Chapter 5 - Your Income and Assets


This chapter explains what income and assets are, how the income and assets tests work, and the changes to your income and assets that you are obliged to tell us about. 

First you need to know

You need to know the answers to the following two questions:

  1. Do you receive a maximum rate pension or a reduced rate pension?
  2. Is your pension paid under the income or the assets test?

Do you receive a maximum rate pension or a reduced rate pension?

You will receive the maximum rate of service pension or social security age pension (paid by DVA) if your income and assets do not exceed set limits. If your income or assets are above these limits, you will receive your pension at a reduced rate.

Many war widows receive the income support supplement. The amount of this payment does not usually exceed $252.40 per fortnight.

See Factsheet:

Is your pension paid under the income or the assets test?

Your pension is assessed using both tests. Whichever test results in the lower rate of pension is the test which applies to you. For most people this will be the income test unless they have assets exceeding the asset value limits. The letters we send to you periodically will tell you which test applies to you. Asset value limits are explained in the section How the Asset Test works later in this chapter.

The difference between income and assets

The difference between income and assets is explained by the following examples.

  • Your money in the bank is an asset and the interest it is deemed to earn is income.
  • If you own a business, the property, plant and equipment are assets and the net profit is income.
  • If you own any real estate (besides the home you live in), the property is an asset and any rent it generates is income.
    Note: If you have entered aged care, depending on your individual circumstances, this may or may not apply to your former home.

What is income?

Income is any amount that:

  • is earned, derived or received by you for your use or benefit; or
  • is a periodical benefit or payment (including a gift or an allowance).

It includes amounts received as personal earnings, money, profits (whether of a capital nature or not) and other forms of remuneration whether received from an Australian source or from another country.

It is important to note that what is considered income for the purposes of your pension assessment is not necessarily the same as income for the purpose of income tax assessment by the Australian Taxation Office.

Income that counts in the income test

  • Deemed income from financial assets.
  • Income from non-financial assets such as rental properties and timeshares.
  • Real estate and business income including income from farms.
  • Income from boarders and lodgers who are not immediate family members.
  • Income from income streams such as superannuation pensions, overseas pensions, immediate annuities (lifetime or fixed), allocated annuities and allocated pensions.
  • Profit component upon withdrawal from a conventional life insurance policy (which accrues bonuses).
  • Cash, cheques or direct deposits to your bank account as payment for domestic solar generation.
  • Income from employment
    Note: If you have reached qualifying age or age pension age, depending on what type of pension you receive, the first $250 of your employment income in a fortnight is disregarded under the Work Bonus.  For further details, refer to the information about the Work Bonus in Wages and Earnings later in this chapter. For qualifying age and age pension age refer to Table 1 and Table 2 of Chapter- 3 Which pension do you get?.

Note: If you are receiving a social security age pension (paid by DVA), any disability pension or permanent impairment payment and Special Rate Disability Pension paid under the Military Rehabilitation and Compensation Act 2004 (MRCA) is counted as income under the income test. If your social security age pension is reduced or not payable because of these payments, the Defence Force Income Support Allowance (DFISA) may be payable. See Chapter 3 - Which Pension Do You Get?

Income that does not count in the income test for service pension

  • The first $250 of fortnightly earnings from employment (plus earnings offset by the Work Bonus Bank) if you are eligible for the work bonus - Refer to the information about the Work Bonus in Wages and Earnings later in this chapter.
  • Allowances for out of pocket expenses incurred when carrying out the duties of a job.
  • Board and lodging received from members of your immediate family.
  • Any child related payments made by Centrelink.
  • *Disability pension and allowances, except loss of earnings.
  • *Permanent impairment payment and Special Rate Disability Pension paid under the MRCA.
    *Note: The above two payments are included in the assessment of rent assistance - See Chapter 6 - Benefits and Services.
  • The amount of superannuation that has been applied to reduce a Special Rate Disability Pension under the MRCA.
  • War widow's pension.
  • Restitution payments made to Holocaust victims of National Socialist (Nazi) persecution.
  • Certain specific payments or grants covered by Exempt Lump Sum Determinations and therefore excluded from the income test. Contact your nearest DVA office for further information.
  • Rental income from your former home while you are in residential aged care and paying an accommodation charge or accommodation bond at least partly by periodic payments.
  • Discounts or credits on power bills due to solar power generation.
  • Spousal maintenance payments that you make to support a former partner, where a valid spousal maintenance agreement exists.
  • Spousal maintenance payments that you receive from your former partner.
  • Carer Allowance paid by Centrelink.
    Note: Carer Allowance is a means test free allowance paid by Centrelink because you are caring for someone. It should not be confused with 'Carer Pension' which is an income and assets tested income support payment also paid by Centrelink.

Obligations in relation to exempt income

You need to tell us if any changes that may impact on the amount of pension that you are paid. For example, you must tell us if you vary your spousal maintenance agreement, or cease paying an Note:  

Income that counts in the income test for income support supplement

Income that is included in or excluded from the pension assessment is very similar for both service pension and income support supplement (ISS) except that for ISS the following payments are also assessed as income:

  • Disability pension paid by another government;
  • War widow's pension;
  • Pensions paid by foreign governments that are similar in nature to war widow's pension.

For further information and other examples of exempt income, contact your nearest DVA office.

See Factsheet:

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What if you deprive yourself of income?

Any income you choose not to receive or deprive yourself of, is counted as income for pension purposes for as long as you deprive yourself of it.

Ceasing employment or reducing the number of hours you work is not deprivation of income.

Obligations in relation to deprived income

You need to tell us if:

  • you deprive yourself of income;
  • you elect not to receive income to which you are entitled; or
  • you give your income away.

You need to tell us within 14 days (28 days if you live overseas or receive remote area allowance) of the event.

Social security age pensioners (paid by DVA) have the same obligations except that if you receive remote area allowance you need to tell us within 14 days of the event not 28 days.

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Financial and non-financial assets

What are financial assets?

Financial assets are financial investments you make. The income from financial assets is calculated using an assumed (deemed) rate of income. Refer to the section later in this chapter, What is deeming?.

