"My partner and I recently split. We owned our home for nearly 2 years. I’ve currently gone onto a single parent pension and wondering if the profit I will receive will affect my payments? We are going through lawyers for the property split which will be lodged with our local court. I cannot afford to buy again for a good while with the number of dependents that I have."
-Claire in Brisbane, QLD
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Thanks for the questions and I hope you are doing well as you navigate the splitting process with your ex-partner. There are many elements to consider during the process, but I also suggest people ensure they are gentle on themselves and include some self-care in the process as they navigate these and the end of the relationship. Hopefully, you also have a good support team around you.
With regards to the parenting payment, it depends on the amount of funds you end up with. Most of the Centrelink support payments have an income and assets test. This means that Centrelink will assess you on both the level of income you earn and then the amount of Assets you have. Depending on which one results in the lesser amount of benefit to you, this is what you will receive.
The Income Test is based on how many dependent children you have. If your income is over the cut-off point of $2,363.60 gross a fortnight you won’t receive any payment. The cut-off point increases by $24.60 per child if you have more than one child.
The Asset Test is based on if you are a homeowner or not. As you have mentioned you are not able to retain the home you can have up to $482,500 of asset before the benefits cut off. If you were able to keep the home the Assets test is $268,000 and the house value is not assessed under the testing.
You will need to ensure you keep Centrelink informed of any changes in income while you are on the payment so they can update and ensure you are getting the right level of payment. Centrelink has some great online recourses you can also use to estimate pension payments and reductions and it will step you through the questions based on your situation. You can also book an appointment to speak with one of the Financial Information Services Officers at a Centrelink Office which clients of mine in the past have had a good experience with. Please see these helpful links below:
As part of the overall spitting process as well as getting legal advice, it is always good to get financial advice to see if there are any strategy areas you are missing.
There are two asset pools when it comes to a separation and family court process. The lifestyle assets (your house and contents and cars or any investment assets) and the superannuation asset pool (your retirement or super assets). The combination of the two and the balancing effect ensure you have a fair split in place for longer-term outcomes as well as the immediate needs today. The superannuation pool is important as you have mentioned the dependant children and often primary carers will have a smaller super balance based on paid work history. You should ensure you have discussed any split of super asset as well as the lifestyle asset pool so as to be putting in place a strategy for your longer-term retirement outcomes.
Build your team around you, seek out further advice and start your journey to being free around your money.
Scott Malcolm is podcast host of the Money Mechanics podcast Unpacking Money and been awarded the internationally recognised Certified Financial Planner designation from the Financial Planning Association of Australia and is Director of Money Mechanics.
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