The assets test

Assets up to a value limit do not reduce the pension. Above it, the reduction is $3.00 a fortnight for every $1,000 of assets over the limit — which the Act states as a fraction of the excess per year, equal to 7.8%.

The Act states the reduction as a fraction of the assets excess per year — the excess multiplied by 19.5 and divided by 250 — identically for every family situation. A fortnight is a twenty-sixth of an annual rate, because point 1064-A1 works out a daily rate over 364 days, so the same rule is ordinarily published as an amount per $1,000 per fortnight. Point 1064-G7 rounds the excess DOWN to a whole $250 before the fraction is applied, so the reduction moves in exact steps and never lands between them — which is what makes the published per-$1,000 form exact rather than an approximation.

This test is written assets test, in the plural, and the payment is the Age Pension. Those are the names the Act itself uses, and they are the names used throughout this site. In everyday use the same test is very often called the asset test, and the payment the aged pension — including in a great deal of otherwise reliable writing about it. Nothing turns on the difference: an asset test threshold and an assets test limit are the same limit, and an aged pension assets test is this page.

The one place the wording does carry information is the plural itself. The test does not look at any single asset. It adds up everything that counts, as a total, on one day — which is why a question about whether one particular possession is “over the asset test” can only be answered by valuing everything else alongside it.

The Act does not work in thousands. It rounds the excess down to a whole $250 before the taper touches it, and disregards the rest. One whole step of excess therefore costs exactly $0.75 a fortnight, and four of them make the $3.00 per $1,000 that every guide quotes.

This is why the reduction never lands between the steps, and why assets a little over a step boundary cost nothing more than assets exactly on it. It is also the sort of rule that gets left out of summaries, which then have to describe an exact figure as an approximation.

The limit depends on whether you own the home you live in, and the two are far apart. That is not a penalty on homeowners — it is the other side of the biggest exemption in the test. The principal home is left out of the count entirely, so a non-homeowner, whose equivalent wealth is sitting in assessable savings, gets a higher limit to compensate.

For the purposes of this Module the value of the assets of a member of a couple is to be taken to be 50% of the sum of the value of the person's assets and the value of the person's partner's assets.

The superannuation rule is the one worth reading twice if you are approaching pension age. A super balance is invisible to the assets test right up until you reach pension age or start drawing from the fund — and then it counts. For a great many people, the assets test result on the day they claim looks nothing like it did the year before, through no change in what they own.

The value of the person's assets, with the exclusions in s 1118 applied — most importantly the principal home, and superannuation before pension age. The valuation of an encumbered asset is governed by s 1121 and the disposal (gifting) rules by ss 1123 to 1128; neither was retrieved this pass and no page states either.

Nothing on this page tells you what you will be paid on its own. Work through the income test as well, and take the lower of the two.