For pension purposes, financial assets include:

  • Accounts with banks or other financial institutions (including savings accounts, cheque accounts, home loan offset accounts and term deposits);
  • Cash in excess of $500;
  • Gold or other bullion;
  • Managed investments such as public unit trusts (including cash, mortgage, property and equity trusts), insurance bonds and friendly society bonds;
  • Loans you make to other people including family and friends;
  • Loans you make to organisations, such as businesses, private trusts or private companies;
  • Bonds and debentures;
  • Shares in public companies listed on any stock exchange either in Australia or overseas;
  • Shares in unlisted public companies;
  • Asset-tested short term income streams;
  • Superannuation fund investments (including public superannuation funds, approved deposit funds, deferred annuities, retirement savings accounts and self managed superannuation funds) for pensioners who are of pension age.

Note: Refer to the following tables for current pension ages for superannuation assessment purpose:

  • For veterans or income support supplement recipients refer to Table 1 of Chapter 3.
  • For partners of veterans refer to Table 2 of Chapter 3.

For information regarding the effects of superannuation fund investments on your pension, refer to Other income streams and Superannuation fund investments later in this chapter or contact your nearest DVA office.

Note: For information on how much money you can have in bank accounts before it affects your income support pension see Chapter 2 - Your Obligations.

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What are non-financial assets?

  • Property, including real assets such as land, investment houses/units and businesses, and valuable personal assets such as jewellery and collections
  • Household contents and personal effects.
  • Investment properties.
  • Cars, motorbikes, boats and caravans.
  • Antiques or collectibles.
  • Standard life insurance policies.
  • Private company shares.
  • Asset-tested long term income streams

What is deeming?

We count your income from financial assets by ‘deeming’ them. Instead of using the actual return or income you are receiving from your assets, we assume they are earning a rate of interest known as the ‘deeming rate’. Income from some financial assets can be difficult to calculate and deeming is a simple and fair way of assessing the amount of income from these assets.

Note: Deeming applies even if the investment return is immediately applied to a specific purpose or reinvested, rather than being directly received by the pensioner. Common examples include home loan offset accounts, rollover of term deposits, and dividend reinvestment plans.

How does deeming work?

The deeming rates are monitored to ensure that they reflect appropriate rates of return. Changes to deeming rates are usually effective from 20 March and 20 September, which are the same dates that pensions are indexed, however, changes can also be made effective from other dates. The most recent change to deeming rates was with effect from 4 November 2013.The deeming thresholds (refer to the following) are indexed in July each year in line with movements in the Consumer Price Index (CPI). If there is a negative CPI, no change is made.

The deeming threshold for singles is $48,000 which is deemed to earn the lower deeming rate of 2%.

The deeming threshold for couples is $79,600 (combined) which is deemed to earn the lower deeming rate of 2%.

Amounts over these thresholds are deemed to earn the higher rate of 3.5%. If your interest rate is higher than the deeming rate, we will still only deem to a maximum of 2% and 3.5%.

Deeming works as follows:

  • The values of your financial assets are added together.
  • The first $48,000 ($79,600 for couples) is deemed to earn the lower deeming rate of 2%.
  • Amounts over $48,000 ($79,600 for couples) are deemed to earn the higher deeming rate of 3.5%.

An example of a deeming calculation for a couple who have total combined financial assets of $248,800.

  • Step 1: Total financial assets:  $248,800
  • Step 2: First $76,600 of total at 2% interest:  $79,600 x 2% = $1,592
  • Step 3: Remaining balance of total:  $248,800 - $79,600 = $169,200
  • Step 4: Balance of total at 3.5% interest:  $169,200 x 3.5% = $5,922
  • Step 5: Add answer at step 2 and step 4:  $1,592 + $5,922 = $7,514
  • Step 6: Divide your answer from step 5 by 26 to convert annual income to fortnightly income:  $7,514 ÷ 26 = $289.00

Fortnightly deemed income (Combined)  $289.00

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Exemptions from deeming

We do not deem income from:

  • Failed investments which have been granted an exemption from deeming.
  • Investments associated with certain church and charitable institutions which have been granted deeming exemption before 1 January 2010 (however, the actual interest earned will be counted as income).
  • Certain funeral bonds.

Note: New investments in church and charitable funds and additional amounts added to an already exempted fund on or after 1 January 2010 are subject to deeming. If you need more information on failed investments, or church or charitable investments, contact your nearest DVA office.

See Factsheet:

How the income test works

Income test for service pensioners and social security age pensioners (paid by DVA)

The amount of income that you may earn and still receive the maximum pension is called the Income Free Area.

Income free areas are different for singles and couples:

  • For singles - $160 per fortnight.
  • For couples - $284 combined per fortnight.
  • For couples who are separated by illness - $284 combined per fortnight.

The rate of reduction from the maximum rate once income exceeds these income free areas is:

  • For singles - 50 cents for every $1 over.
  • For couples - 25 cents each for every $1 over.
  • For couples who are separated by illness - 25 cents each for every $1 over (a reduction from the maximum singles rate).

See Chapter 2 - Changes to your financial circumstances - Your Obligations for more information about how much money you have in bank accounts before your income support pension may be affected.

Note: The minimum variation to service pension is $1.00 per fortnight.

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Income Test for war widows and widowers receiving the income support supplement

The income support supplement that some war widows and widowers, including wholly dependent partners receiving compensation under the MRCA, receive is also income tested. The rate of income support supplement does not usually exceed $252.40 per fortnight. The amount of other income that you may have and still receive this rate is:

  • Singles - $470.90 per fortnight
  • Couples - $931.50 per fortnight

These figures are for income in addition to your war widow's pension or equivalent MRCA benefit.

Once your income exceeds the above amounts, the supplement is reduced.

  • For singles, your supplement is reduced by 50 cents for every $1 of income you have above this amount.
  • For couples, your supplement and your partner's pension are reduced by 25 cents for every $1 of income you and your partner have above this amount.

Note: The minimum variation to the income support supplement is $1.00 per fortnight.

See Chapter 2 - Changes to your financial circumstances - Your Obligations for more information about how much money you can have in bank accounts before your income support pension may be affected.

If you need information about your rate of pension, please contact your nearest DVA office.

