My Unique Situation Analysis. Ss Usa Vs Age Pension Oz.

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Posted (edited)

DISCLAIMER: I would not do anything illegal, so if you sense something is wrong with what I am saying, kindly brush up on the laws before you comment.

 

Now I think all the regulars know me, but let me give a brief up to date bio, narrative form.

 

A 65 yo dual citizen, holds Permanent Residency in the Philippines. Born Aussie. Father worked for the Australian Govt, we did live in the USA when I was 16. I stayed there, became a citizen, in 1975. I validated my US Citizenship requirements by serving in the USAF. Subsequently I did not live in the USA, but I paid taxes and had earned my US Social Security by that time.

 

Briefly as possible. I did not live in Australia but I was based there. I had a small business and paid some token taxes and paid my non resident tax as well.

 

Aussie Govt says. A born citizen who fulfills 10 years of residence may LIVE IN AUSTRALIA eg return at any time and may collect the Age Pension. Currently at age 65, but has already been raised to 67 and may go to age 70 later. If born before 1952, 65 applies as in my case.

 

Application to be filed while physically present in Australia. I should have reported Nov 2014, but I did not appear. I have not yet gone to Australia but due to go. The pension will be paid immediately after processing, but will be stopped upon leaving the country and can be reinstated on appeal. If you are frequently absent the appeal may be rejected. After 24 months the restrictions are lapsed, but a new set of rules will then apply. Complex hard line rules no exceptions maybe only in life or death situations.

 

I will talk now in terms of USD, AUD and Pesos, all amounts rounded out.

 

I get SS from the USA at around $800 per month. Gina gets a child allowance which is split between 2 children, $570 per month=$1370 US which is 60,000 pesos/month. We pay no rent, that's what we live on

and here in the province it's good, if in Metro,borderline adequate.

 

If I go to Australia the current rate is $782 AUD every 14 days, plus govt supplements, $190=$960 AUD in 14 days. Rounded out over a year equates to $2100 AUD per 30 day month. However, there is penalty imposed for receiving a foreign pension and this is around 25%. So  $2100 minus 25%=$1575 per month.

 

If ever you do leave Australia the supplements will stop. So $1575 now minus $380=$1175 per month.

 

So a pension amount of $1175 running for life under the terms I have described above. $1195 AUD=41,000 Pesos per month.

 

Now this is going to get more complicated, so if everyone would like to have a read, please do.

Edited by chris49
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Posted (edited)

Complications now arise.

 

The maximum allowable absence in my case is 180 days. So report every 180 days by validating your presence eg, a Passport stamped by immigration. So 2 fights a year from the Philippines to Australia....minimum stay with turnaround, 24 hours.

 

Legislation currently in place to cut this to 6 weeks, every 42 days you must validate.

 

So calculators out, that's around 8 trips in a calendar year.

 

 

 

MY CALCULATIONS SAY.

 

If I make 8 trips a year some supplements will still apply.

 

I might get $1195 + 160 = $1375/ month=$16500 per year. I will need 8 budget flights/year, each flight might cost me $600-700, plus expenses on quick turnaround, lets say $1000 x 8.

 

Bottom Line: Cutting out all cinnamon, I would be left with around $700 AUD/month.

 

$700 AUD =23,500 at today's exchange rate.

 

So finally, is that worth the effort or not? 

 

 

Edited by chris49
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Posted

DISCLAIMER: I would not do anything illegal, so if you sense something is wrong with what I am saying, kindly brush up on the laws before you comment.

 

Now I think all the regulars know me, but let me give a brief up to date bio, narrative form.

 

A 65 yo dual citizen, holds Permanent Residency in the Philippines. Born Aussie. Father worked for the Australian Govt, we did live in the USA when I was 16. I stayed there, became a citizen, in 1975. I validated my US Citizenship requirements by serving in the USAF. Subsequently I did not live in the USA, but I paid taxes and had earned my US Social Security by that time.

 

Briefly as possible. I did not live in Australia but I was based there. I had a small business and paid some token taxes and paid my non resident tax as well.

