If you’d like to stay eligible for the Commonwealth Seniors Health Card (CSHC), you need to be across a major change to the income test that commences on January 1, 2015 to include your untaxed superannuation income.
What you need to know
From January 1, the CSHC income test will be expanded to include ‘deemed’ income on any non-grandfathered account-based pension.
The good news is that if you commence an account-based pension before January 2015, your account will be grandfathered into the New Year, and you will remain exempt from the new CSHC income test.
The table below summarises these changes:
In a nutshell, any income received from an account-based pension before 2015 is entirely exempt from deeming and will not affect your potential access to the CSHC.
In a recent article, Switzer Super Report expert Tony Negline explained some of the technicalities behind the change.
Deeming thresholds for 2014/15 are $48,000 if you’re single and $79,600 if you’re in a couple.
“Up to these thresholds, you’re deemed to earn 2% each year. Above these thresholds, your investments are assumed to earn 3.5% per annum,” says Negline.
“Assume the $300,000 purchase price is assumed to earn 3.5% per annum. That is, $10,500. Depending on your income from other sources, this might see your income higher than the CSHC thresholds mentioned above.”
Check your eligibility
To be eligible for the CSHC, you need to be of pension age and have an adjustable taxable income that is below $51,500 if you are single, and $82,400 if you’re a couple.
*your adjustable taxable income is your taxable income plus reportable fringe benefits/ reportable super contributions, and any net investment losses.