Commonwealth Coat of Arms of Australia

Veterans’ Entitlements Act 1986

No. 27, 1986

Compilation No. 189

Compilation date: 1 January 2024

Includes amendments: Act No. 103, 2023 and Act No. 106, 2023

Registered: 13 February 2024

This compilation is in 4 volumes

Volume 1: sections 1–45UY

Volume 2: sections 46–93ZG

Volume 3: sections 94–216

Volume 4: Schedules

 Endnotes

Each volume has its own contents

About this compilation

This compilation

This is a compilation of the Veterans’ Entitlements Act 1986 that shows the text of the law as amended and in force on 1 January 2024 (the compilation date).

The notes at the end of this compilation (the endnotes) include information about amending laws and the amendment history of provisions of the compiled law.

Uncommenced amendments

The effect of uncommenced amendments is not shown in the text of the compiled law. Any uncommenced amendments affecting the law are accessible on the Register (www.legislation.gov.au). The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. For more information on any uncommenced amendments, see the Register for the compiled law.

Application, saving and transitional provisions for provisions and amendments

If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes.

Editorial changes

For more information about any editorial changes made in this compilation, see the endnotes.

Modifications

If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. For more information on any modifications, see the Register for the compiled law.

Selfrepealing provisions

If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes.

 

 

 

Contents

Part IIIB—Provisions applying to service pension, income support supplement and veteran payment

Division 1—Ordinary income concept

46 General meaning of ordinary income

46A Certain amounts taken to be received over 12 months

Division 1A—Work bonus

46AA Income concession

46AB Meaning of employment income

46ABA Meaning of gainful work

46AC Unused concession balance

46AD No double income reductions under sections 46AA and 115G

Division 2—Business income

46B Ordinary income from a business—treatment of trading stock

46C Permissible reductions of business income

Division 3—Income from financial assets (including income streams (short term) and certain income streams (long term))

46D Deemed income from financial assets—persons other than members of couples

46E Deemed income from financial assets—members of a couple

46H Deeming threshold

46J Below threshold rate, above threshold rate

46K Actual return on financial assets not treated as ordinary income

46L Certain money and financial investments not taken into account

46M Valuation and revaluation of certain financial investments

Division 4—Income from income streams not covered by Division 3

Subdivision B—Income streams that are not family law affected income streams

46SA Scope of Subdivision

46T Income from assettest exempt income stream

46U Income—income stream not a defined benefit income stream

46V Income—income stream is a defined benefit income stream

46VA Income from marketlinked assettest exempt income stream

46W Income from assettested income stream (long term)

46X Income—assettested income stream (long term) that is not a defined benefit income stream

46Y Income—assettested income stream (long term) that is a defined benefit income stream

46YA Income from certain lowpayment assettested income streams

46YB Income—assettested income stream (lifetime)

Subdivision C—Family law affected income streams

46Z Scope of Subdivision

46ZA Income from assettest exempt income streams

46ZB Income from assettested income stream (long term)

46ZBA Income from assettested income stream (lifetime)

46ZC Decisionmaking principles

Division 6—Income tests—conversion of foreign currency amounts

47 Application of Division

47A Conversion of foreign currency amounts

47B Base exchange rate

47C Reassessed exchange rate

47D Applicability of reassessed exchange rate

47E Rounding off exchange rates

Division 7—Income tests—disposal of ordinary income

48 Disposal of ordinary income

48A Amount of disposition

48B Disposal of ordinary income—not a member of a couple

48C Disposal of ordinary income—members of couples

48E Dispositions more than 5 years old to be disregarded

Division 9—Selfemployment programs

50 General effect of Division

50A Reduction in rate of payments under this Part if recipient or partner also receiving payments under a selfemployment program

50B Rate reduction under this Division

Division 11—General provisions relating to the assets test

Subdivision A—Value of person’s assets

52 Certain assets to be disregarded in calculating the value of a person’s assets

52AA Value of superannuation investments determined by Minister to be disregarded

52A Value of assettested income streams that are not defined benefit income streams, assettested income streams (lifetime) or family law affected income streams

52B Value of assettested income streams that are defined benefit income streams

52BAA Value of assettested income streams (lifetime) that are managed investments

52BAB Value of assettested income streams (lifetime) that are not managed investments

52BA Value of assettested FLA income streams

52BB Value of partially assettest exempt income streams

52BC Value of superannuation reserves for superannuation funds of 4 members or less

52C Effect of charge or encumbrance on value of assets

52CA Effect of certain liabilities on value of assets used in primary production

52CB Value of life policy

52D Loans

Subdivision B—Dispositions of assets (general provisions)

52E Disposal of assets

52F Amount of disposition

52FAAA Application of asset deprivation rules to cease in respect of certain assets

