In short

A National Redress Scheme payment is not counted as income for the Age Pension and is not taxed. But once you hold the money it counts under the assets test, and money in bank accounts or investments is deemed under the income test. From 1 January 2025 the payment is exempt from the residential aged care means assessment for life, if you tell Services Australia.

This article discusses support for survivors of institutional child sexual abuse. If it brings up distress, the National Redress Scheme lists free, confidential Redress Support Services on its website, and you can call the Scheme on 1800 737 377.

Many survivors who apply to the National Redress Scheme are now of Age Pension age, and a common worry is whether a redress payment will cut or stop their pension. The short answer: the payment itself is not counted as income and is not taxed, but the money still counts under the assets test once you have it, and Centrelink's deeming rules apply to it like any other savings. Applications close on 30 June 2027 [4][10], so many people will face this question in the next year or two.

What a redress payment is

The Scheme can offer up to three things: a monetary payment, access to counselling and psychological care, and a direct personal response (such as an apology) from the institution [5]. You choose which parts to accept. The payment is decided individually and ranges from under $10,000 up to a maximum of $150,000 [3][8]. Earlier payments an institution made to you for the abuse are usually deducted [3].

You can take the money as one lump sum, in instalments, or as a lump sum followed by instalments [8].

The Age Pension rules in four points

1. The payment is not income. Under the Social Security Act, payments under the National Redress Scheme are not counted as income for social security purposes (section 8(8)(jc)) [1]. Receiving it does not reduce your pension through the income test in the fortnight it arrives.

2. Once you hold it, it is an asset. The Department of Social Services (DSS) is explicit that the exemption on receipt "does not alter the fact that ... any assessable asset produced from the lump sum is counted under the social security assets test" [1]. Money in your bank account, a term deposit or shares bought with it all count [2][5].

3. Deeming applies. The same DSS note says any ongoing income the money produces is counted under the income test [1]. For money in bank accounts and other financial investments, that means deemed income. From 20 September 2026 the deeming rates are 1.75% on the first $66,800 of a single person's financial assets ($110,600 for a couple combined) and 3.75% above that [14].

4. It is not taxed, and it is protected. Redress payments are not subject to income tax, are exempt from Commonwealth debt recovery, and are protected from creditors if you become bankrupt [5][8]. DSS suggests keeping redress money in a separate account so those protections are easy to apply [2]. A separate account also makes it simple to show Services Australia where the money came from.

A widely repeated belief is that redress money is "exempt from Centrelink". That is true for the income test on receipt. It is not true for the assets test or deeming.

Worked example

Illustrative only, using FY2026-27 figures. Not personal advice.

Elaine, 73, is single, owns her home and receives the full Age Pension of $1,237.70 a fortnight (from 20 September 2026) [13]. She has $200,000 in the bank and $50,000 of other assessable assets (her car and contents).

Before redress. Her deemed income is $66,800 × 1.75% + $133,200 × 3.75% = $6,164 a year, or $237.08 a fortnight. That is $11.08 over the single income free area of $226, so the income test trims her pension by 50 cents for each dollar over: $5.54 a fortnight [12]. Her total assets of $250,000 are below the $333,000 homeowner limit, so the assets test does not reduce her pension [11]. She receives about $1,232.16.

After an $80,000 redress payment. The $80,000 is not counted as income when it arrives [1]. But her bank balance is now $280,000, so her deemed income rises to $66,800 × 1.75% + $213,200 × 3.75% = $9,164 a year, or $352.46 a fortnight. The income test reduction becomes ($352.46 − $226) × 50% = $63.23. Her assets are now $330,000, still just under the $333,000 limit [11]. Her pension falls to about $1,174.47 a fortnight, around $58 a fortnight (about $1,500 a year) less than before.

Two things are worth noticing. The drop comes entirely from deeming on money she now holds, not from the payment being treated as income. And Elaine is only $3,000 under the assets limit: above it, the assets test reduces the pension by $3 a fortnight for every $1,000 over the limit [15], and whichever test gives the lower pension is the one that applies.

If Elaine spends part of the money on things she needs, such as repairs to her home (which is not counted under the assets test) or health costs, her assessable assets and deemed income fall too. Giving money away to family is different: gifts above the allowable limits are still counted for five years. See our article on gifting rules and deprivation before making gifts.