 

Aussie Govt says. A born citizen who fulfills 10 years of residence may LIVE IN AUSTRALIA eg return at any time and may collect the Age Pension. Currently at age 65, but has already been raised to 67 and may go to age 70 later. If born before 1952, 65 applies as in my case.

 

Application to be filed while physically present in Australia. I should have reported Nov 2014, but I did not appear. I have not yet gone to Australia but due to go. The pension will be paid immediately after processing, but will be stopped upon leaving the country and can be reinstated on appeal. If you are frequently absent the appeal may be rejected. After 24 months the restrictions are lapsed, but a new set of rules will then apply. Complex hard line rules no exceptions maybe only in life or death situations.

 

I will talk now in terms of USD, AUD and Pesos, all amounts rounded out.

 

I get SS from the USA at around $800 per month. Gina gets a child allowance which is split between 2 children, $570 per month=$1370 US which is 60,000 pesos/month. We pay no rent, that's what we live on

and here in the province it's good, if in Metro,borderline adequate.

 

If I go to Australia the current rate is $782 AUD every 14 days, plus govt supplements, $190=$792 AUD in 14 days. Rounded out over a year equates to $2100 AUD per 30 day month. However, there is penalty imposed for receiving a foreign pension and this is around 25%. So  $2100 minus 25%=$1575 per month.

 

If ever you do leave Australia the supplements will stop. So $1575 now minus $380=$1175 per month.

 

So a pension amount of $1175 running for life under the terms I have described above. $1195 AUD=41,000 Pesos per month.

 

Now this is going to get more complicated, so if everyone would like to have a read, please do.

 

just clarifying the Australian pension component you are talking about

 

If you've already been receiving the Age Pension for greater than two years while in Australia you can move overseas and receive the pension. The amount you'll receive depends on how long you'll stay overseas and how long you lived in Australia since being 16.

Living overseas for greater than 26 weeks will see your pension reduced to an amount in proportion to the number of years you were an Australian resident once over the age of 16. If you've lived in Australia for greater than 25 years you'll receive the full amount.

If you've lived in Australia for less than 25 years you'll receive an amount in proportion to the years as a resident.

If you've come back to Australia and have started receiving the Age Pension in the last two years you won't be able to receive the Age Pension overseas. In these cases you must live in Australia for at least two years since your last arrival for residence.

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Posted (edited)

Good, you are quoting the web site which is applicable to my situation.

 

I have read it btw a few hundred times and the other bits you did note quote. And called the International Free Hotline.

 

" how long you lived in Australia since being 16."  OK, I understand the rules so will help you.

 

Pension received in Australia will not vary. Everyone will get the same.

 

Pension received outside Australia will change after 6 weeks, loss of supplements and after 6 months the amount will vary according to your Aussie Residency after age 16.

 

Living overseas for greater than 26 weeks will see your pension reduced to an amount in proportion to the number of years you were an Australian resident once over the age of 16

 

Now I can't keep quoting that because the one you quoted is out of date since January 2015 and it's about to get revised again.

 

So cutting directly to the chase (this will get incredibly complicated if we have to keep going over the rules), kindly move to the question in my 2nd post

Edited by chris49
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Recent amendments have increased the work period to 35 years owrking since age 16. If you have achieved that

requirement you qualify for the full pension amount. There are some amendment changes proposed in the last budget

relating to concession card access. There is some queries whether it is still 26 weeks. As I understand it, if

over the 35 years working life time, it is reinstated on your return to Australia - but this I cannot confirm.

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Recent amendments have increased the work period to 35 years owrking since age 16. If you have achieved that

requirement you qualify for the full pension amount. There are some amendment changes proposed in the last budget

relating to concession card access. There is some queries whether it is still 26 weeks. As I understand it, if

over the 35 years working life time, it is reinstated on your return to Australia - but this I cannot confirm.

 

I would say yes. A person with 35 years working life can leave for indefinite periods. The only caveat there is if absent for a long period of time before age 65 he might have to appeal. He will naturally get his pension but Centerlink will set the terms.

