Centrelink and credit cards

[Old Techo]

The forum remains a bit quiet so out of idle interest I have been looking at the age pension asset testing.

For those receiving a partial pension I understand that the present reduction rate is $1.50/fortnight per $1000 of assets. Doing my sums this equates to an annual interest rate of 3.9% and is more than any bank offerings at the moment. If I have this right, come Jan 1st 2017 under the new asset limit rules this reduction rate will double, thus 7.8% effective interest rate.

Researching the Centrelink rules it seems that in assessing your assets the miserable buggers don't consider credit card debts as an asset offset. I mean if you owed $5000 on your card they don't subtract that from your total assets. Clearly one is better off by taking some money out of the bank possibly earning 3% interest and paying off your card, thus reducing your assets and increasing your pension at a 3.9% rate now and 7.8% next year.

It occurs to me if Centrelink refuse to consider one's credit card debt then they equally should not consider your card if in credit. It is not an investment. It is not earning interest. It is not a bank account. So why not take $10,000 out of your 3% interest bank account and put your credit card $10,000 into credit and earn 3.9% or 7.8% effective interest by a pension increase due to an asset reduction of $10k?

Equally one could gradually withdraw some cash and park it under the bed but there is a loss risk with that and cash withdrawals may be noticed. Putting a credit card into credit could be done simply by overpaying each month and appearing as normal transactions.

The moral perspective is cheating but I wonder what the legal perspective is if Centrelink ignore credit cards? Anyone have any experience or ideas?

[Jay&dee]

Hi Old Techo,

What a great post.
You are certainly thinking outside the 9 dots.

Like Kerry Packer said.

"Why should I give the government more money than I have to.
I don't like the way you are already spending the tax money I already pay."

This analogy could also apply in reverse here.

Hope you get a lot of feedback mate.
jay&Dee

[Jay&dee]

Hi Old Techo,

What a great post.
You are certainly thinking outside the 9 dots.

Like Kerry Packer said.

"Why should I give the government more money than I have to.
I don't like the way you are already spending the tax money I already pay."

This analogy could also apply in reverse here.

Hope you get a lot of feedback mate.
jay&Dee

[Jay&dee]

OOOOPS!!!
Sorry re double post.
jay&Dee

[TramcarTrev]

Ok yes OT you are on the money there so to speak.

Firstly I being a devious underhanded financial type was given some advice actually by a Centrelink Financial adviser re legal asset minimization. They were actually trying to explain it to my MIL but she refuses to listen.

Firstly you can spend whatever you want, Centrelink cant stop you and paying off a CC debt is perfectly acceptable. You can "gift" money at the rate (It think) of $15k every 5 years, to me if you have a surplus and I wont even charge you to hide it. Best bet is to spend it on non tangibles eg fast women, slow women, Cruise the Greek Isles, Food, wine and song...

You can hide assets in a mortgage, quite legally in a mortgage with a withdrawal facility and you actually get what ever the loan interest rate is on the money you have stashed against your mortgage and that money is not seen as an asset.

You can then draw down any funds you need for whatever purpose. Depending on what you do with that money you could be buying an asset, but as I do replacing a car every 2 years or 40000km is legal and as vehicles depreciate faster than a snowflake in Hades they are OK too...

You can draw your pension in cash and stash every fortnight if you wish, only problem here is potential theft or even worse forgetting where you stash it. A good home safe is a good bet though... Then spend money from your bank account to reduce that thus reducing the amount Centrelink reduces your pension for money it sees as an asset.

Centrelink have a lot of people bluffed and every time they win a bit of money they race off to tell Centrelink, dont; unless you show cause Centrelink will never know but remember they are all cross linked to the ATO who are the real niggers in the woodpile here... So declaring bank interest at Tax reconciliation may be a tad self incriminating.

Some of the other good hiding places have been removed by Ms Gillard... Some people hid cash in things like "funeral funds" to avoid horrendous "bonds" having to be paid when you get put into an aged care facility. Alas now Funeral Funds are an asset but of course unless you tell Centrelink they wont know...

As you age it pays to spend spend spend, Centrelink cannot stop you spending on Holidays though they do see a van and tug as an asset. I'm not sure of the situation of those who live in a van permanently but I'm sure its not considered a permanent residence so you are entitled to rent assistance UNLESS you have a residence of the permanent type. A mate of mine lived in his van for a year while his retirement villa was built and he got rent assistance.

So what do Centrelink consider assets; dwellings, land and property that are not your sole residence. Any vehicle, caravan, trailer, boat or even horse that you use for private transport. These assets you can quite legally depreciate though as Centrelink is only interested in the market value. Coins, collectibles, bullion, stamp collections or any asset that could be considered exchangeable for cash. But as always unless you tell Centrelink you have a very rare 1930 penny they wont know... Cash in the bank is an asset once you cross the threshold, from memory you can have $40k without being penalised...

Centrelink does not have powers of search so unless you tell them you have the Welcome Stranger nugget under your bed they wont know.

Wait till you hit an aged care facility then you will see some amazing juggling, your bond is an asset as nowadays its fully refundable...

[Motherhen]

Centrelink are masters of looking at one side of the ledger only and not the other .

[masterplumber]

Centrelink have a lot of people bluffed and every time they win a bit of money they race off to tell Centrelink, dont; unless you show cause Centrelink will never know but remember they are all cross linked to the ATO who are the real niggers in the woodpile here... So declaring bank interest at Tax reconciliation may be a tad self incriminating.

No need to worry about telling the ATO about interest, dividends or a heap of other stuff, as they already know. A lot of these questions are just checking your honesty.

Gerry

[Motherhen]

Yes, most dividends and interest income is notified to the ATO, and even eBay sales are reported to ATO and Centrelink. Not sure about Lotteries. Unless you are looking for free 'board and lodgings", don't 'hide' anything from these departments, who have draconian powers.

[TramcarTrev]

Lottery wins can be kept private if you tick the box when buying the tickets. The ATO cant tax the actual prize but they can and really enjoy taxing the income generated by Lottery wins. Interest earned is supposedly declared at the Bank interest question...