Sunshine and Centrelink don’t mix? Maybe they do. Let me explain.
Reducing your assessable assets is a key to qualifying for and maximising Age Pension payments.
Too much cash or other assessable assets can reduce your pension entitlement.
Investing in home improvements is a popular strategy to reduce your assessable assets. As the primary residence, the home is exempt from the pension assets test.
The challenge is working out the return on investment of selling assets like cash, shares, property or managed funds, which can produce income, and using them to pay for home improvements.
Traditionally, a new kitchen or bathroom have been popular renovations. You just hope there is a return on investment, and sooner rather than later.
But what if you could make an improvement where you actually made a financial return?
Well, just look up.
All that sunshine can be captured to power your electricity demands and feed back into the electricity grid.
Solar panels are a permanent structure and considered part of your home and so not assessable for the age pension. So too are batteries.
But what if in going solar to offset your electricity usage, you generate and sell back so much electricity it affects your pension?
If you receive cash from feeding excess electricity into the grid, then yes, they can.
If payments are received in the form of a credit on an electricity bill, no.
So, if your home solar power plant generates more electricity than you can write off against your power bill and the electricity company owes you money, then that income could be assessable.
There are two things you can do:
- elect to have your electricity company send you a cheque in the mail which you can cash; or
- elect to have that quarter’s surplus transferred to your next bill.
The first option would count as income, which could affect your pension if it brought you over the earnings threshold.
The second option allows you to continue to pay $0 (or close to it) for your electricity usage every quarter.
Then again, you could cut back what you are supplying to the grid. Batteries do that.
Battery technology is advancing in leaps and bounds.
In fact, the Australian Energy Market Commission (AEMC) predicts that cost parity between solar panel-battery storage system electricity and energy from the grid is imminent.
Battery storage allows you to store excess generation and use it when the sun isn't shining.
Instead of feeding excess generation back into the grid, you feed it into the batteries to use at a later time.
Installing batteries is another home renovation option, both to cut income and to add market value.
Australians are increasingly taking up home batteries to support their solar roofs.
The AEMC says the take up of batteries linked to solar is even greater than the explosive expansion of solar panels in the early 2000s which took the market by surprise.
If you are considering investing into your home to improve your lifestyle, and potentially look at what gains can be obtained for your Centrelink Age Pension, it is important that you speak with a specialist.
- The cost of residential battery systems is likely to fall by 41% between 2017 and 2050.
- With battery costs falling, the average payback period of residential solar PV with battery storage is expected to decline to under 10 years by 2022.
- The high capital costs of battery technologies will also be significantly reduced by a number of government subsidy schemes in SA, Victoria, NSW, the ACT and Queensland.
- Australia is forecast to make up approximately 30 per cent of the global demand for residential battery technology in 2019.
Energy affordability is one of our key campaigns.