Obligations if you are assessed under the income test

You need to tell us if:

  • you are receiving a reduced rate of pension and your total income from all sources increases by more than $2.00 for singles or $4.00 for couples per fortnight; or
  • you are receiving a maximum rate of pension and your total income from all sources exceeds the relevant income free area by more than $2.00 for singles or $4.00 for couples per fortnight; or
  • the value of your assets exceeds the asset limit included in our latest advice to you.

You need to tell us within 14 days (28 days if you live overseas or receive remote area allowance) of the changes.

For social security age pensioners (paid by DVA) - you need tell us if:

  • you are receiving a reduced rate of pension and your total income from all sources increases; or
  • you are receiving a maximum rate of pension and your total income from all sources exceeds the relevant income free area; or
  • the value of your assets exceeds the asset limit included in our latest advice to you.

Social security age pensioners (paid by DVA) need to tell us within 14 days of the event

Note: If you are assessed under the income test and you think that the value of your assets (apart from your home) may have increased to the point where your asset limit is exceeded, let us know and we will conduct a review of your circumstances to ensure that your pension is paid at the correct rate

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What are Assets?

An asset is any property or possession you partly or wholly own, including outside Australia, and debts owing to you. The value of an asset is what you would get if you were to sell it on the open market (less any debts or encumbrances owed against the asset). It is not necessary that there be a ready or willing purchaser of your property. If you are the partial owner of the property, the assessed value is the same percentage of the asset's current value as you own.

What is counted as an asset?

What is not counted as an asset?

    • The home you live in.
    • Aids and appliances for the disabled.
    • The amount of the asset that is exempt for an asset tested exempt income stream.
    • Superannuation fund investments (including public superannuation funds, approved deposit funds, deferred annuities, retirement savings accounts and self managed superannuation funds) for pensioners who are under pension age.
    • Exempt funeral bonds, pre paid funeral plans or cemetery plots.

If you are the primary beneficiary of a complying special disability trust, then assets up to the value of $626,000 held in the trust are exempt from assessment under the assets test. This amount is indexed on 1 July each year.

Note: The home you live in may also include the land surrounding it on the same title. Refer to 'Farms and large residential blocks' later in this chapter.

Note: Refer to 'What are financial assets?' earlier in this chapter for information on pension age.

Note: If you enter residential aged care your former home may continue to be exempt from the assets test under certain circumstances. When the exemption period ends, the home will be counted as an asset. See Chapter 4 - Living Arrangements, Changing Situations which could affect your pension for more information or contact your nearest DVA office.

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How the Assets Test works

The value of assets you can have and still receive the maximum rate pension is called the assets value limit.

Different assets value limits apply for singles and couples and according to whether you own your home. A lower assets value limit is applied if you own your home and a higher assets value limit is applied if you do not own your home. Once the value of your assets exceeds the assets value limit, your pension is reduced by 75 cents a fortnight for every $500 above the limit.

Assets limits before service pension and age pension reduce:
   Home Owners  Non-home owners
 Singles  $202,000  $348,500
 Couples- combined*  $286,500  $433,000

*This includes illness-separated and respite care couples.

Note: Financial assets also have a deemed income value. For the amount of financial assets to result in a pension reduction see Chapter 2 - Changes to your financial circumstances - Your Obligations for more information.

Assets limits before income support supplement reduces:
   Home owners  Non-home owners
 Singles  $586,500  $733,000
 Couples - combined  $783,500  $930,000
 Illness separated couples - combined  $1,055,500  $1,202,000

Note: Financial assets also have a deemed income value. For the amount of financial assets to result in a pension reduction see Chapter 2 - Changes to your financial circumstances - Your Obligations for more information.

(Refer to What are financial assets? and How does deeming work? earlier in this chapter.

Obligations if you are assessed under the assets test

You need to tell us:

  • you gain or dispose of any assets; or
  • your total income increases above the income limit included in our latest advice to you.

You need to tell us within 14 days (28 days if you live overseas or receive remote area allowance) of the changes.
Social security age pensioners (paid by DVA) have the same obligations except that if you receive remote area allowance you need to tell us within 14 days of the event not 28 days.

Note: If you are assessed under the assets test however you think that your total income may have increased to the point where your income limit is exceeded, let us know and we will conduct a review of your circumstances to ensure that your pension is paid at the correct rate.

See Factsheet:

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What if you give away assets?

If you give away assets above the gift limits, the amount exceeding the gift limits is counted as an asset for pension purposes. Deprived assets amounts are also deemed in the same way as financial assets, and so may affect your assessable income. Refer to 'Gifts' later in this chapter for more information on the gift rules.

Note: You should contact DVA before you deprive yourself of income or give away assets to ensure that you understand the effect it will have on your pension.

Obligations in relation to giving away assets

You need to tell us:

  • the value of the asset given away;
  • who you gave it to;
  • the date that you gave the asset away; and
  • any other changes to your income and assets as a result of giving the asset away.

You need to tell us within 14 days (28 days if you live overseas or receive remote area allowance) of these changes.

Social security age pensioners (paid by DVA) have the same obligations except that if you receive remote area allowance you need to tell us within 14 days of the event not 28 days.

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Gifts

A gift is an asset which is given away without receiving the market value of that asset in return.

How much money can you give away?

Regardless of whether you are a single person or a couple, the maximum amount you can give away without affecting your pension is:

  • $10,000 each financial year, but no more than
  • $30,000 over a rolling five-year period.

The amount you give away above the relevant limit will be counted as if it were still your asset under the assets test for 5 years. Income will be deemed on the extra amount as well.

If however, during those 5 years, the gifted asset is returned to you or you receive part or full consideration for it, then the value will be adjusted accordingly. The returned asset or consideration may however be included in your other assets.

If you are the controller of a private trust or private company any amount that the trust or company gives away, including by way of distribution, may also count as deprived income. Relinquishing control of a private trust or private company is regarded as disposal or giving away an asset. (Refer to 'What if you deprive yourself of income' and 'What if you give away assets' earlier in this chapter).

The family of a severely disabled person can give up to $500,000 to a trust created solely for the care and accommodation of that person. Gifts of up to a total of $500,000 per trust by an income support recipient/s who has reached the relevant pension age will be exempt from the deprived assets rules. If more than one person applies for the gifting concession, it will be applied to the gifts of parents and immediate family members in the order of who first receives income support at or after pension age.

