For most older Australians, the Age Pension is a critical support for living costs in retirement. But to qualify, you must meet strict eligibility requirements — and a big part of that is the means test, which includes both an Income Test and an Assets Test.
This comprehensive guide explains how Centrelink calculates what you earn and what you own, what’s included and exempt, how thresholds are set, and what this means for your pension payment. Knowing how these tests work will help you plan your finances and make the most of your retirement entitlements.
The means test ensures that the Age Pension is paid to those who genuinely need it, based on their financial situation.
It’s made up of two parts:
Centrelink works out your payment under both tests, then uses whichever test results in the lower pension amount.
The Income Test includes money you receive from work, business, investments, and some pensions from overseas. To simplify things, Centrelink uses a system called deeming for financial investments — instead of assessing the actual interest you earn, they assume a set rate of return.
What Income Is Counted?
Common sources of income that count under the Income Test include:
What Income Is Not Counted?
Some amounts are exempt from the Income Test:
Deeming Rules
Centrelink assumes your financial investments earn a certain rate of return — even if you earn less (or more) in reality. This is called deeming.
Current deeming rates (as of 2024–25) are:
| Situation | Deeming Rate | Threshold |
|---|---|---|
| Singles | 0.25% up to $60,400, 2.25% above that | $60,400 |
| Couples | 0.25% up to $100,200, 2.25% above that | $100,200 |
Centrelink applies these rates to the total value of your financial investments to estimate your income.
Income Test Thresholds (2024–25)
There are limits for how much you can earn before your pension payment reduces:
| Situation | Fortnightly Income for Full Pension | Cut-off Point |
|---|---|---|
| Singles | Up to $204 | $2,444.60 |
| Couples | Up to $360 | $3,737.60 |
Above the free area, your pension reduces by 50 cents for each $1 you exceed it (or 25 cents each for couples).
The Assets Test looks at the value of what you own. Your family home is exempt, but almost everything else is included.
What Assets Are Counted?
Countable assets include:
What Assets Are Exempt?
Assets Test Limits (2024–25)?
To receive the full pension, your assets must be below these thresholds:
| Situation | HomeOwner | Non-HomeOwner |
|---|---|---|
| Singles | $ 301,750 | $ 543,750 |
| Couples | $ 543,750 | $ 693,500 |
If your assets exceed these thresholds, your pension reduces by $3 per fortnight for every $1,000 over the limit.
Both the Income Test and Assets Test are applied to your situation. Centrelink will pay you the lower of the two results.
This means that even if you pass the Income Test, your Assets Test might limit your pension — or vice versa. It’s important to check both when planning your finances.
You can’t simply give away assets to meet the limits. Centrelink allows limited gifting without penalty:
Anything above this is treated as if you still own it for five years.
If you pay money for a lifetime right to live in someone else’s home (a ‘granny flat arrangement’), the money you pay may be exempt from the Assets Test — but strict rules apply. Always seek advice.
When applying for the Age Pension, you must declare:
Once you’re on the pension, you must report any changes. This includes:
Failing to report changes can lead to overpayments, debts, or fines.
Here are some legal and well-proven ways to manage your income and assets:
Your income and assets will be reviewed regularly. Centrelink may cross-check your information with other agencies like the ATO or banks. Keeping good records is essential.
Managing the means test can be complex. It’s worth getting professional guidance:
Understanding the Income and Assets Test is key to getting the most from your Age Pension. Small changes in how you manage money and property can make a big difference.
Take the time to check what’s included, plan ahead, and get help if you need it — so you can make the most of your entitlements and retire with confidence.