Will my pension be cut if I move in with my sister?

Suppose two sisters live in their own houses, one sells and moves in with the other sister for six months while she buys another property. Does Centrelink treat the temporary combined situation as a “combined couple” and cut their single pension rate to a combined rate, or can they maintain their single status for a limited period?

Family members cannot be assessed as being in a relationship, so they’ll maintain their single pensions in this situation. The person who sold their home must advise Centrelink so that they can assess their rate of payment correctly.

If she is going to buy another property, then she should inform Centrelink of this and they will exempt the amount she plans to spend from being counted as an asset for up to two years (deemed for income test but at the lowest rate).

I made a downsizer contribution last year and put in it my accumulation fund, giving me around $1.4 million in my pension fund and another $600,000 in the accumulation fund. My remaining transfer balance is currently around $250,000 according to the ATO. Should I choose to do so, can I transfer the $250,000 plus the $300,000 downsizer into pension mode?

If your remaining transfer balance is $250,000, that is the most you can transfer into pension mode. The balance must remain in accumulation.

I am 60 years old and working part-time. I would like to leave my super – about $600,000 in total – to my two adult children instead of my spouse, despite the potential tax implications of doing so. My children are financially independent and live away from home. My most likely path forward is to nominate them as binding beneficiaries. I have received conflicting advice as to how much tax my children would have to pay on the taxable component, which forms almost all of my super balance. Is it a set rate or aligned with their top marginal tax rate?

An alternative may be to leave the super to my estate. I understand I can use withdrawals and recontributions, including the bring forward provisions, to minimise the taxable component of my balance, but that I would have to stop work to do so. It so happens that I may soon be out of work for four to weeks due to lack of ongoing work. Do I have to fully resign to withdraw and recontribute my super, or will this enforced hiatus suffice? What if I want to return to some form of paid work later on?

You’ve raised a range of issues. First, you can’t avoid the death tax by leaving the money to your estate. You can minimise it to a degree by using the withdrawal and re-contribution strategy you mentioned, but the best strategy is to have it withdrawn tax-free before you die.

This can be achieved by making sure your lawyer has instructions to withdraw your superannuation tax-free when your death is imminent and to deposit it into your bank account. The tax is 17 per cent of the taxable component if left directly to them, or 15 per cent if paid by the estate as there is no Medicare levy.