(Refer to 'special disability trusts' later in this chapter).

You should contact your nearest DVA office for information about who would meet the criteria to be assessed as a severely disabled person for the purpose of a special disability trust.

Obligations in relation to gifts

You need to tell us if you give away amounts totalling more than:

  • $10,000 over the course of a financial year; or
  • $30,000 over the course of a 5 year rolling period.

(If you give away $50 here and $100 there or you give away an asset such as your car and other money and over the course of a financial year you have given away more than $10,000, you will need to keep track of what you have given away so that you can let us know).
This obligation also applies to amounts given away or distributed by a private company or private trust that you control.

You need to tell us within 14 days (28 days if you live overseas or receive remote area allowance) of the changes.

Social security age pensioners (paid by DVA) have the same obligations except that if you receive remote area allowance you need to tell us within 14 days of the event not 28 days.

Note: If you are not sure whether the amount you want to give away will affect your pension, contact your nearest DVA office before you make a decision.

If you receive a reduced rate pension and it is asset tested, and you give away assets equal to or less than either limit, your pension may increase. It is in your interest to advise us of any gifts in excess of $500.

See Factsheet:

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How we assess the value of your income and assets

The next section explains income and asset items individually, including your obligations in relation to each.

Superannuation pensions paid from defined benefit schemes

(eg ComSuper, Defence Forces Retirement and Death Benefits, Military super pension, State super pension, bank super, railway super etc)

Gross superannuation paid from a defined benefit scheme is counted as income for pension purposes and is converted to a fortnightly amount. For example, an annual superannuation of $5000 is divided by 26 fortnights:

$5000 ÷ 26 = $192.31 per fortnight

Your defined benefit superannuation pension may have a tax free component calculated under the tax law by your defined benefit pension provider. Whether you have a tax free component, and the value of the tax free component, will depend on your individual circumstances.

If you have a tax free component, this is regarded as a deductible amount for income support pension purposes, and reduces the amount of your assessable income. For example, an annual superannuation of $5000 less an annual deductible amount (tax free component) of $100 is divided by 26 fortnights.

$5000 - $100 ÷ 26 = $188.46 per fortnight

Obligations in relation to superannuation pensions paid from defined benefit schemes

You need to tell us if:

  • you start receiving superannuation payments; or
  • your superannuation payments increase.

You need to tell us within 14 days (28 days if you live overseas or receive remote area allowance) of the changes.

Social security age pensioners (paid by DVA) have the same obligations except that if you receive remote area allowance you need to tell us within 14 days of the event not 28 days.

If your pension assessment includes Australian Government (ComSuper) or the Defence Forces Retirement and Death Benefit (DFRDB) or State Government superannuation, you do not need to tell us about indexation changes to these benefits.

Other income streams

(eg purchased superannuation pensions, market linked pensions, allocated pensions, account based pensions, immediate annuities and allocated annuities) (See also Managed Investments later in this chapter)

Income stream products are financial arrangements where you give an investment company a sum of money and they pay you a regular income. You can purchase an income stream from your savings or directly from accumulated superannuation contributions. Different types of income streams are assessed in different ways.

For purchased assets tested long term and assets test exempt income streams, the payment you receive minus a deduction for the return of your purchase price over the term of the income stream is counted as income.

For purchased assets tested short term income streams, we do not assess the actual income you receive because the income stream is treated as a financial asset and is deemed.

The balance of your income stream is counted as an asset unless it is classified as an assets test-exempt income stream. For some income streams purchased between 20 September 2004 and 19 September 2007, only 50% of the balance is classified as an assets test-exempt income stream. Income streams purchased from 20 September 2007 are fully assessable under the assets test, although limited exceptions apply.

Note: Annuities and pensions are complex investments. You need to provide a copy of any relevant schedules. For more information about the effect on your pension, contact your nearest DVA office.

See Factsheet:

Obligations in relation to purchased superannuation pensions, market linked pensions,
allocated pensions, account based pensions, immediate annuities and allocated annuities

You need to tell us if:

  • you buy or commence an income stream;
  • you switch from one income stream to another;
  • you withdraw money from your income stream;
  • your gross annual payment amount changes; or
  • your income stream expires.

You need to tell us within 14 days (28 days if you live overseas or receive remote area allowance) of the changes. 

Social security age pensioners (paid by DVA) have the same obligations except that if you receive remote area allowance you need to tell us within 14 days of the event not 28 days.

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Wages and earnings

Gross wages and salary are converted to fortnightly amounts and counted as income.

If you are employed seasonally or on a casual basis or your wages vary from week to week, we average your gross wages over the period that best represents your earnings situation. In these circumstances where your earnings are not earned at a constant or clearly recognisable rate it will be necessary to regularly review your earnings, over a defined period to better determine your average fortnightly amount of earnings. Your rate of pension will be adjusted according to your average fortnightly earnings.

If you work either full time or part time and you receive a regular and consistent income your gross wage will be counted as income.

If you 'sacrifice' salary or wage payments in favour of other benefits, such as additional superannuation, vehicles, accommodation or other benefits, the amount of salary or wages you sacrifice is counted as income at the time the salary or wages are earned.

If you are self employed, we use your tax return which is supplied by you (or your profit and loss statement if you do not lodge a return) to work out your income, allowing for reasonable expenses. For self employed people, the deductions allowed by DVA may not be the same as the deductions allowed by the Australian Taxation Office (ATO). Please note that self employed people do not have access to the Work Bonus concessions on employment income outlined below.

If you are working and not sure how your employment situation will affect your rate of pension you should contact your nearest DVA office.

Certified copies of pay slips may be required to verify gross income from wages and earnings. Payments received from your employer to meet incurred expenses are not assessable as income.

The Work Bonus is an incentive for older Australians to remain in the work force. The Work Bonus applies if you continue in paid employment past the qualifying age for your service pension or income support supplement; or if you receive a social security age pension, past your age pension age. Under this scheme, the first $250 of gross fortnightly employment income is disregarded when assessing your fortnightly income.

