Nick Bruining Q+A: Home truths on what you can do with a huge inheritance and keep the Centrelink age pension

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Nick Bruining
The Nightly
3 Min Read
A retired couple has cash and super of $650,000 They’re also set to inherit $700,000. But there’s one massive rule that will allow them to put the money to work AND keep their pension. Here’s how ...
A retired couple has cash and super of $650,000 They’re also set to inherit $700,000. But there’s one massive rule that will allow them to put the money to work AND keep their pension. Here’s how ... Credit: Don Mason/Getty Images


My wife and I — 70 and 72 years old, respectively — are both retired.

We receive a combined fortnightly Centrelink pension of $686. I also receive a pension from the US of about $8000 a year.

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We have $140,000 in cash and $510,000 in superannuation. Along with my sister, I inherited a unit in the UK which was sold over a year ago. After tax and other expenses, my share was about $700,000.

I now want to bring this money over here. If we buy or build another home for $1.6 million to live in and sell our current home for $900,000 we would still have cash, super and personal assets of $650,000.

What sort of pension might we be entitled to?


With the information you provided, it appears Centrelink may be working off incorrect information. If Centrelink is not aware of the UK assets, I estimate that your current combined Australian pension should be about $1050 under the asset means-test — assuming a value of $30,000 on your cars and other fixed assets.

If Centrelink is aware of your UK entitlement, you shouldn’t be receiving any Aussie pension. You should obtain a copy of your Centrelink income and asset records and cross-check those with what you actually have.

If the record is inaccurate, you would not be entitled to any backpay, but may instead have to return any Australian pension if you were overpaid during the period. Once you became entitled to the inherited property or its proceeds — no matter where it is located in the world — you must notify Centrelink within 14 days.

My calculations show that at this point, your benefit will be cancelled because your total assets will easily exceed the homeowner’s upper asset test limit after July 1 of $1,031,000.

Your suggested strategy of purchasing a new home will help you greatly because the value of your dwelling — no matter how much it is worth — is exempt from means-testing.

While you haven’t explained how the change-over is to be funded, I will assume you may intend to borrow the money if building. You could purchase your new home by using the proceeds of the inherited home and combine it with your super and bank savings.

Once you sell your family home, you could make use of the super downsizer contribution rules to replenish the super. Under those rules, if you have lived in your home for 10 years or more and deposit the money within 90 days of settlement, each of you can contribute $300,000.

That money could then be converted back into an account-based pension and appropriately invested.

The benefit of this approach is that all of the money in the pension fund is tax-free and any money withdrawn from the fund is also tax-free.

Super downsizer can be used by anyone over the age of 55.

Once all is finalised and with your estimated amounts left over, you will still be asset-tested by Centrelink and your reinstated pension should be the same amount as calculated of about $525 each a fortnight.


About four years ago I inherited a property in the Netherlands which was part of the estate of my uncle.

I considered selling it and bringing the money into Australia but COVID-19 broke out and instead I rented it out.

I do not actually receive the rent. Instead, it’s put into a Dutch bank account. When we travel there, we simply use that money to pay for our trip.

My wife says we should have told Centrelink about the house. Is she, once again, correct?


Unfortunately, the answer is yes.

Irrespective of where in the world any asset is held, it and the income received must be declared here in Australia.

The declaration of offshore activities is included in tax and social security laws. You should notify Centrelink and the Australian Tax Office as soon as possible, because with the sophisticated international data-sharing arrangements now in place, it is not a question of if they catch up with you, but when.

Data that routinely changes hands across borders includes bank accounts, land registration data and share holdings.

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


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