All my assets are in crypto. How will this affect my pension?

I am a pensioner, and most of my assets are in cryptocurrency. About two years ago, I initially struggled with Centrelink’s junior staff, but once the senior staff got involved, they determined that my crypto assets were not deemed assessable.

However, as of July 1, 2024, my pension income has become inconsistent and Centrelink is yet to explain why. They plan to update all records, which I’m fine with, but the junior staff now insist that my cryptocurrency is subject to deeming under the pension income test and have, so far, refused to investigate further.

Loading up on crypto assets when you retire won’t exempt you from the age pension tests.Credit: Simon Letch

Services Australia assesses the asset value of your cryptocurrencies based on their present market value. They do not have any assessable income and therefore are not subject to the income test deeming provisions.

However, if you are regularly buying and selling cryptocurrencies with a view to making a profit, Services Australia may consider you self-employed and operating a business. Individual circumstances are considered.

If you’re getting income support payments such as the age pension and own a cryptocurrency, you need to let Services Australia know within 14 days if there is a significant change in the asset value.

You often advise putting money into investment bonds, and I’ve considered withdrawing from my superannuation to do so and get some diversification. However, my financial adviser said it would be unwise because I have funds in super in pension mode, where I am enjoying tax-free earnings. By contrast, investment bonds are taxed at a flat 30 per cent from the first dollar earned. My adviser also mentioned that if I have surplus money, a better option might be a good index fund with franked dividends, which would be tax-free for me. Your insights would be appreciated.

We’re not comparing apples to apples here. Obviously, it wouldn’t make sense to take money from a tax-free vehicle and re-invest it into an environment where earnings would be taxed at 30 per cent.

But investment bonds have a unique advantage: they’re protected from will challenges.

Suppose you were a senior citizen with a fairly short life expectancy and who was holding substantial money in super. If there was one individual who you especially wanted part of your legacy to go to, and you were concerned that the bequest might be challenged, it may be appropriate to take some money out of super and put it into an investment bond.

If the amount was, say, $100,000, the reduced net return due to the tax would be relatively small over a short time frame. You could take comfort in knowing that the bequest would go to where you intended. You would avoid the death tax on super.

I often get questions about investing for grandchildren. The reality is that gifts to minors attract the children’s tax, with the first $416 of income from the investment tax-free, but the rest taxed at the highest marginal rate.

However, if the money is placed into an investment bond with the grandchild as the nominated beneficiary, there’s no need to declare anything on anyone’s tax return each year. The bond can be transferred tax-free to the beneficiary, free of capital gains tax, when deemed appropriate.

Just last week, a friend shared that she had been putting $1000 a month into a bond since their child was born. Now, at 10 years old, the child has access to a tax-free $196,000, available whenever it’s needed. Of course, if left to grow – which is highly likely – it could be worth more than $500,000 in another 10 years.

I was born on June 14, 1960. When can I access my super as a tax-free lump sum to pay off my loan? I was recently retrenched after 45-plus years with the same company and received a $16,000 redundancy. No one has been able to give me a clear answer.

It’s a simple question – you’ve passed your preservation age of 60, and having retired from a job, you have satisfied a condition of release to access your super. The payment should be tax-free.

I am retired and receive a defined benefits pension. Am I allowed to make a $3000 super contribution to my 60-year-old wife and claim the $540 tax rebate?

To qualify for the $540 spouse superannuation tax offset, a partner must make a non-concessional (after-tax) contribution of at least $3000 to their spouse’s super.

The full offset is available if the receiving spouse’s income is $37,000 or less, with a phased reduction for incomes between $37,000 and $40,000.

Income for the offset includes assessable income (employment, business, or rental earnings), reportable fringe benefits (such as a company car) and reportable employer super contributions.

Noel Whittaker is the author of Retirement Made Simple and other books on personal finance. Questions to: [e-mail]

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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