Note: For qualifying age for service pension and income support supplement refer to Table 1 of Chapter 3. For pension age for social security age pension refer to Table 2.

Unused portions of the $250 Work Bonus discount will accumulate each fortnight in a Work Bonus Bank, up to a maximum limit of $6,500. You may have unused Work Bonus discount if you are not currently working, or if your fortnightly earnings are less than $250.

Amounts accrued in the Work Bonus Bank will offset future employment income that would otherwise be assessable under the income test.

Employment income in excess of your Work Bonus discount will form part of your income along with all other types of income that are counted in the income test.

For the Work Bonus, employment income refers only to income from remunerative work engaged in as an employee in an employer/employee relationship and includes wages, salary, commissions and fringe benefits earned by an employee. Income from employment in the form of superannuation, compensation, and leave payments not associated with ongoing employment is not included in the Work Bonus calculation and so remains fully assessable.

If you are participating in the Veterans' Vocational Rehabilitation Scheme (VVRS), some of your employment income may be disregarded from assessment. If you are also eligible for the Work Bonus, you will receive either the Work Bonus or VVRS discount, whichever provides the larger discount from your employment income.

If you are working and not sure how your employment situation will affect your rate of pension you should contact your nearest DVA office.

Obligations in relation to wages and earnings

You need to tell us if:

  • you start working for yourself or for someone else;
  • your current earnings increase;
  • you become aware that your income has increased, for example, when you lodge an income tax return or prepare a profit and loss statement.

You need to tell us within 14 days (28 days if you live overseas or receive remote area allowance) of the changes.

Social security age pensioners (paid by DVA) have the same obligations except that if you receive remote area allowance you need to tell us within 14 days of the event not 28 days.

Even though changes to your earnings may not affect your pension because you are entitled to the Work Bonus, you still need to tell us about these changes as they may affect your Work Bonus Bank and therefore affect your pension in the future.

It is in your own interest to let us know if you stop work or if your income from employment reduces so that we can increase your pension without delay.

See Factsheets:

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British and other overseas pensions

British pensions are counted as income and assessed in a special way. We monitor the daily market exchange rates using the ‘On Demand Air Mail Buying Rate’ as supplied by the Commonwealth Bank. This is the closest to the rate used to convert British pension to Australian dollars prior to payment in Australia. If the base rate varies by plus or minus 2.5%, that new rate is applied to the assessment of your DVA pension from the first day of the next pension period.

Contact details for British social security pension are ‘The International Pension Centre’, Tyneview Park, Newcastle Upon Tyne NE98 1BA, United Kingdom or phone 0011 44 1912 187777.

Contact details for the Armed Forces Pension Scheme (Service Personnel and Veterans Agency) are Pensions Division, Mailpoint 480,Kentigern House, 65 Brown Street, Glasgow G2 8EX or phone 0011 44 1412 243600.

Contact details for war pensions, including war disablement and British war widow’s/widower’s pension, are Service Personnel and Veterans Agency, Norcross, Thornton Cleveleys, Lancashire, FY5 3WP or phone 0011 44 1253 866043.

Other foreign (overseas) pensions - if Australia is not your country of origin and if you have lived and worked in another country, you are required to test your pension eligibility with that country. There are countries that pay pensions because you have lived and worked in that country. You are required to test your eligibility and notify DVA if you are eligible for any payments. The gross amount of foreign pension you are eligible for is counted as income for pension purposes except where paid in respect of incapacity or death resulting from employment in connection with a war or war-like operation in which the crown has been engaged. If you are receiving age pension and your foreign pension is from a country which has an International Social Security Agreement with the Australian Government, your Australian pension may be reduced on a dollar-for-dollar basis by the foreign pension.

If you receive a lump sum payment representing an extended period of retrospective pension entitlement, your Australian pension will be reassessed over that period. In March and September each year we will update the exchange rate used to convert the amount of your foreign pension to Australian dollars.

You do not need to tell us of changes in the exchange rate, although you can request the exchange rate be updated at any time.

If you receive an indexed foreign pension you will need to advise us if your rate of pension changes for any reason other than a change in the exchange rate.

Note: If you intend to travel or reside in a country where you may have an entitlement to a foreign pension you are required to make a claim for that pension while in that country. This includes making a claim in that country, even if you have previously applied and been rejected because of where you were living at the time you applied.

Note: If you are receiving rent assistance, income support supplement, or a social security age pension (paid by DVA), then any foreign disability pension paid because of war-related disabilities is counted as income for pension purposes

Obligations in relation to British and all foreign pensions

You need to tell us if:

  • you receive notification that an overseas pension (including British social security, armed forces or public service pension) has been granted. You will need to let us know the date that payment of your overseas pension will commence.
  • you start receiving an overseas pension (including a British pension);
  • you receive a British social security pension and you return to Britain or travel to a country where your British social security pension is indexed; or
  • your overseas pension increases (for reasons other than exchange rate variations).

You need to tell us within 14 days (28 days if you live overseas or receive remote area allowance) of the event.

Social security age pensioners (paid by DVA) have the same obligations except that if you receive remote area allowance you need to tell us within 14 days of the event not 28 days.

See Factsheets

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Public company shares

Public company shares represent the portion of a public company owned by a person and can be in:

  • A public company which is listed on any stock exchange (either in Australia or overseas);
  • An unlisted public company; or
  • Derivatives, such as options, rights, warrants and futures.

How are public company shares valued?

We value all of your shares which are listed on the Australian Stock Exchange by multiplying the number of shares you own by the last sale price of the share. We use the last sale price on our database, which is updated fortnightly.

Example 1
  • If you own 1,000 AAA ordinary shares and the last sale price was $17.00 a share, the total value of these shares would be $17,000.

Unlisted public company shares, overseas shares, options, rights, warrants and futures are valued by multiplying the number of shares you own by the last sale price of the share. We use the latest available information in the financial press or information provided by the company.

Your income from shares - is deemed on the value of your public company shares. We do not assess your actual share dividends or your capital gains. The value of your shares is included in the total value of your financial assets which is then deemed.

Note: Private company shares are not deemed or added to your other financial assets (see Private companies and private trusts).

