Nick Bruining Q+A: Consider the Centrelink benefits of renting in a retirement village instead of buying

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Nick Bruining
The Nightly
Should you choose to rent instead of buying a unit outright?
Should you choose to rent instead of buying a unit outright? Credit: Getty/Getty


We are a married couple who receive a part-pension and are about to move into a retirement village.

We sold our house and will pay $620,000 for our unit, leaving us with about $100,000. We will pay a monthly maintenance fee of just over $600. We are also liable for power costs and pay council rates directly.

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For Centrelink purposes, are we still assessed as homeowners and do we have any other options?


If not too late, it might be worth exploring a rental arrangement instead of the lump-sum amount because you could be entitled to rent assistance of up to $177.20 a fortnight.

If you do decide to rent, the higher non-homeowner’s asset test limit of $722,000 will also apply. The proceeds of the house sale — invested in a high-interest bank account and coupled with rent assistance — might cover the cost of renting the unit.

At 4 per cent, for example, the $620,000 would generate about $477 per week. You would need a bank account that pays interest monthly to assist with cash flow.

If you proceed with a lump sum, the money paid by you to enter the retirement village is known as your entry contribution. Centrelink will assess the full $620,000 as your contribution for the time you live there. To determine if you are a homeowner, Centrelink uses an “extra allowable amount”, which is the difference between the non-homeowner and homeowners asset test threshold.

As of July 1, that extra allowable amount is $252,000. The extra allowable is established at the time you move in and is not increased each year.

With $620,000 paid in while the amount is $252,000, you will continue to be assessed as a homeowner. As it stands, the $600 maintenance fee paid as a “homeowner” does not qualify you for any additional payments from Centrelink.

If your entry contribution was less than the extra allowable amount, you would have been assessed as non-homeowners. Assuming you proceed with the purchase, the amount left over is $100,000.

That figure will be added to any other financial assets you have and assessed under both the income and the asset test.

While you have not stated which means test your pension has currently been reduced by, remember that once the proceeds are recorded by Centrelink these additional funds may probably reduce your pension further.


I am in my 30s and have a problem I hope you can help solve. I work in a sensitive government role and any legal issues could end my career.

Prior to COVID-19, I was in a long-term relationship that ended badly in 2020. With all that was happening, I neglected to file my income tax return.

Unfortunately, that trend has continued and, once again, I feel the pangs of guilt having not lodged a return since the 2019 tax year.

I have received reminders from the ATO which I ignored. Can you suggest any pathway forward?


You are not alone and many people fail to lodge their returns for various reasons which, in the main, the Australian Taxation Office is sympathetic to and will take into consideration.

Importantly, you should make contact with the ATO by calling 13 28 61 and let the office know what has happened and that you are now fixing the problem.

You could use a tax agent or accountant if you wish, but you will probably find that you can lodge the missed returns yourself. If you have a myGov account, you can link the ATO service to the portal.

This service allows you to prepare and lodge your own tax returns online. You will find that almost all of the data regarding wages, bank interest, share dividends and even some deductions have been pre-filled for each year.

In many cases, it is just a case of clicking “confirm” and simply lodging the return.

If any penalties are applied, you should then call the ATO again and again explain the situation. There is a reasonable chance they will cancel the penalties.

Nick Bruining is an independent financial adviser and a member of the Certified Independent Financial Advisers Association

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