Assets test
The Age Pension test that reduces your payment as your assessable assets rise above a threshold.
The assets test counts most of what you own: super, investments, bank accounts, vehicles, and the contents of your home at second-hand value. Your principal home is excluded.
Above a free area, the pension reduces by a set amount for each $1,000 of assets — a taper that has been $3 per fortnight, equivalent to a deemed return of around 7.8% a year on the excess.
Thresholds differ for singles and couples, and for homeowners and non-homeowners. Non-homeowners receive a considerably higher free area to reflect their housing costs.
Deprivation rules limit what gifting can achieve. You can give away a set amount each year up to a five-year cap, and anything above that continues to be assessed as though you still own it for five years from the date of the gift.
How the taper bites
Every extra $10,000 of assessable assets above the free area reduces the pension by around $780 a year — a steep effective rate on those savings.
The bit people get wrong
Household contents are assessed at second-hand value, not what you paid or what they would cost to replace. Many people substantially overstate this figure and reduce their own entitlement.
Common questions
Is my home included?
No. Your principal residence is exempt regardless of value, though non-homeowners receive a higher asset threshold to compensate.
How is my car assessed?
At current market value, not purchase price. The same applies to caravans, boats and other vehicles.
Can gifting reduce my assets?
Only within limits. Gifts above the allowable amounts remain assessed as yours for five years under the deprivation rules.