Example 2
  • If you own 1,000 AAA Ordinary shares and the last sale price was $17.00, the total value of these shares is $17,000. If this $17,000 was your only financial asset, we would deem it to earn income at the current deeming rate of 2% ($17,000 x 2% ÷ 26 = $13.08 deemed income per fortnight).

Your public company shares as assets The current value of all shares is counted as an asset for pension purposes.

In March and September of each year we update the value of all public company shares which are listed on the Australian Stock Exchange with the most recent share prices available to us. The value of all of your listed shares will also be updated when we review your public company shares or managed investments specifically at your request.

Unlisted public company shares, overseas shares, options, rights, warrants and futures will only be updated when you tell us of a change in their value or if we notice that a re-valuation may be required.

Your obligations in relation to public company shares

You need to tell us if:

  • you buy shares including shares in an overseas or unlisted company;
  • you sell shares;
  • you give shares away;
  • the number of shares you hold increases through dividend reinvestment, rights issues or options to purchase additional shares; or
  • the value of your unlisted public company shares, overseas shares, options, rights, warrants or futures varies by more than $1,000.

You need to tell us within 14 days (28 days if you live overseas or receive remote area allowance) of the changes.

Social security age pensioners (paid by DVA) have the same obligations except that if you receive remote area allowance you need to tell us within 14 days of the event not 28 days.

You do not have to tell us if
  • the prices of your listed shares change;
  • the number of your listed shares changes due to a company restructure which affects all share holders (for example, a share split, consolidation, or bonus issue); or
  • the name of your listed company changes due to a company name change, merger or takeover.

However you may tell us about significant changes in the value of your shares if you consider your pension may be affected.

Note: We monitor public company share name changes, mergers, takeovers, restructures and terminations for all listed shares and will update your share record in response to these events. By keeping the name and number of shares you hold up to date, we can ensure that your listed shares will be revalued correctly in March and September each year. 

See Factsheet:

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Managed Investments

Managed investments include:

  • Public unit trusts (including property, equity, bond, cash management and mortgage trusts and common funds) offered by unit trust managers;
  • Insurance bonds (including investment bonds, savings plans, insurance certificates and single premium insurance policies) offered by insurance companies;
  • Friendly society bonds offered by Friendly Societies;
  • Superannuation fund investments (including public superannuation funds, approved deposit funds, deferred annuities, retirement savings accounts and self managed superannuation funds) offered by a range of institutions;
  • Non–exempt funeral bonds.

Managed investments can be:

  • Unit based - these investments issue units which represent your portion of the investment.
  • Account based - the value of these is a cash amount which includes the amount originally invested, plus any additions and the capital growth accumulated to date.

How are Managed Investments valued?

We value all of your unit based investments by multiplying the number of units you own by the unit buy back price. We use the unit buy back price on our database, which is updated monthly.

Example 3
  • If you own 1,000 ZZZ Trust ordinary units and the last unit buy back price was $1.90, the total value of these units would be $1,900.

Account based investments are valued using the current total buy back value provided by you or the fund manager.

Example 4
  • If you have an investment in the YYY Capital Guaranteed Fund, the last known value of your investment will appear on the last statement you received from the fund manager. A more current value is available if you ask the fund manager to provide you with the current total buy back value.

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Your income from managed investments

Income is deemed on the value of your managed investments. We do not assess your actual investment dividends or your capital gains. The value of your managed investments is included in the value of your total financial assets which is then deemed.

Example 5
  • If you own 1,000 ZZZ Trust ordinary units and the last unit buy back price was $1.90, the total value of these units would be $1,900. If this $1,900 was your only financial asset, we would deem it to earn income at the current deeming rate of 2% ($1,900 x 2% ÷ 26 = $1.46 deemed income per fortnight.)

Your managed investments as assets
The value of all managed investments is counted as an asset for pension purposes.

Revaluing managed investments
In March and September of each year we will update the value of all your unit based investments with the most recent unit buy back prices available to us. The value of all of your unit based investments will also be updated when we review your managed investments or shares specifically at your request.

Account based investments will only be updated when you tell us of a change in their value or if we notice that a revaluation may be required.

Superannuation fund investments
- include superannuation funds, approved deposit funds, deferred annuities, retirement savings accounts and self managed superannuation funds. They are not counted for pension purposes until you reach pension age or commence to receive a pension or annuity out of the fund. Once you reach pension age, superannuation fund investments are treated as managed investments. If you convert the investment to an income stream, the income stream rules apply.

Note: Refer to the following tables for current pension ages for superannuation assessment purpose:

Obligations in relation to managed investments

You need to tell us if:

  • you switch from one investment product to another;
  • you attain pension age and hold a superannuation fund investment;
  • you buy or sell units, re-invest dividends, take up rights issues, or exercise the option to purchase additional units;
  • you add to, or withdraw money from an account based investment; or
  • the value of your account based investments varies by more than $1,000.

You need to tell us within 14 days (28 days if you live overseas or receive remote area allowance) of the event.

Social security age pensioners (paid by DVA) have the same obligations except that if you receive remote area allowance you need to tell us within 14 days of the event not 28 days.

You do not have to tell us if:

  • The unit buy back prices of your unit based investments change.
  • The number of units you hold in your unit based investments changes due to an investment restructure which affects all unit holders (for example, a unit split, consolidation or bonus issue).
  • The name of your fund manager or investment changes due to a company or product name change, merger or takeover.

However you may tell us about significant changes in the value of your managed investments if you consider your pension may be affected.

Note: We monitor investment name changes, mergers, takeovers, restructures and terminations for all managed investments and will update your records in response to these events. By keeping the name and the number of units you hold up to date, we can ensure that your unit based investments will be re-valued correctly in March and September each year.

Funeral bonds

A funeral bond is an investment offered by a friendly society or life insurance company to allow you to set aside money to cover your funeral costs. A funeral bond provides benefits only upon the death of the nominated person and cannot be accessed earlier.

Obligations in relation to funeral bonds

You need to tell us if:

  • you make a new funeral bond investment;
  • you contribute additional money to an existing funeral bond investment;
  • you purchase a prepaid funeral plan;
  • you are refunded money from a prepaid funeral plan;
  • you purchase a cemetery plot; or
  • your joint funeral bond is paid towards the funeral of a nominated person.

