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Double Dipping with the Pension

Have you ever heard of double dipping with the pension? This is where you spend your assets so that you can get the pension.

Here is a brief example:

A pension age couple who have $1mil in super and own their own home may not be able to get the pension because the super is over the asset threshold of $830,000.

The $1mil may be earning them $30,000 in income per year.

Another couple may have $1mil in super, but they spend $540,000 on a bloody great holiday.

Their assets are thereby reduced and they now qualify for a part pension. For the couple the pension works out to be $982 per fortnight or $25,532 per year. But they still have $500,000 cash which they could invest and get $15,000 per year at 3% return. This would total $40,532 per year.

So by blowing $540,000 on expenses a couple could increase their income by more than $10k pa.

Believe it or not many have this attitude – they think they deserve the pension and they will do almost anything to get the maximum allowable. Including spending say $540,000 to qualify for $10,000 per year extra income.

Modelled on an article from The Tax Institute https://www.taxinstitute.com.au/news/3-november-2017

Written by Terry Waugh, lawyer at Structuring Lawyers, www.structuringlawyers.com.au