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Hello Chris49,  I actually did address your second question last night but it appears I did not press post so it is now in the ether.   At the end of the day you would be entitled to the pension as you have said but you would still need to meet the criteria of living in australia where the Department of Human Services looks at the following as you are aware:

 

 

You are living in Australia if Australia is your usual place of residence. That is, Australia is where you make your home.

When we are deciding whether you are living in Australia we will look at:

  • the nature of your accommodation, and
  • the nature and extent of your family relationships in Australia, and
  • the nature and extent of your employment, business or financial ties with Australia, and
  • the frequency and duration of your travel outside Australia, and
  • any other matter we think is relevant

So provided you tick of that criteria you should be right to go.

 

As to your second question where you asked if it was worth it, I mentioned (albeit its in the ether) it depends on your situation, from what you described it sounds like you are comfortable and I suppose when I say comfortable that is subjective.   But from my point of view earning 60,000 piso a month and not having to pay rent is comfortable.  However, if your situation calls for additional income and your entitled to it why not claim it even if it does involve a few trips -8  You may be able to turn those trips into a benefit bringing back vegemite for instance!

 

As to your calculations, you mention the following "there is penalty imposed for receiving a foreign pension and this is around 25%."what is that?  I have a friend who lives in thailand and has been living there now for about 4 years.  ATO has classed him as a non resident so he pays 32.5 cents tax on every dollar of pension he receives.  But it took them 2 years before they classed him as a non resident for tax purposes.  I'm sure you are aware of the ATO residency requirements which are different to the Department of Human Services residency tests.  

 

Now to look for that lost post last night.

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Posted (edited)

 benefit bringing back vegemite for instance!   Naturally for an Aussie that is important, not only that but in general.

 

 

"there is penalty imposed for receiving a foreign pension and this is around 25%."what is that?   25% applied to my case but not in all cases. I said Australia is complicated and here it is extremely so. Once your foreign earnings go over a certain level a penalty of 50 cents in each dollar of your pension will apply, but there is an initial exemption of $160 every 14 days. See now how it triply complicates because the Aussie rules are applied to each 14 day period and there is a reference to exchange rates.

 

Let me give you an example try to follow.  $800 USD is around $1040 AUD at today's exchange rate.  That calculates out to $480 every 14 days. There is an exemption given of $160. No penalty on the first $160. So take this amount of $480 and subtract the exemption.

So $480-160  = $320.....take off 50 cents in each dollar as a penalty, so the penalty is also by coincidence $160, so every 14 days your Aussie pension is reduced by $160.

 

So the current Aussie Age Pension is $782 plus the awarded supplements, total of $205. So $782 plus $205 gives you a total pension of $987 every 14 days...so now $987 minus $160 equals $827*** every 14 days and that is the amount I would receive.

 

*I did calculate that out on the most extreme example, the actual loss might be a bit less.

 

**It does seem quite generous but in reality it is not, look at the current value on the AUD, if you did not have your own home you could not live on this amount. I am looking at hostel accom, maybe sharing and it is a little bit upmarket because of my back up, the US Pension, but it is not deluxe or close to that

 

*** Good you are accessing the web site if you continue going deeper into "earned income" you can see this and some other fascinating nuances  eg if you happen to work, past age 65, you get another unpenalised $250/week....SEE HOW IT AGAIN COMPLICATES.

 

 

ATO has classed him as a non resident so he pays 32.5 cents tax on every dollar of pension he receives.  But it took them 2 years before they classed him as a non resident for tax purposes.  I'm sure you are aware of the ATO residency requirements which are different to the Department of Human Services residency tests.  

 

 

ATO=???. We have heard about it and we dread to think about it. Wouldn't we simply claim that back on our annual tax return?

 

Tell me a bit more if you don't mind.

 

As for the travel if the 8 trips a year becomes a reality. I could reduce the frequency to 7 by staying 5 days each visit, Or I could be creative flying ex Australia to the USA  on my occasional visits, which accounts for one of the 7-8 trips.

 

Thanks btw Ynot for your interest in this complex matter. What I might do is go over, maybe early 2016 and have a 30-60 day visit. Maybe decide then if it's worth the 2 years detention or not.