You need to tell us within 14 days (28 days if you live overseas or receive remote area allowance) of the event.

Social security age pensioners (paid by DVA) have the same obligations except that if you receive remote area allowance you need to tell us within 14 days of the event not 28 days.

See Factsheet:

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Income from an estate

Income paid to you from an estate is counted as income for pension purposes.  We convert the total amount received to a fortnightly amount, for example, $3000 per year converts as follows: $3,000 ÷ 26 = $115.38 per fortnight.

Obligations in relation to income from an estate

You need to tell us if:

  • you start to receive income from an estate; or
  • the amount you are receiving from an estate increases.

You need to tell us within 14 days (28 days if you live overseas or receive remote area allowance) of the event.

Social security age pensioners (paid by DVA) have the same obligations except that if you receive remote area allowance you need to tell us within 14 days of the event not 28 days.

Real estate and rental income

If you receive rental income from an investment property, holiday home or timeshare, we will assess as your income the net income after deductions for reasonable expenses incurred in renting the property.

If you lodge a tax return we will use this to calculate the amount of your income and expenses.

If you do not have to lodge a tax return, you should keep a list of the rental property's income and expenses.

If the property is recently rented and records of expenses are not available, we will allow one third of the gross rent as a deduction for expenses. A further deduction can be made to cover interest on a mortgage used to purchase the property.

Under the assets test, the market value of any real estate other than your home is counted as an asset. Any mortgage secured on the property is deducted from the value of the property, provided the mortgage is not security for another person or institution. A mortgage which is secured against a different property to that which the funds are expended on (a collateral security) cannot be recognised.

Obligations in relation to real estate and rental income

You need to tell us if:

  • you start receiving rent;
  • your current rental income increases;
  • you buy real estate;
  • you sell real estate; or
  • you give real estate away.

If you are paid under the income test, you need to tell us within 14 days (28 days if you live overseas or receive remote area allowance) of the event if:

  • the value of your assets exceeds the asset limit included in our latest advice to you.

Note: If this applies to you, let us know and we will conduct a review of your circumstances to ensure that your pension is paid at the correct rate.

You need to tell us within 14 days (28 days if you live overseas or receive remote area allowance) of the event.

Social security age pensioners (paid by DVA) have the same obligations except that if you receive remote area allowance you need to tell us within 14 days of the event not 28 days.

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Business partnerships, sole trader enterprises

Income you receive from your partnership or sole trader enterprise is counted as income for pension purposes. We use the information on your tax return and attached schedules and generally exclude reasonable expenses associated with the running of the partnership or sole trader enterprise. The deductions allowed by DVA may not be the same as the deductions allowed by the Australian Taxation Office (ATO).

The net value of the enterprise is the amount counted as an asset. This means the current market value of property owned by the business or partnership, less any debts owing. If it is a partnership, only the portion owned exclusively by you is counted. Any amounts distributed to you personally are counted as income.

Obligations in relation to business partnerships, sole trader enterprises

You need to tell us if:

  • you start to receive income from a partnership or sole trader enterprise;
  • your income from a partnership or sole trader enterprise increases (this would usually be apparent when your tax return is completed or when a profit and loss statement is prepared by your accountant);
  • you buy a business or a share in a business or partnership;
  • you sell your business or a share in your business or partnership;
  • you dissolve the partnership or sole trader enterprise; or
  • you give your partnership or sole trader enterprise, or share of same, away.

You need to tell us within 14 days (28 days if you live overseas or receive remote area allowance) of the event.

Social security age pensioners (paid by DVA) have the same obligations except that if you receive remote area allowance you need to tell us within 14 days of the event not 28 days.

See Factsheet

Farms and large residential blocks

Income you receive from your property is counted as income for pension purposes. We use the information on your tax return and generally exclude reasonable expenses associated with the daily operation of the farm or property. The deductions allowed by DVA may not be the same as the deductions allowed by the Australian Taxation Office (ATO).

If your home is a farm or on a block of land that is 2 hectares (5 acres) or more, the home and curtilage (ie the house and up to 2 hectares immediately surrounding the house that is on the same title) are not counted as an asset, provided the 2 hectares of land is used for private and domestic purposes.

Land in excess of 2 hectares, adjacent to your principal home and on the same title may be exempt from the assets test. To be eligible for this exemption you must have reached pension age and the property must have been your principal home for at least 20 years, or your partner must meet these requirements. A land use test must also be satisfied. If the land is viable it must be used to generate an income, or you must have a valid reason for not doing so.

If you are not eligible for this exemption, the land surrounding your principal home and on the same title, used primarily for domestic purposes, up to a maximum of 2 hectares only, is exempt from the assets test. Any loans secured on the property are taken into account when determining the market value of the property. The value of all plant and equipment and livestock are included as assets.

Obligations in relation to farm or property

You need to tell us if:

  • you start to receive income from your farm or property
  • your farm or property income increases (this would usually be apparent when your tax return is completed or when a profit and loss statement is prepared by your accountant);
  • you buy a farm or property;
  • you sell a farm or property; or
  • you give your farm or property away (including if you give it away in exchange for a granny flat interest).

If you are paid under the income test you also need to tell us, if:

  • the value of your assets exceeds the asset limit included in our latest advice to you.

Note: If this applies to you, let us know and we will conduct a review of your circumstances to ensure that your pension is paid at the correct rate.

You need to tell us within 14 days (28 days if you receive remote area allowance) of the changes.

Social security age pensioners (paid by DVA) have the same obligations except that if you receive remote area allowance you need to tell us within 14 days of the event not 28 days.

See Factsheet

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Private companies and private trusts

The income and assets held in a private trust or private company may be attributed to a person if they satisfy one of the following:

  • The control test - 'control' includes control via an associate; or
  • The source test - where a person transfers assets or services to a private trust or private company after 7:30 pm Australian Eastern Standard Time (AEST) on 9 May 2000.

This attribution means that the assessable income and/or assets held in a private company or private trust may be counted in your pension assessment. Reasonable expenses associated with the running of the private trust or private company are usually excluded. The deductions allowed by DVA may not be the same as the deductions allowed by the Australian Taxation Office (ATO).

