- 1. What is the Commonwealth Seniors Health Card (CSHC)?
- 2. Who is eligible for the Commonwealth Seniors Health Card (CSHC)?
- 3. What year of income does Centrelink use when testing for CSHC eligibility?
- 4. Where can I find more information about the CSHC and eligibility?
IMPORTANT: Effective from 20 September 2017, the government has again indexed the income test thresholds for the CSHC (see this article for latest thresholds). The next indexation of the CSHC income thresholds takes place on 20 September 2018. Note that since 1 January 2015, new applicants for CSHC need to include tax-free superannuation income when assessing CSHC eligibility.
Any Australian hoping to be a self-funded retiree should also ask, ‘Am I eligible for a Commonwealth Seniors Health Card (CSHC)?’
Any Australian hit hard by the Age Pension assets test changes taking effect from January 2017, may also be asking themselves whether they can now claim the CSHC (for more information on the 2017 Age Pension changes see SuperGuide article Latest retirement deal! Lose Age Pension, receive Seniors Health Card.
CSHC eligibility is a popular prospect for budding self-funded retirees, and the answer can be best explained by dividing the question into four parts:
- What is the Commonwealth Seniors Health Card?
- Who is eligible for the Commonwealth Seniors Health Card (CSHC)?
- What year of income does Centrelink use when testing CSHC eligibility?
- Where can I find more information about the CSHC and eligibility?
1. What is the Commonwealth Seniors Health Card (CSHC)?
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. You can find out about the other discounts that you’re entitled to by reading the Centrelink guide to concession cards on the Department of Human services website. I have included the link for the guide at the bottom of the article.
Income thresholds for CSHC: Taking effect from 20 September 2017, the CSHC income test thresholds have increased. From 20 September 2017, tour annual adjusted taxable income must be less than $53,799 (for a single person) or less than $86,076 (for a couple, combined. If a couple is separated due to illness, respite care or prison, then the combined income threshold rises to $107,598. For information on the CSHC income thresholds for previous years, see SuperGuide article Great news! Seniors Health Card income thresholds increase, again.
Note: Certain CSHC holders will receive the Energy Supplement, if they became eligible for the CSHC before September 2016. CSHC holders who became eligible for the card because they lost their Age Pension entitlements on 1 January 2017 will also be paid the Energy Supplement (provided they applied for the CSHC within 6 weeks of losing the Age Pension). The Energy Supplement, which remains fixed at the September 2014 rate, is $551.20 for a couple ($275.60 for each member of couple), and $366.60 for a single person.
Background: The CSHC was introduced in 1994 to encourage individuals to become self-funded retirees. The income thresholds for eligibility steadily increased from 1994 to 2001 to reflect cost of living increases. From 2001 until 2014 however, the income thresholds for eligibility had not changed for 13 years; until the government committed to indexing the CSHC income test thresholds each year, effective from 20 September 2014. The thresholds were again indexed from September 2015, and again indexed from September 2016, and then again from September 2017 (see the next section of this article for the latest thresholds).
2. Who is eligible for the Commonwealth Seniors Health Card (CSHC)?
The CSHC is available to Australians of Age Pension or older age or older (at least 65 or 65.5 years for men and since 1 July 2013, at least 65 or 65.5 years for women, noting that Age Pension age has increased to 65.5 years from July 2017, for Australians born after a specified date), and those Australians who meet the age requirement ALSO don’t qualify for the Age Pension or who don’t qualify for a Department of Veterans’ Affairs pension. You must also be an Australian resident and currently living in Australia.
You must satisfy an income test (currently based on ‘adjusted taxable income’ and this ATI includes a deemed income amount for applicable applicants post-December 2014), but you do not have to satisfy an assets test to be eligible for the CSHC.
Income thresholds for CSHC: Taking effect from 20 September 2017, the CSHC income test thresholds have increased. From 20 September 2017, your annual adjusted taxable income (plus deemed income on super pensions, if applicable) must be less than $53,799 (for a single person) or less than $86,076 (for a couple, combined). If a couple is separated due to illness, respite care or prison, then the combined income threshold rises to $107,598.
