2014 Budget Impacts



Written By the Vice President ACT TPI Association.



1.Reviews of Income Support Payments.  There will be additional reviews of income support payments – e.g. Service Pension.  The reviews will be increased from 12,000 to 20,000 reviews per financial year.  These reviews do not involve DVA disability pensions.

2.   Invalidity Payments under SRCA and MRCA.  Veterans’ incapacity payments for disabilities accepted under SRCA and MRCA, will be reviewed by a medical specialist after 12 months of payments.  This is in line with Centrelink Disability Pensions.  These reviews will not affect members receiving any rate of disability pension, including the Special Rate pension under the VEA, or the Special Rate of Disability Pension under the MRCA.

3.Commonwealth Seniors Health Card (CSHC).  From 20 Sep 14, the index will be measured annually against the income limit movement by the CPI.  This will result in additional retirees becoming eligible for CSHC.  This will allow more retirees access to medicines listed on the Pharmaceuticals Benefits Scheme at a concessional rate.  The CSHC is subject to an adjustable taxable income test and include untaxed superannuation income in the eligibility assessment.  Income will also include untaxed superannuation income in the assessment of income to determine eligibility from 1 January 2015.

The assessment of superannuation income will be the same for CSHC holders as for Age Pension recipients Deemed income will be calculated based on the account balance of account based income streams.  It cuts out at $50,000 for singles and $80,000 for couples, or $100,000 who are separated by illness.   It is paid to singles or couples who have reached Age Pension age, but do not qualify for a payment from DVA.

4.Clean Energy Supplement.  Is added income support paid to help meet household costs associated with the carbon price.  It is now to be called Energy Supplement and will continue, but without any form of indexation.  It will remain a static amount as of 1 July 2014.

5.Cessation of the Seniors Supplement.  The payment on 26 June 2014, the last regular payment of Seniors Supplement will be paid, though the Energy Supplement will continue to be paid.  The Seniors Supplement provided annual payments of $876.20 for singles, and $1,320.80.  To have qualified for the Seniors Supplement, you must have been a holder of a CSHC.

6.Pension Bonus Scheme.  The Pension Bonus closure date has been deferred.  The closure date has changed from 31 March 2014, to 1 July 2014.

7.Certain Concessions for Pensioners and Seniors Card Holders.  The government will terminate the National Partnership Agreement on Certain Concessions for Pensioners Concession Card and Seniors Card Holders, from 1 July 2014. This Agreement contributes to state and territory government provision of certain concessions for pensioners and seniors. 

8.Housing Help for Seniors – Pilot.  The pilot programme has been cancelled as the Government felt there was no evidence that the pilot would achieve its goal.

9.Eligibility Thresholds for Australian Government Payments.  The income free areas, asset value limits, and deeming thresholds for income support pensions are indexed once a year on 1 July.  Indexation will not occur in 2017, 2018 and 2019.  Indexation will recommence on 1 July 2020, and be indexed only by the CPI.

10.Changes to Pensions – Income and Asset Test Thresholds.  From 1 July 2017 for a period of three years, the income free areas, asset value limit thresholds for income support pensions will be fixed.  This means that increases in income and assets of an individual or couple over these three years could result in a reduction of the Age Pension, Carer Payment, Service Pension or Disability Support Pension.  The family home, which can also be a caravan or a boat, if a principal place of residence, will not be included in the pension asset test. 

a.Income Test.  A couple can have a combined income (including Superannuation) of $2,817.20 a fortnight before the Service Pension cuts out (this amount does not include your TPI pension).  If your amount of income is below the above amount, it would only reduce when you exceed the Income Free Area, which is currently $276 combined, for a couple a fortnight.  When your income exceeds the income free area, each dollar of income over this limit reduces your pension by 40 cents a fortnight (20 cents each for couples).  If you were granted your Service Pension after 20 September 2009, it reduces by 50 cents a fortnight (25 cents each for couples).  There is no change in this test threshold; only that it will be fixed for three years.  Remember, the test paying the lower rate of pension is the one that is applied.

(The amount of income support pension you receive depends on your income and assets.   The pension is calculated under two separate tests - the Income Test and the Assets Test.  The test paying the lower rate of pension is the one that is applied.)