Even if you are not the attributable stakeholder, any income you receive from a private company or a private trust may be counted for pension purposes. This includes:

  • Wages and directors' fees;
  • Share dividends;
  • Distributions (including other forms of remuneration);
  • Excessive interest on loans; and
  • Estate payments.

Note: Any gifts/transfers over $10,000 in a financial year (or $30,000 over a five year rolling period) and any loans to companies or trusts are considered to be financial assets and are deemed to be earning income. Gifts made by a private trust or private company may be counted as deprivation of your asset if you are the attributable stakeholder.

The net assets of private trusts and private companies are the current market value of assets less any allowable business liabilities.

Special disability trusts - (SDT) are to assist families who have the financial means to make private financial provisions for the future care and accommodation of family members with severe disabilities. To qualify as a SDT, the trust must meet specific criteria.

The trust can be established by parents and immediate family members for the current and future care of a severely disabled family member.

The pension of the person with a disability who is the beneficiary of the trust will not be affected until the assets exceed the limit of $626,000. This limit will increase annually on 1 July in line with the CPI. (Refer to ‘Gifts’ earlier in this chapter for details on gifting concessions.)

For further information on private companies, private trusts and special disability trusts contact your nearest DVA office.

Obligations in relation to companies, trusts and special disability trusts

You need to tell us if:

  • you start a company or trust;
  • you dissolve a company or trust;
  • you sell, give away or acquire more shares in a company;
  • you lend, give or transfer money to a trust or company;
  • the value of any loans to a trust or company increases;
  • you start receiving income from a company or trust;
  • you receive a loan from a company or trust;
  • you cease receiving income from a company or trust;
  • you receive a capital gain on managed investments or shares owned by a company or trust; 
  • further gifts are made to a special disability trust;
  • an event occurs that may cause the special disability trust to become non-complying;
  • the beneficiary of a special disability trust commences paid employment; or;
  • the beneficiary of a special disability trust dies.

When you have finalised your financial statements for the year you should forward a copy within 14 days (28 days if you live overseas or receive remote area allowance) to DVA. The financial statements for a company and trust include tax returns, balance sheet, profit & loss statement, depreciation schedule and your personal income tax return.

You need to tell us within 14 days (28 days if you receive remote area allowance) of the events.

Social security age pensioners (paid by DVA) have the same obligations except that if you receive remote area allowance you need to tell us within 14 days of the event not 28 days.

See Factsheets

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Boarders and lodgers

The following list shows the percentage of gross income counted as income if you have people living in your house:

  • Lodgers (accommodation only) - 70%
  • Lodgers (bed and breakfast) - 50%
  • Boarders (bed and full meals) - 20%

Note: Board and lodgings received from members of your immediate family does not count as income for income support pension purposes.

Example 6
  • If you have one lodger who receives bed and breakfast, and pays you $100 per fortnight, 50% (ie. $50) is counted as income.
  • If you have two boarders who each pay $200 per fortnight, 20% (ie. $40 per boarder or $80 in total) is counted as income.
Obligations in relation to boarders and lodgers

You need to tell us if:

  • you start receiving income from boarders or lodgers; or
  • your current income from boarders or lodgers increases.

You need to tell us within 14 days (28 days if you receive remote area allowance) of the changes.

Social security age pensioners (paid by DVA) have the same obligations except that if you receive remote area allowance you need to tell us within 14 days of the event not 28 days.

Compensation

Special rules relate to the effect on pension by compensation for insurance, worker's compensation, court judgments or settlements of legal actions for damages or other compensation. There are differences in how the rules affect service pension and income support supplement and how they affect social security age pension (paid by DVA).

There are also complex rules associated with the effect on compensation benefits paid under the VEA, SRCA and MRCA when other compensation has been received. Therefore, payment of other compensation can trigger multiple effects to DVA payments across a range of Acts and contacting the Department is important to understand this.

Compensation includes both periodic (ongoing) payments and lump sum payments.

If you are entitled to compensation, or think you may be entitled to compensation, you must take reasonable action to claim it.

If you intend to claim, or lodge a claim or commence receiving compensation or your compensation details vary you must notify your nearest DVA office. For more information about the effect on your pension, contact your nearest DVA office before you make any decisions.

See Factsheets:

Obligations in relation to compensation

You need to tell us of:

  • the day you receive a compensation payment; or
  • the day you first become aware you are going to receive a payment;

whichever is earlier.

If you are already receiving periodic compensation payments which affect your pension, you need to tell us if:

  • the amount of your periodic compensation payment increases; or
  • you become aware it is going to increase;

whichever is earlier.

You need to tell us within 14 days (28 days if you live overseas or receive remote area allowance) of the event.

Social security age pensioners (paid by DVA) have the same obligations except that if you receive remote area allowance you need to tell us within 14 days of the event not 28 days. You also need to tell us within 7 days if you anticipate receiving or you receive a compensation payment.

Life Insurance

When a conventional life insurance policy matures, is surrendered, or a withdrawal is made, there may be a profit component that is counted as income for a period of 12 months from redemption.

Other income

If you receive income from any other source like gratuities or directors’ fees, the gross amount received is counted as income.

Obligations in relation to life insurance and other income

You need to tell us if:

  • you start receiving income from any other source;
  • income you have told us about increases;
  • you surrender or make a withdrawal from a conventional life insurance policy; or
  • your life insurance matures.

You need to tell us within 14 days (28 days if you receive remote area allowance) of the changes.

Social security age pensioners (paid by DVA) have the same obligations except that if you receive remote area allowance you need to tell us within 14 days of the event not 28 days.

Cars, boats and caravans,

Unless these are your principal residence, their current market value is counted as an asset. Any income they generate (for example, from hiring out) less reasonable expenses, is counted as income for pension purposes.

Household contents and personal effects

The value of these is assumed to be $10,000 and is counted as an asset. If you think they are worth more or less than $10,000, you may nominate another amount. The value of your household contents and personal effects is only a pension issue if your assets are either above the assets value limit or close to it.

Are your income and assets details recorded correctly?

To confirm your current income and asset details are recorded correctly with DVA, you can view your details online through your DVA MyAccount, call the Department for a verbal confirmation or refer to your most recent income and asset correspondence.

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