What is annual adjusted taxable income (ATI)?: The current definition of ‘adjusted taxable income’ is an individual’s taxable income plus total net investment losses, plus foreign income not normally taxed in Australia, plus employer-provided fringe benefits (if worth more than $1,000), and plus reportable super contributions. Since 1 January 2015, ATI also includes a ‘deemed income amount’ for new applicants. I explain what all of these items mean later in the article.
Salary sacrifice super contributions count for adjusted taxable income: For the 2008/2009 financial year and earlier years, salary sacrificing didn’t count when determining eligibility for the CSHC. Since July 2009 however, the definition of income for the purposes of the CSHC, includes salary sacrificed contributions.
Pre-2015 CSHC holders: Super benefits not counted as taxable income (except for payments from some public sector funds): Any super benefits paid to individuals aged 60 or over are tax-free and, importantly, do not form part of an individual’s taxable income. As a consequence, the removal of super benefits (from a taxed source) received by over-60s from the income tax system since July 2007 means that a greater number of retirees are eligible for a CSHC. The one exception to the exclusion of superannuation benefits from taxable income (since July 2007), however, is where an individual receives pension income from an untaxed source, which is the case for some retired public servants. Pension income from an untaxed source is still counted when considering CSHC eligibility because this income forms part of a person’s taxable income. This is another example of retired public servants missing out under the tax-free super rules. Note that any new CSHC holders, on or after 1 January 2015 have deemed income from super pensions included in the CSHC income test (see next paragraph for more information).
New rules for new CSHC applicants since 1 January 2015
Note: Since 1 January 2015, new applicants for CSHC need to include superannuation pension income when assessing CSHC eligibility. The income included is not actual super benefit payments, but a deemed amount on the asset value of the super pension, and based on a set interest rate. For more information on this change see SuperGuide article More retirees eligible for Seniors Health Card (CSHC) from September 2017.
You can confirm your CSHC eligibility with Centrelink.
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 to the CSHC income for new applicants, or for pre-2015 CSHC recipients who subsequently start new super pensions, see SuperGuide article link in earlier paragraph).
For the convenience of readers who are eligible for the CSHC, or researching whether they may be eligible for the CSHC, I have included a composite extract that explains ‘adjusted taxable income’ and the CSHC income test. Again, note that deemed income from super pensions also counts for post-December 2014 CSHC holders.
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.
This is where it gets tricky. The income assessment for the CSHC is based on the verified taxable income from one of the two financial years prior to the year the claim is lodged. For example, if the claim is lodged in the 2017/2018 year, the CSHC assessment is based on the taxable income for the 2016/2017 year or the 2015/2016 year. “Verified taxable income” generally means the taxable income shown on a person’s Tax Notice of Assessment.
Since 1 January 2015, new applicants (rather than pre-2015 CSCH holders) also have to include deemed income amounts from super pensions.
Note: For the thousands of Australians who have just retired and hoping to receive a CSHC for the first time in the 2017/2018 year, based on an income that you no longer receive, then your entitlement to the CSHC could be problematic. Fortunately, Centrelink has anticipated this issue. If the verified taxable income for the previous year is above the CSHC income limits, then it is possible for an individual to supply an estimate of their taxable income for the current financial year using the calculation table (see pages 7 and 8) provided in Centrelink’s ‘Information you need to know about your claim for Commonwealth Seniors Health Card’ booklet (the link is at the bottom of this article).
Warning: When you do receive your Tax Notice of Assessment for the year that you used for testing your CSHC eligibility, and if you discover that your estimate is incorrect and that your taxable income is in fact above CSHC income limits, then you must notify Centrelink immediately.
4. Where can I find more information about the CSHC and eligibility?
Your first port of call is the Department of Human services website (which now manages all Centrelink information). The Centrelink section of the DHS website contains plenty of information about the CSHC, or you can contact them by phone on 13 23 00. I suggest you write down this phone number because when I first searched for this phone number it took me 20 minutes to find it on the DHS website, and it was hidden away in a 19-page booklet. More recently however the number is more prominent on the website although it only invites you to use the number if you have lost your CSHC, when it is the main phone number for any CSHC question.
For more information on the CSHC, check out the following documents:
- A Guide to Centrelink Concession Cards
- Information you need to know about your claim for the Commonwealth Seniors Health Card booklet
- Claim for a Commonwealth Seniors Health Card form
For more information on the changes to the CSHC income test see the following SuperGuide articles: