Centrelink Income Test 2026-27: How Investments and Super Affect Your Payment

When you apply for the age pension or another income-tested Centrelink payment, the amount you receive depends partly on your income. But Centrelink doesn't just count your actual investment earnings — it deems your financial assets to earn income at set rates, regardless of what they actually return.

Understanding how deeming works is critical for anyone who holds investments, super, or a combination of both and wants to optimise their Centrelink entitlements in retirement.

The two Centrelink tests: income and assets

Every Centrelink payment that involves means-testing uses two separate tests: the income test and the assets test. Whichever test produces the lower payment (more reduction) is the one that determines what you receive.

This means you could pass the income test with flying colours but fail the assets test — or vice versa. You can't optimise against just one. Both must be considered.

This article focuses on the income test and specifically on how financial assets — shares, ETFs, bank accounts, term deposits, managed funds, and superannuation — affect it.

What is deeming?

Deeming is Centrelink's method of calculating a "deemed income" from your financial assets — an assumed return that applies to your assessment regardless of what those assets actually earn.

If you hold $200,000 in shares that paid no dividends this year, Centrelink still deems them to be earning income at the deeming rate. If you hold $200,000 in a term deposit earning 5.5%, Centrelink uses the lower deeming rate — not your actual return. Deeming removes the incentive to hold low-yielding assets purely to reduce assessed income.

2026-27 deeming rates and thresholds

From 1 July 2026, the following deeming rates apply:

Singles:

Financial assets	Deeming rate
First $66,800	1.25%
Above $66,800	3.25%

Couples (where at least one partner receives an income support payment):

Financial assets (combined)	Deeming rate
First $110,600	1.25%
Above $110,600	3.25%

Deemed income calculation example — single person, $300,000 in financial assets:

Component	Calculation	Amount
First $66,800 × 1.25%		$835
Remaining $233,200 × 3.25%		$7,579
Total annual deemed income		$8,414
Fortnightly deemed income	$8,414 ÷ 26	$323.62

This $323.62 fortnightly figure is what Centrelink counts as income from these financial assets — regardless of whether the actual return was higher or lower.

What financial assets are subject to deeming?

Deemed assets (counted at deeming rates):

Bank and savings accounts
Term deposits
Shares and ETFs (ASX-listed and international)
Managed funds and unit trusts
Listed investment companies (LICs)
Superannuation in pension phase (once converted to an income stream)
Account-based pensions from a super fund

NOT subject to deeming (not financial assets for this purpose):

Superannuation in accumulation phase (below pension age) — this is the critical exception for pre-retirees
Your home (principal place of residence)
A car, boat, or personal effects
Business assets in an operating business

Does superannuation count for the income test?

This is the most important distinction for pre-retirees and retirees:

Super in accumulation phase (below age pension age): Does NOT count for the income test. The balance is not assessed as a financial asset. This is a significant planning opportunity — keeping money in super accumulation can reduce Centrelink-assessed income.

Super in pension phase (account-based pension): IS subject to deeming from 1 January 2015. If you've converted your super to an account-based pension, the balance of that pension is deemed to earn income at the standard deeming rates.

Centrelink-friendly strategy: If you're below the age pension age and haven't yet converted your super to a pension phase income stream, the accumulation balance doesn't count for the income test. Some couples use this to their advantage: the older partner starts a pension while the younger partner keeps their super in accumulation, excluding it from assessment.

Note: there are age pension age rules that interact with this — your accumulation super starts counting once you reach pension age, even if still in accumulation.

The income test: free areas and reduction rates

Centrelink calculates your entitlement by reducing the maximum pension by $0.50 for every $1 of income above the free area.

2026-27 income test figures (age pension, per fortnight):

	Single	Couple combined
Free area (full pension below)	$218	$380
Cut-off (pension ceases above)	$2,619.80	$4,000.80
Taper rate above free area	$0.50 per $1	$0.25 per $1 (per partner)

How to calculate your fortnightly pension entitlement:

Calculate total assessed fortnightly income (deemed financial assets + employment income + other income sources)
Subtract the free area ($218 single)
Multiply excess by 0.50
Subtract from the maximum fortnightly pension rate
Check the assets test result — whichever gives the lower pension applies

Example — single retiree, $300,000 in financial assets, no other income:

From our earlier calculation, deemed income = $323.62/fortnight.

