Effective from 20 September 2016, the income test thresholds for the Commonwealth Seniors Health Card (CSHC) have increased for the third time in 13 years, and will continue to be indexed every September. The new indexed income test thresholds appear later in the article.
The CSHC is available to retirees who are not eligible for the Age Pension, that is, Australians who are fully self-funded retirees, and earn income below a certain threshold.
The Liberal government had promised, and kept to its promise, to index the income thresholds for the CSHC, every year in September (the first adjustment taking effect from 20 September 2014, and then again from 20 September 2015, and again from 20 September 2016), in line with the Consumer Price Index.
What type of benefits does the CSHC offer retirees?
The CSHC gives you access to cheaper prescriptions via the Pharmaceutical Benefits Scheme, and an increase in benefits for medical expenses above a certain threshold via the Medicare Safety Net. You may also be eligible for bulk-billing for doctor’s appointments (at the doctor’s discretion). As a CSHC holder you can also travel on the Ghan, Indian Pacific and the Overland rail services at concessional rates. Depending on the state that you live in, you may also be entitled to concessions from your state government and, from some private businesses.
What are the income thresholds for CSHC?
|CSHC||From 2001 until 19 September 2014||20 September 2014 until 19 September 2015||20 September 2015 until 19 September 2016||20 September 2016 until 19 September 2017|
|Couple (combined, separated by illness, respite, prison)||$100,000||$103,000||$104,546||$105,592|
See table above for a summary of CSHC thresholds since 2001, and for more detail see the rest of this section. For information on what is counted as income for the CSHC income test, see the next section of this article.
Since we started SuperGuide nearly 8 years ago, I had highlighted the lack of indexation associated with the Commonwealth Seniors Health Card, which had the (probably intended) effect of fewer people each year being eligible for the CSHC.
I agree with annual indexation of the CSHC income thresholds. In my experience, over the past 25 years of dealing with pre-retirees and retirees, many of those individuals who are now self-funded retirees, have lived within their means and went without certain lifestyle items during their working lives, and are now in a position that they can fund their own retirement. The past 8 years of uncertain sharemarkets, rocketing energy costs and increasing health costs have hit self-funded retirees very hard, as have the lower interest rates on term deposits. I believe it is a small cost to the federal budget ($91 million over 3 years) for a huge benefit to the older segment of the Australian population.
From 20 September 2016: Effective from 20 September 2016 (and applicable until 19 September 2017), the adjusted taxable income thresholds have increased as follows:
- $52,796 for singles
- $84,472 for couples (that is, $42,236 per member of couple)
- $105,592 for couples (combined threshold) separated by illness, respite care or prison
From 20 September 2015: Effective from 20 September 2015 (and applicable until 19 September 2016), the adjusted taxable income thresholds were increased as follows:
- $52,273 for singles
- $83,636 for couples (that is, $41,818 per member of couple)
- $104,546 for couples (combined threshold) separated by illness, respite care or prison
From 20 September 2014: Effective from 20 September 2014 (and applicable until 19 September 2015), the adjusted taxable income thresholds were increased as follows:
- $51,500 for singles
- $82,400 for couples (that is, $41,200 per member of couple)
- $103,000 for couples (combined threshold) separated by illness, respite care or prison
Before 20 September 2014: Before 20 September 2014 and from 2001, the current income thresholds for CSHC eligibility were:
- $50,000 for singles
- $80,000 for couples (that is, $40,000 per member of couple)
- $100,000 for couples (combined threshold) separated by illness, respite care or prison
Important: The Government is making significant changes to the CSHC income test which may affect your eligibility for the CSHC. See SuperGuide article Seniors Health Card (CSHC) changes to hit retirees.
Are you eligible for a Commonwealth Seniors Health Card?
You can read our very popular SuperGuide article, Are you eligible for a Commonwealth Seniors Health Card? to discover if you’re eligible for the CSHC.