What is income?  Income includes:

  • deemed income from financial assets
  • salaries and wages
  • the monetary value of non-income benefits paid in lieu of salary and wages
  • superannuation pensions
  • overseas pensions
  • payments from immediate annuities, allocated annuities and allocated pensions
  • income from real estate
  • payments in the form of cheques, cash or direct deposits into a bank account for energy from solar power generation fed back into the electricity grid
  • profits from farms, private trusts, private companies and other businesses such as partnerships
  • income from estates and life interests
  • distributions from private trusts and private companies

a.Asset Test.  A couple who own their own-home can have $279,000 in assets before the service pension is reduced.  This means you can still have assets up to and including this amount and still receive the maximum rate of service pension.  As an example, a pensioner couple who own their own home, and have assets of $296,000 (this does not include the value of their own home).  Their pension will be paid at a reduced rate because of their assets over $279,000.  The pension is reduced by 37.5 cents for every $250 over the limit.   There is no change in this test threshold, only that is will be fixed for three years.  Remember, the test paying the lower rate of pension is the one that is applied.  The following list shows the common types of Assets that are counted for pension purposes:

  • money in bank, building society and credit union accounts
  • investments in shares, managed investments, bonds and debentures
  • vehicles (including cars, boats and caravans)
  • household contents and personal effects
  • businesses, companies and partnerships
  • real estate (other than the principal residence)
  • properties (including farms) with over 2 hectares of land surrounding the principal home unless certain conditions are met
  • trusts
  • life assurance/insurance, based on the surrender value (the amount received on redeeming the policy)
  • loans
  • gifts (totalling more than $10,000 in a financial year or totalling more than $30,000 in a rolling five-year period)
  • asset tested short and long term income streams
  • superannuation funds and rollover funds (such as approved deposit funds or deferred annuities) for pensioners who are over pension age (qualifying age for a war widow/widower)
  • bullion
  • collections (such as coins and stamps).

11.Reset of Assets Test Deeming Rate Thresholds – This is where interest from investments is deemed to earn a certain amount of interest.  A home-owner couple, for example, are deemed to have earned 2 per cent on the first $77,400 of deemed assets and 3.5 per cent on the rest.  Deeming thresholds currently are $46,600 for a single, and $77,400 for a couple combined.  These amounts will continue to be indexed until indexation is paused on 1 July 2017.  On 20 Sept 2017 the deeming thresholds will be reduced to $30,000 for a single and $50,000 for a couple combined.  Indexation of the reset amounts will commence on 1 July 2020, and indexed by the CPI.

  • To work out your ‘deemed’ assets, your assets include:
  • accounts with banks or other financial institutions (including savings and cheque
  • accounts and term deposits)
  • cash in excess of $500
  • gold and other bullion
  • managed investments such as public unit trusts (including cash, mortgage, property and equity trusts), insurance bonds and friendly society bonds
  • loans you make to other people including family and friends
  • Gifts (totalling more than $10,000 in a financial year or totalling more than $30,000 in rolling five-year period)
  • loans you make to organisations, such as businesses, private trusts or private companies
  • bonds and debentures
  • shares in public companies on any stock exchange either in Australia or overseas
  • shares in unlisted public companies
  • superannuation fund investments (including public superannuation funds, approved deposit funds, deferred annuities, retirement savings accounts and self-managed superannuation funds) for pensioners who are of pension age
  • asset-tested short term income streams

Index Pension and Pension Equivalent Payment by the CPI.  From 1 July 2017, MTAWE and the PBLCI will no longer be used in the indexation of age and service pension.  Indexation changes will align pension indexation with those for other social security payments (CPI).  The change will flow through to affect the rate of income support supplement, carer payments, bereavement allowance, disability pension (including TPI pensions) and war widow(er) pension and equivalent MRCA payments.

13.Concessional Pharmaceutical Co-Payment.  There will be a one off increase to the existing concessional pharmaceutical co-payment of $6.10, of an additional $0.80 cents, to $6.90.  For spouses/partners without a concession card, the payment will rise from $37.70 by an additional $5.00 to a total of $42.70.  The increase will take effect on 1 January 2015.  The general safety net thresholds will increase by 10 per cent each year, the concessional safety net to increase by 2 scripts per year, over 4 years from 1 January 2015, to a total of 68 scripts, by 2018.

14.A Co-payment of $7 for Doctor’s Visits.  This co-payment is not applicable to DVA white and gold card holders.  Spouses/partners and dependant children under 16 years on concession cards, will only pay for the first 10 visits a calendar year from 1 January 2015.  Visits to out-of-hospital pathology and imaging services can be expected to rise from 1 July 2015.

15.Entitlements for Optometry.  There will be a change to the entitlements for optometry.  If the client is under 65 they can only have an eye examination every 3 years.  If the client is over 65 they can have an eye examination annually.  Dr Killer (DVA) pointed out that it is still relevant that if there is a clinical need then it will be approved.

16. New Medicare Safety Net.  From 1 January 2016, the existing Original Medicare Safety Net, Extended Medicare Safety Net and Greatest Permissible Gap will be simplified and replaced by the new Medicare Safety Net. There will be new safety net thresholds of $400 for concessional singles and concessional families, $700 for non‑concessional FTB‑A families and non‑concessional singles, and $1,000 for non‑concessional families who do not receive FTB‑A. 