Subdivision BA—Dispositions of assets before 1 July 2002

52FAA Application

52FA Disposal of assets in prepension years—not a member of a couple

52G Disposal of assets in pension years—not a member of a couple

52GA Disposal of assets in prepension years—members of couples

52H Disposal of assets in pension years—members of couples

52J Dispositions more than 5 years old to be disregarded

Subdivision BB—Dispositions of assets on or after 1 July 2002

52JA Disposition of assets in tax year—individuals

52JB Dispositions of assets in 5 year period—individuals

52JC Disposition of assets in tax year—members of couples

52JD Disposition of assets in 5 year period—members of couples

52JE Certain dispositions to be disregarded

Subdivision C—Provisions relating to special residences and special residents

52KA Application of Subdivision to granny flat residents

52L Basis for different treatment

52M Entry contribution

52N Extra allowable amount

52P Renegotiation of retirement village agreement

52Q Residents who are not members of a couple

52R Members of couples

52S Members of illness separated couple (both in special residences)

52T Members of illness separated couple (partner not in special residence and partner property owner)

52U Members of illness separated couple (partner not in special residence and partner not property owner)

52V Members of ordinary couple with different principal homes (both in special residences)

52W Members of ordinary couple with different principal homes (partner not in special residence and partner property owner)

52X Members of ordinary couple with different principal homes (partner not in special residence and partner not property owner)

Subdivision D—Financial hardship

52Y Access to financial hardship rules

52Z Application of financial hardship rules

Subdivision E—Pension loans scheme

52ZAAA Pension loans scheme definitions

52ZA Eligibility for participation in pension loans scheme

52ZB Effect of participation in pension loans scheme—pension rate

52ZBA Pension loans scheme advance payment

52ZC Effect of participation in pension loans scheme—creation of debt

52ZCA Effect of participation in pension loans scheme—maximum loan available

52ZD Need for a request to participate

52ZE Need for a request to later nominate or change nominated amount or rate of pension

52ZEAA Need for a request for a pension loans scheme advance payment

52ZEA Nonreceipt of service pension or income support supplement

52ZF Existence of debt results in charge over real assets

52ZG Debt not to be recovered until after death

52ZH Enforcement of charge

52ZJ Person ceases to participate in pension loans scheme if debt exceeds maximum loan available

52ZJA Commission may cease person’s participation in pension loans scheme

52ZK Person withdraws from pension loans scheme

52ZKA Repayment or recovery of debt after pension loans scheme ceases to operate

52ZL Registration of charge

52ZM Manner of enforcement of charge

52ZMAA No negative equity guarantee

Subdivision F—Commutation of assettest exempt income stream

52ZMA Debt resulting from commutation of assettest exempt income stream contrary to subsection 5JA(2), 5JB(2) or 5JBA(2)

Division 11A—Means test treatment of private companies and private trusts

Subdivision A—Introduction

52ZN Simplified outline

52ZO Definitions

52ZP Relatives

52ZQ Associates

52ZR When a company is sufficiently influenced by an entity

52ZS Majority voting interest in a company

52ZT Entitled to acquire

52ZU Transfer of property or services

52ZV Constructive transfers of property or services to an entity

52ZW Active involvement with a primary production enterprise

52ZX Power to veto decisions of a trustee

52ZY Extraterritorial operation

52ZZ Application to things happening before commencement

Subdivision B—Designated private companies

52ZZA Designated private companies

Subdivision C—Designated private trusts

52ZZB Designated private trusts

Subdivision D—Controlled private companies

52ZZC Controlled private companies

52ZZD Direct voting interest in a company

52ZZE Voting power

52ZZF Direct control interest in a company

52ZZG Interest in a share

Subdivision E—Controlled private trusts

52ZZH Controlled private trusts

52ZZI Interest in a trust

Subdivision F—Attributable stakeholders and attribution percentages

52ZZJ Attributable stakeholder, asset attribution percentage and income attribution percentage

Subdivision G—Attribution of income of controlled private companies and controlled private trusts

52ZZK Attribution of income

52ZZL No double counting of attributed income

52ZZM Ordinary income of a company or trust

52ZZN Ordinary income from a business—treatment of trading stock

52ZZO Permissible reductions of business and investment income

52ZZP Derivation periods

52ZZQ Attribution periods

Subdivision H—Attribution of assets of controlled private companies and controlled private trusts

52ZZR Attribution of assets

52ZZS When attributed asset is unrealisable

52ZZT Effect of charge or encumbrance on value of assets

52ZZU Effect of unsecured loan on value of assets

52ZZV Value of company’s or trust’s assets etc.