Continue reading this article if you want information on what counts as adjusted taxable income for the purposes of the CSHC.
History of the CSHC
The CSHC was introduced to help self-funded retirees with health costs in retirement; costs which can substantially reduce living standards. The longstanding thresholds were set in 2001 and at the time did provide a generous scheme for middle-income retirees, as well as lower-income self-funded retirees. According to the Coalition, “self-funded retirees have made a significant contribution to the success of the nation over their life-time, and we should not be discouraging seniors from being self-reliant by constantly reducing entitlement to the CSHC.”
Originally, the CSHC was introduced in 1994 to provide assistance to low-income retirees who were asset-rich but income poor, such as farmers. In 1999, the income test for the CSHC was changed to taxable income, and the income limits were increased to allow more self-funded retirees to access the CSHC. In 2001, the income thresholds were set at $50,000 for singles and $80,000 for couples, and these thresholds remained in place until 19 September 2014. From 20 September 2014, the income test thresholds increased to $51,500 for singles, and $82,400 for couples, and have since been indexed each September (refer table earlier in this article).
According to the Liberal Party 2013 election policy statement, when the Howard government came to power in 1996, only 33,000 retirees held CSHCs. By the end of the Howard government, in 2007, there were 318,000 retirees with CSHCs.
In his September 2014 media release, Minister for Social Services, Kevin Andrews stated that 290,000 Australians received the CSHC at that time, and the annual indexing of the CSHC income tests would allow an additional 27,000 Australians to become eligible over the next 4 years.
What is ‘adjusted taxable income’?
Important: According to the Department of Human Services, the CSHC is subject to an adjusted taxable income test plus any deemed amount from account-based income streams. Although SuperGuide reminds readers that any pre-2015 recipient of the CSHC is not subject to deeming rules (for more information on the change to the 2015 change to the CSHC income for new applicants, or for pre-2015 CSHC recipients who subsequently start new super pensions, see SuperGuide article Are you eligible for a Commonwealth Seniors Health Card? )
For the convenience of readers, I have included a composite extract from the Department of Human Services website that explains the current definition of ‘adjusted taxable income’:
Adjusted taxable income is a combination of taxable income, target foreign income, total net investment losses, employer-provided benefits, and reportable superannuation contributions:
Taxable income is your gross income minus allowable deductions. It includes income from wages, a business, investments, lump sum payments and any taxable pensions or benefits like Parenting Payment and Newstart Allowance. Income under the tax-free threshold is still counted as taxable income. Although you may not be required to lodge a taxation return due to the level of your income, you may still have taxable income.
Foreign income is money received from outside Australia for which you don’t pay Australian income tax. This may include money from foreign business interests or investments. The amount must be in Australian dollars and cover the Australian financial year.
Total net investment losses
Total net investment losses are the sum of net losses from rental-property income plus net losses from financial investment income. The losses will be added back on to adjusted taxable income.
A net loss from rental property income is the amount by which the expenses of owning the property, such as mortgage interest payments and maintenance costs, exceed the gross rental income from it.
A net loss from financial-investment income is the amount by which the expenses of owning the investment, such as interest payments on the money lent to purchase the investments, exceed the income that the investments are earning. Such investments are often referred to as negatively geared.
Employer-provided benefits that are taken into account for the Commonwealth Seniors Health Card include benefits such as cars, school fees, loans, housing, and health insurance. Employer-provided benefits in excess of $1000 form part of a person’s adjusted taxable income.
Reportable superannuation contributions
Reportable superannuation contributions are the wages you choose to salary sacrifice into a superannuation fund. This is on top of the compulsory contributions paid by your employer. If you are self-employed, reportable super contributions are the superannuation payments you make that you claim as a tax deduction. discretionary or voluntary contributions. They can also be referred to as ‘concessional’ or ‘before-tax contributions’.
Note: Post-tax contributions to superannuation are not reportable superannuation contributions.