17.Family Tax Benefit A (FTB-A).  The maximum income rate to receive this benefit for a single child stays at $94,316, but the income threshold will be frozen from 1 July 2015, and not increased by $3,796 for each additional child. 

18.Limit the Large Family Supplement to families with four or more children.  This measure will limit the FTB-A - Large Family Supplement (currently $313.90 per child per annum) to families with four or more children from 1 July 2015.  The Large Family Supplement will be paid in respect of the fourth and each subsequent child in a family, and a newborn supplement and upfront payment of up to $2,001 per child. 

19.Family Tax Benefits B (FTB-B). This benefit will be limited to families with the primary earner has an income of less than $100,000 (down from $150,000) and only until their youngest child turns six from 1 July 2015.  As a transitional arrangement, families with a youngest child aged six and over on 30 June 2015 will remain eligible for FTB‑B for two years.

20.New Family Tax Benefit allowance.  A new allowance for single parents on the maximum rate of FTB-A where youngest child is aged between six and 12, will be paid from the point when they become ineligible for FTB-B.  From 1 July 2015, this allowance will provide $750 for each child aged between six and 12 years old in an eligible family.

21. Revised Family Tax Benefit end‑of‑year supplements.  The FTB end‑of‑year supplements have been revised to their original values, and ceasing indexation from 1 July 2015.  The revised supplements will provide $600 per annum per FTB-A child and $300 per family per annum for each FTB-B family.

22.Fuel.  Bowser prices will rise by 1c a litre next financial year, after the indexation of fuel excise recommences in August.  The fuel excise will be indexed bi-annually.

(The Medicare Safety Net assists Australian families and singles by contributing towards out‑of‑pocket costs for Medicare eligible out‑of‑hospital services. Once the annual thresholds have been met in a calendar year, Medicare will pay 80 per cent of any subsequent out‑of‑pocket costs, capped at 150 per cent of the Medicare Benefits Schedule (MBS) fee. The out‑of‑pocket costs that accumulate to reaching those safety net thresholds will also be capped at 150 per cent of the MBS fee.)

Items of Interest:

Defence Service Home Insurance Scheme (DSHIS).  A study on the future management and operations of the DSHIS will be conducted this year and the result be incorporated in the next budget.

Backdating of Pension Claims.  All pension claims automatic backdating of payments will cease from 1 Jan 2015.  After 1 Jan 2015, backdating will be from the date of the claim lodgement.  This will restore equity between disability pension compensation and income support payments under VEA, and permanent compensation payments under MRCA, which are only backdated to the date of the claim.  Backdating provisions for War Widow(er) pension claims remain unchanged.

New DVA Health Card.  The new card is due to be released in June 2014.  The new orange, white and gold cards will have poppies etched on the card along with the Anzac 100 Year logo.   This release is in line the next expected issue date of the cards.  The other major change in the card is that the card is now called a “DVA Health Card” in lieu of “DVA Repatriation Card”.

Building Excellence and Training (BEST) Programme.   The government will restore funding to the BEST programme; of an additional one million per year over forward estimates.

Western Front Interpretative Centre.  There will be $6.9m extra funding for the Centre

Tax Rebate for Dependent Spouse.  The Dependant Spouse Rebate is being abolished from 1 July 2014.  For the year ending 30 June 2013 (this current tax year), you will be able to claim a Spouse Rebate only if you fulfil one of the following conditions:

  • Your spouse was born before 1 July 1952
  • Your spouse is an invalid or is permanently disabled
  • Your spouse is a carer    
  • You are eligible to claim zone, overseas forces, or overseas civilian tax offset

At present if you support your wife or husband, you are entitled to a maximum tax rebate of $2,355, or $2,736 if you also support a child or student and do not receive Family Tax Benefit.  If you have a spouse with an adjusted taxable income of less than $10,166 you can claim a dependent spouse rebate.  The tax offset reduces by $1 for every $4 of your spouse’s adjusted taxable income that is over $282.

Increase in the Medicare Levy.  The government previously announced on 1 May, 2013, that it would increase the Medicare Levy by half a percentage point to be directed to the DisabilityCare Australia Fund. From 1 July, 2014, the Medicare levy will increase from 1.5% to 2% of taxable income.


Increase the Medicare Levy Low‑Income Thresholds for Families. The Government will increase the Medicare levy low‑income threshold for families from the 2013‑14 income year. The thresholds are as follows:

  • for couples with no children increased to $34,367, and
  • additional amount of threshold for each dependent child or student increased to $3,156.


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