Edited by chris49
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With the ATO classifying you as a non resident, it depends how you arrange your affairs.  The friend I was referring to only comes back to Aus about 2 times a year for a few weeks each time, but as I said it took them 2 years before they classified him as a non resident and started taxing him at the rate of 32.5 cents on every pension dollar.  Their residency criteria is separate to the department of human services.   For instance they may look to see if you lived in australia for more than 6 months, or they may see if you were in Australia for at least 183 days in a calendar year.  Flying in and out of Australia does not reset the the 183 days criteria, they look at the total days you actually spend in Australia during the financial year. The other criteria may be the substance of your residency, maintaining a home, not having a home anywhere else, your bank accounts, your principal place of residence etc.  They have a whole list of critera they take into account when determining if you are a resident or not!!  In regard to myself, when I retiree, I will be too young to claim the aged pension, so I am not relying on it.  I will have my super, so I will be relying on the earnings from that.   So I'm sure by time I am ready to claim the pension they probably would have changed the rules again and it may be too difficult to obtain and live in the Philippines, but if you are able to claim even a portion of it, then why not do it providided its still financially beneficial why not claim the dollars, as I said you may be able to start a cottage industry selling jars of vegemite to expats at a small profit!!

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Posted (edited)

With the ATO classifying you as a non resident, it depends how you arrange your affairs.  The friend I was referring to only comes back to Aus about 2 times a year for a few weeks each time, but as I said it took them 2 years before they classified him as a non resident and started taxing him at the rate of 32.5 cents on every pension dollar.  Their residency criteria is separate to the department of human services.   For instance they may look to see if you lived in australia for more than 6 months, or they may see if you were in Australia for at least 183 days in a calendar year.  Flying in and out of Australia does not reset the the 183 days criteria, they look at the total days you actually spend in Australia during the financial year. The other criteria may be the substance of your residency, maintaining a home, not having a home anywhere else, your bank accounts, your principal place of residence etc.  They have a whole list of critera they take into account when determining if you are a resident or not!!  In regard to myself, when I retiree, I will be too young to claim the aged pension, so I am not relying on it.  I will have my super, so I will be relying on the earnings from that.   So I'm sure by time I am ready to claim the pension they probably would have changed the rules again and it may be too difficult to obtain and live in the Philippines, but if you are able to claim even a portion of it, then why not do it providided its still financially beneficial why not claim the dollars, as I said you may be able to start a cottage industry selling jars of vegemite to expats at a small profit!!

 

Thanks mate for keeping up with the topic.

 

The 6 months (182 days) travel window is proposed to be closed within the 2015-2016 budget and will reduce to 42 days. With the caveat that the people with the full 35 year working life will not be penalized and may continue to stay out.

 

On your residency and tax liability, broadly, I can only address my own situation and paraphrasing the rule which applies to me: An Australian Citizen physically present in Australia on the day he makes his claim, now expand that and figure that after 2 years I might be leaving and returning every 42 days, so that's already 2 years ahead plus whatever time it take for the system to catch up AND

the fact that I'm under the taxable ceiling of around $25k AUD per year, I am not going to worry about that one yet.

 

So summary. I am born Aussie returning home after a long absence, I meet the 10 year residency rule. I do have another income and will be penalized on that. I will be physically present when I make my claim. I have family ties, 3 sisters and numerous relatives who will verify my unique story,

 

I will allow 60 days for a decision and will have funds for that. If my claim is refused and I cannot reasonably appeal I will leave. I used to call Centrelink almost weekly checking and verifying all this and the only thing they have consistently said is: You will be awarded a pension but it will be stopped immediately if you leave the country within 2 years and might not be reinstated even if you appeal. After 2 years these restrictions will lapse and you will be treated the same as anyone else.

 

And I am looking to get a Commonwealth Seniors Health Card which might be important in the future.

 

So mate, I am quite happy here. We will Baptize the 2 kids in November. Probably set off for home early next year, due for a visit anyway.

 

I wonder Ynot if your friend has assets or Super which puts him over the allowable income threshold? Is that why he's taxed and he could he not claim it back.

 

It is complicated, so thanks for your input.

Edited by chris49
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