Aged care: a separate, more generous rule

From 1 January 2025, National Redress Scheme payments are exempt as an asset from the means assessment for permanent residential aged care [7]. Services Australia says the total amount you were granted is deducted from your assessable assets, from the later of the payment date or the date you enter care, and the exemption is applied for life [6]. It applies if either you or your partner received the payment [6].

Three limits matter:

  • You must tell Services Australia (or DVA). The exemption is not automatic; they may ask for evidence such as a bank statement showing the deposit [6].
  • It covers residential aged care only. It does not apply to Support at Home, Home Care, respite care or flexible care [6].
  • It does not change the Age Pension. An aged care resident's pension is still worked out under the ordinary rules above, so the money still counts for pension purposes while it is held.

For how the residential aged care fee is calculated more generally, see our article on the means-tested care fee.

Timing: the Scheme is closing

Applications must be lodged before 30 June 2027, and the Scheme is legislated to end on 30 June 2028 [4]. Late applications are accepted only in exceptional circumstances [4]. Parliament's Joint Standing Committee reported on the Scheme's future in October 2026, and its recommendations are being considered by the Government [10].

Applications from people who are elderly or terminally ill can be dealt with sooner, and the Scheme may offer some of these applicants an advance payment. You do not need to ask; the Scheme will contact you if you are eligible [9]. If you accept the $10,000 advance, your final payment is reduced by that amount [3].

What this means for you

If you have received, or expect, a redress payment, questions worth considering include:

  • Have you told Services Australia about the money in your account, so your pension stays correct? Your bank balance is reported like any other asset.
  • Are you close to an assets test limit, as Elaine is, where a little more saved would start the $3-per-$1,000 reduction?
  • If you are in, or likely to move into, residential aged care, has the redress payment been disclosed so the aged care exemption is applied?
  • Would instalments rather than a lump sum suit your budget? The assets and deeming rules apply to what you hold at any time.
  • Is the money kept separate from your other savings so its protections are easy to apply?

Where to go next

  • National Redress Scheme: 1800 737 377, Monday to Friday 8 am to 5 pm, or nationalredress.gov.au [5].
  • knowmore: a free, independent legal service for survivors that also offers financial counselling, recommended by the Scheme before you sign your acceptance [8].
  • Services Australia: to update your assets or ask about the aged care exemption [6].
  • A licensed financial adviser: for advice on how to hold or use the money alongside your pension. Our articles on the Age Pension income test and deeming rates explain the underlying rules in more detail.

Sources

Key takeaways

  • A National Redress Scheme payment is not counted as income for social security purposes, and it is not taxed.
  • Once you hold the money it counts under the Age Pension assets test, and money in the bank is deemed at 1.75%/3.75% (from 20 September 2026).
  • In our example, an $80,000 payment to a single homeowner on a full pension reduced the pension by about $58 a fortnight, entirely through deeming.
  • For permanent residential aged care, the total amount granted is exempt from the means assessment for life from 1 January 2025, but only if you tell Services Australia. It does not apply to Support at Home.
  • Applications to the Scheme close on 30 June 2027, and the Scheme ends on 30 June 2028.

Frequently asked questions

Does a National Redress Scheme payment affect the Age Pension?

The payment itself is not counted as income, so it does not reduce your pension when it arrives. But once you hold the money it counts under the assets test, and savings or investments are deemed to earn income, which can reduce your pension.

Is a redress payment taxable?

No. Services Australia and the National Redress Scheme both say redress payments are not subject to income tax. They are also exempt from Commonwealth debt recovery and protected from creditors in bankruptcy.

Do redress payments count for aged care fees?

From 1 January 2025 they are exempt from the means assessment for permanent residential aged care, for life, once you or your partner tell Services Australia. The exemption does not apply to Support at Home, Home Care, respite or flexible care.

When do National Redress Scheme applications close?

Applications must be lodged before 30 June 2027. The Scheme ends on 30 June 2028, and late applications are accepted only in exceptional circumstances.

A note on advice. This article is general information only and doesn't account for your personal circumstances. Everyone's situation is different — before acting, it's worth talking it through with a licensed adviser who knows your full picture.