Reduction = ($323.62 − $218) × 0.50 = $105.62 × 0.50 = $52.81/fortnight pension reduction

If the maximum single age pension (at 20 September 2026 rate, approximately $1,144/fortnight) applies, this person receives approximately $1,091/fortnight — nearly the full pension.

Compare to $800,000 in financial assets (single):

Deemed: $66,800 × 1.25% = $835 + $733,200 × 3.25% = $23,829 = $24,664/year = $948.62/fortnight
Reduction: ($948.62 − $218) × 0.50 = $365.31/fortnight
Pension: $1,144 − $365.31 = $778.69/fortnight — significantly reduced

Use our Superannuation Calculator to project your super balance to pension age and understand the scale of your potential Centrelink assessment.

The assets test: key 2026-27 thresholds

While this guide focuses on the income test, you need to know the assets test thresholds to understand which test limits your payment:

Full age pension assets test threshold (2026-27, approximate):

Situation	Homeowner threshold	Non-homeowner threshold
Single (full pension)	~$314,000	~$566,000
Couple (full pension)	~$470,500	~$722,500

Age pension cut-off (assets test — part pension ceases):

Situation	Homeowner	Non-homeowner
Single	~$695,500	~$947,500
Couple	~$1,045,500	~$1,297,500

These are approximate 2026-27 figures (indexed quarterly). A homeowner couple with combined assets (excluding the home) of $1,045,500 receives no age pension under the assets test — regardless of income.

Centrelink-friendly strategies

1. Keep super in accumulation as long as possible

If one partner is below pension age, keeping their super in accumulation excludes it from both income and assets test assessment. This can meaningfully increase Centrelink entitlements in the lead-up to retirement.

2. Use the family home strategically

The principal place of residence is exempt from the assets test. For couples approaching the assets test threshold, investing in the home (renovations, extensions) converts assessable financial assets into exempt assets. This is a legitimate, ATO-and-Centrelink recognised approach.

3. Gifting rules — don't give away assets to reduce assessments

Centrelink has strict gifting rules. You can only gift $10,000 per financial year and $30,000 over any 5-year period without affecting your assessment. Gifts above these limits are counted as deprived assets for 5 years — as if you still held them. This is specifically designed to prevent "gifting" wealth away to access more pension.

4. Account-based pension vs lump sum

Converting accumulation super to an account-based pension triggers deeming. But it also enables tax-free withdrawals (after 60) and 0% tax on earnings in pension phase. The trade-off between tax saving and Centrelink impact needs to be modelled for each individual — a financial adviser can run this comparison.

Frequently asked questions

What are the Centrelink deeming rates for 2026-27?

For singles: 1.25% on the first $66,800 of financial assets, 3.25% on the balance. For couples (one partner receiving an income support payment): 1.25% on the first $110,600 combined, 3.25% above. These rates apply from 1 July 2026 and are set by the Minister — they can be changed without legislative amendment.

Does my superannuation count as income for Centrelink?

It depends on whether your super is in accumulation or pension phase. Super in accumulation phase (not yet converted to a pension) does NOT count for the income test if you're below age pension age. Super in pension phase (an account-based income stream) IS subject to deeming — the balance of your pension account is deemed to earn income at the standard rates.

How often do deeming rates change?

Deeming rates are set by the Minister for Social Services and can change with budget decisions or by ministerial announcement. They have been relatively stable in recent years, though they were temporarily lowered during the COVID-19 period. Always check the current rates via Services Australia when planning.

What happens if my investments earn more than the deeming rate?

Nothing — Centrelink uses the deeming rate regardless of actual returns. If your portfolio earns 8% and the deeming rate is 3.25%, Centrelink only counts the deemed income. This makes higher-returning investments (shares, property funds) more Centrelink-efficient than their actual yield suggests.

How does selling an investment property affect my Centrelink payment?

Selling an investment property converts a non-financial asset (property) into a financial asset (cash). The cash proceeds become subject to deeming from the date of sale, potentially increasing your assessed income. Additionally, if the proceeds push you above an assets test threshold, your pension may reduce or cease. Any capital gain may be assessed differently — get advice before settlement.

Centrelink deeming rates, income test free areas, and assets test thresholds in this article reflect 2026-27 figures effective from 1 July 2026. Age pension rates and thresholds are indexed in March and September each year. Always verify current figures with Services Australia or a financial adviser before making decisions based on Centrelink entitlements. This article is general information only and does not constitute financial or social security advice.