelink entitlement as it will initially be paid into your superannuation account. Superannuation accounts are excluded from any Centrelink means testing until you reach Age Pension Age – which is between age 65 and 67.
It is when you then go to withdraw your TPD and/or superannuation that there may be an impact to your Centrelink entitlement.
Centrelink Pensions and Allowances
Most Centrelink benefits have similar means testing. Centrelink will apply their “Income Test” and “Assets Test” and whichever results in the lower payment is the test that is applied.
With these payments, your actual withdrawal from super does not have any impact on your payment – it is what you do with the funds that Centrelink will assess. For example, if you withdraw TPD/Super money to pay bills, pay down your mortgage, go on a trip, etc – Centrelink will not assess these amounts. However, if you withdraw funds and put them in a bank account, Centrelink will assess this additional amount in your bank account and apply their Income & Assets Test.
The following information explains Centrelink Income & Assets testing & thresholds. There are different thresholds depending whether you are single or a couple, or whether or not you own your home.
Newstart Allowance (NSA)
If you receive Newstart Allowance, the total value of your assets (excluding the value of your home or superannuation) cannot be over the following amounts:
Assets Test Thresholds
If your assets are over these limits, you will not be eligible to receive the NSA.
To receive the full Newstart Allowance, your income (and your partners income) must be less than $104 per fortnight ($2,704 pa). If your income is over this amount your allowance will be reduced.
If you receive no income but have money in the bank or have other investments, Centrelink apply Deeming Rates to work out how much income is attributed to these financial assets.
For example, if you are single, with no other income and have over approximately $106,000 in the bank (including any other financial assets) then your Newstart allowance will begin to be reduced.
Couples could have combined financial assets of $122,000 before their NSA is reduced.
Disability Support Test (DSP)
The assets test thresholds for the DSP are same as those listed in the previous table for the NSA, however you don’t lose the DSP if your assets are over this amount, the DSP will be reduced by $3 per fortnight for every $1,000 you are over this threshold.
To receive the full DSP a single person’s income must be under $172 per fortnight ($4,472 pa), and a couple’s combined income must be under $304 per fortnight ($7,904 pa).
Therefore, if you (and your partner) have no other income, you can have the following amounts in the bank (including any other financial assets) and continue to receive the full DSP:
- A single person can have financial assets of roughly $161,000
- Couples can have combined financial assets of $282,000
Family Tax Benefits (FTB)
Family Tax Benefits are assessed differently. When you make a withdrawal from super before age 60, a portion of your withdrawal will be taxable – this amount will be included in your “adjusted taxable income” which is what Centrelink use to determine your eligibility to receive FTB
With FTB – Part A, if you or your partner get an income support payment or your family’s adjusted taxable income is $51,903 or less, you may receive the maximum rate of FTB Part A
For FTB – Part B, eligibility requires either a single parent’s adjusted taxable income or the primary earner of a couples adjusted taxable income to be less than $100,000 per annum.
If you withdraw funds from superannuation prior to age 60, then the taxable component of the withdrawal is included in your “adjusted taxable income” and therefore could impact your entitlement to FTB Part A.