Not a day goes by when I am not asked some form of question about how best to structure (hide) money to protect and improve a Centrelink benefit.
The question usually stems from the sale of a house, receipt of an inheritance or some other impetus.
Whilst the term “hiding money” brings thoughts of illegal activity to mind, there are legitimate strategies available to you to preserve or enhance your eligibility for a Centrelink benefit.
The most effective strategy is adding money to superannuation. Superannuation in accumulation phase is not assessed until you reach Age Pension age (this varies depending on your year of birth). By adding money to the superannuation fund of a younger member of a couple, the older partner can benefit from an increased Age Pension payment.
A similar strategy can be implemented for someone who retires before reaching Age Pension age and needs support from Centrelink. There are restrictions around adding and accessing money from superannuation, therefore the strategy should be discussed with an appropriately qualified financial adviser before making any changes.
Other less generous yet effective strategies include:
- Gifting – you are able to gift $10,000 pa and a maximum of $30,000 in any rolling 5-year period. If you exceed these gifting limits in any way, you will be assessed as though you still have the money or asset.
- Prepaid funeral – prepaid funerals and funeral bonds up to the value of $13,250 are not assessed by Centrelink. Buying one of these may assist in improving your benefit.
- Spend it – Your home is not assessed by Centrelink therefore spending money on renovations and maintenance could help improve your Centrelink payment. Spending money on things such as clothes or a holiday may also be helpful. However, this is not something we recommend for clients because spending a dollar of your own money won’t result in you receiving a dollar from Centrelink. Financially speaking, it is much better to preserve your wealth rather than whittle it away and rely on Centrelink.
I think it is also important to discuss the “elephant in the room”. Hiding money under your bed is not a viable strategy. Firstly, the cost of living is rising and if your money sits idle, your money is effectively losing value (purchasing power). In addition, as people grow older and develop dementia, hidden money is often forgotten about. Most importantly, if not declared, hiding money is fraudulent and can result in having to repay money received and criminal charges. We’ve seen it many times before.
The strategies and advice mentioned above is of general nature only. We strongly recommend you chat to someone who is appropriately qualified to discuss these matters and apply them to your personal circumstances. If implemented incorrectly you could be in a worse off position.