“I own my home outright and I am receiving $812.58 per fortnight, while living with my 59-year-old non-pensioner partner who is not working. I have been turning a good profit on short-term trading lately. My question is how do I best deal with these profits?
I would love to be able to consistently trade at a greater rate than the pension and not receive the pension but what happens if the trading turns to losses? Should I start a MYOB account for this purpose and treat it as a business and present it at tax time? Or should "profits" and losses be reported fortnightly?"
-Question from Peter in Hyland Park, NSW
Top answer provided by:
Kris Wrenn
Hi Peter,
The main thing you need to know about shares and how they are assessed by Centrelink, is that it is the overall value of your shares that is important at any given time, not what profit or loss you have experienced at any given time. The total value of your shares potentially impacts your Age Pension in two ways:
1. The value is assessable under the assets test and;
2. The value is “deemed” to earn an income under the income test. Key thing to note – the actual income received (dividends) are not relevant, nor are any capital gains or losses experienced short term.
In order for a homeowning couple to be eligible for the maximum Age Pension, the current level of assets (outside of the home) that they are able to have at present is $451,500. The current level of allowable income is $360 per fortnight.
So, purely based on the assets/income you’ve listed, i.e. $140,000 inheritance, $14,000 of shares/ETFs, and no employment income for either yourself or your partner, I would estimate that you would be entitled to 100% of the Age Pension, and more importantly, changes in value of between -$500 and +$500 shouldn’t impact this entitlement.
If I’m not quite on the mark that you currently receive 100% of the Age Pension, then not to worry, as soon as you do those home improvements you will certainly jump to 100% on account of the home not being assessable.
If you are actively buying some shares and selling others, I do agree with you that you would need to report the changes to Centrelink each fortnight. But small changes in the overall value of around $500 up or down shouldn’t impact your entitlement either way.
On that basis, I think the set-up of a MYOB account would probably not be worthwhile in your situation.
In all of this Peter I am assuming that you are not considered employed as a share trader, (perhaps as a sole trader for example?). I say this because, in that case, gains and losses from share trading would be considered income and as such could impact your Age Pension entitlement.
The best step from here would be to discuss all the above with Centrelink and see if they agree.
Kris Wrenn
Hudson Financial Planning
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