Overview

Many people worry that a modest amount of savings will stop their Disability Support Pension. Others assume they can hold any amount in the bank because it’s “just cash”. Neither is quite right. DSP asset limits apply to the total value of your assessable assets, and money in the bank is counted alongside things like shares, cars and investment property.

Your bank balance also affects your payment in a second way, through the income test. This guide explains how DSP asset limits work, what counts and what doesn’t, and the situations where people often get caught out.

How DSP asset limits work

For most DSP recipients aged 21 and over, the standard pension assets test applies. Services Australia adds up the value of everything you own that is assessable. It then compares that total against two thresholds.

Below the first threshold, you may receive the full rate of payment. Above it, your payment generally reduces gradually as your assets increase. Once your assets pass the upper cut-off point, no payment is made under the assets test.

These thresholds are indexed regularly, so they change over time. For that reason, it’s worth checking the current figures on the Services Australia website rather than relying on a number you saw last year.

What counts as an asset

Assessable assets generally include:

• money in bank accounts, term deposits and cash
• shares, managed funds and other investments
• investment property and holiday homes
• cars, caravans and boats
• household contents and personal effects
• business assets and loans owed to you
• superannuation, once you reach Age Pension age
• assets held overseas

Household contents are usually valued at what they could realistically sell for. Many people overestimate this figure on their claim, which can reduce their payment unnecessarily.

What usually doesn’t count

Some assets are generally exempt from the assets test. Your principal home is the most significant, although owning a home affects which threshold applies to you.

Superannuation in accumulation phase is generally exempt while you are under Age Pension age. This matters for many DSP recipients, because a large super balance may have no effect on their payment until later in life. Once money is withdrawn, it may become assessable depending on what you do with it.

Other exemptions can apply in specific circumstances. For example, assets held in a complying Special Disability Trust may be exempt from the principal beneficiary’s assets test up to the concessional limit. Some prepaid funeral arrangements may also be exempt.

Your bank balance is tested twice

This is where many people are surprised. Money in the bank counts under the assets test, but it is also deemed to earn income under the income test.

Deeming means Services Australia assumes your financial assets earn a set rate of return. It doesn’t matter what interest your account actually pays. That deemed income is then added to any other income you have, such as wages.

Services Australia assesses your payment under both tests. The test that produces the lower payment rate applies. As a result, a large bank balance can sometimes reduce your DSP through deeming, even when you are under the DSP asset limits.

What changes your limit

Disability pension asset limits are not the same for everyone. Several factors can change the threshold that applies to you:

• Relationship status. Couples have a combined limit, and both partners’ assets are counted, even if only one of you receives DSP.
• Home ownership. Non‑homeowners generally have higher limits, because they don’t have the benefit of an exempt home.
• Age. Special rules and payment rates can apply if you’re under 21 and don’t have dependent children.
• Permanent blindness. People receiving DSP because they are permanently blind are generally exempt from the income and assets tests, although exceptions apply in some circumstances, including Rent Assistance and compensation cases.

When people often go over the limit

Most people don’t build up assets gradually. Instead, a single event pushes their total above the DSP asset limits. Common examples include:

• receiving a compensation settlement, which may also trigger a Centrelink preclusion period
• withdrawing a TPD benefit from super, which can move money from an exempt asset to an assessable one
• receiving an inheritance
• selling a home, although a temporary exemption may apply if you intend to buy another
• a partner’s assets increasing

In each case, the timing and structure of the money can make a significant difference to your DSP. For example, a TPD payout left inside super may be treated very differently from the same amount sitting in a bank account. Our Post-TPD Advice service covers this decision in detail.

What happens if your assets go over the limit

Going over the first threshold doesn’t usually stop your payment straight away. In many cases, your DSP reduces gradually rather than being cancelled. However, if your assets pass the upper cut-off, your payment may stop.

You need to report relevant changes to your income or assets to Services Australia within 14 days. Failing to report can lead to an overpayment, which you may have to repay.

If your assets are above the limit but you can’t easily sell them or use them to support yourself, asset hardship provisions may apply. These provisions are discretionary, and Services Australia will look closely at your circumstances.

Planning around DSP asset limits

Holding money in the bank may be simple, but it is not always the best fit for your DSP position or your longer-term financial goals.

Depending on your situation, options may include keeping funds in super while you are under Age Pension age, setting up a Special Disability Trust for a family member, or structuring a lump sum so it supports you over time. Each option has its own rules, costs and trade-offs. As a result, the right approach depends on your age, health, family situation and goals.

Getting the right advice

DSP asset limits can feel confusing, especially when your health is already taking up most of your energy. Fortunately, a clear plan can make the rules much easier to work with. HFI specialises in advice for people receiving DSP, TPD benefits and compensation payments, and we work with clients across Australia.