Subdivision I—Modification of asset deprivation rules

52ZZW Individual disposes of asset to company or trust

52ZZX Disposal of asset by company or trust

52ZZY Individual ceases to be an attributable stakeholder of a company or trust

52ZZZ Individual disposes of asset to company or trust before 1 January 2002—individual is attributable stakeholder

52ZZZA Individual disposes of asset to company or trust before 1 January 2002—individual’s spouse is attributable stakeholder

Subdivision J—Modification of income deprivation rules

52ZZZB Individual disposes of ordinary income to company or trust

52ZZZC Disposal of income by company or trust

52ZZZD Individual disposes of income to company or trust before 1 January 2002—individual is attributable stakeholder

52ZZZE Individual disposes of income to company or trust before 1 January 2002—individual’s spouse is attributable stakeholder

Subdivision K—Concessional primary production trusts

52ZZZF Concessional primary production trusts

52ZZZG Individual ceases to be an attributable stakeholder of a trust—receipt of remuneration or other benefits from trust during asset deprivation period

52ZZZH Net value of asset

52ZZZI Value of entity’s assets

52ZZZJ When asset is controlled by an individual

52ZZZK Adjusted net value of asset

52ZZZL Adjusted net primary production income

52ZZZM Net income of a primary production enterprise

52ZZZN Net income from a primary production enterprise—treatment of trading stock

52ZZZO Permissible reductions of income from carrying on a primary production enterprise

Subdivision L—Antiavoidance

52ZZZP Antiavoidance

Subdivision M—Decisionmaking principles

52ZZZQ Decisionmaking principles

Subdivision N—Information management

52ZZZR Transitional period

52ZZZS Informationgathering powers

52ZZZT Commission may obtain tax information

52ZZZU Disclosure of tax information

52ZZZV Disclosure of tax file number information

Division 11B—Private financial provision for certain people with disabilities

Subdivision A—Special disability trusts

52ZZZW What is a special disability trust?

52ZZZWA Beneficiary requirements

52ZZZWB Trust purpose requirements

52ZZZWC Trust deed requirements

52ZZZWD Trustee requirements

52ZZZWE Trust property requirements

52ZZZWEA Trust expenditure requirements

52ZZZWF Reporting requirements

52ZZZWG Audit requirements

52ZZZWH Waiver of contravention of this Division

Subdivision B—Income of special disability trusts

52ZZZWI Attribution of income

52ZZZWJ Income amounts from special disability trusts

Subdivision C—Assets of special disability trusts

52ZZZWK Attribution of assets

Subdivision D—Transfers to special disability trusts

52ZZZWL Effect of certain transfers to special disability trusts

52ZZZWM The effect of exceeding the $500,000 limit

52ZZZWN Transfers by the immediate family members prior to reaching pension age etc.

52ZZZWO Transfers by principal beneficiaries or partners

52ZZZWP Cessation of special disability trusts

52ZZZWQ Effect of this Subdivision

Division 12—Service pensioner and income support supplement recipient benefits

Subdivision A—Introduction

53 Fringe benefits and treatment at Departmental expense for certain service pensioners

Subdivision B—Fringe benefits

53A Fringe benefits

53B Commission must determine continued fringe benefits eligibility circumstances

Subdivision C—Treatment at Departmental expense

53D Eligibility for treatment at Departmental expense

53E Veterans to satisfy certain conditions

Division 12A—Payments after bereavement

Subdivision A—Bereavement period

53H Definition

Subdivision B—Death of pensioner’s partner (where partner was receiving a pension or a social security pension)

53J Application

53K What happens if pensioner’s reassessed rate equals or exceeds combined pensioner couple rate

53L What happens if pensioner’s reassessed rate is less than combined pensioner couple rate

53M Determination of amount of pension and social security pension

53N Transfer to another pension

53NAA Matters affecting bereavement payments under this Subdivision

53NA No liability of financial institution for certain payments to pensioner

Subdivision C—Death of pensioner

53P Application

53Q Payment of one instalment

Subdivision D—Death of dependent child

53R Application

53S When reassessed pension rate in respect of pensioner comes into effect

53T Bereavement payment

Division 13—Recipient obligations

54 Secretary may require notification of an event or change of circumstances

54A Secretary may require recipient to give information relevant to payment of service pension, income support supplement or veteran payment

54AA Secretary may require recipient to give information, produce documents or appear before an officer

54B Document served with a section 54 notice

54BA Secretary may require person or person’s partner to take action to obtain a comparable foreign pension

54C Interpretation

Division 14—Pensioners in certain institutions

55 Service pension, income support supplement or veteran payment may be suspended or forfeited when person in gaol or in psychiatric confinement following criminal charge

55A Instalments may be redirected to partner or child

Division 15—Variation and termination

56 Automatic termination or rate reduction—recipient complying with section 54 notification obligations

56A Automatic termination—recipient not complying with section 54 notification obligations

56B Automatic rate reduction—recipient not complying with section 54 notification obligations

56C Rate increase determination

56D Rate reduction determination

56DA No rate increase or reduction for small amounts

56E Cancellation or suspension determination—general

56EA Cancellation or suspension determination for failure to comply with section 54A notice

56EB Cancellation or suspension for failure to take action to obtain a comparable foreign pension

56EC Cancellation determination where service pension, income support supplement or veteran payment not payable

56ED Suspension instead of automatic termination under section 56 or 56A

56EE Suspension instead of automatic termination under section 56 or 56A—partners

56F Resumption of a payment after suspension

56G Date of effect of favourable determination

56GA Date of effect of determination under section 56C—dependent child

56H Date of effect of adverse determination

56J Payment may be cancelled at recipient’s request

56K Payment may be suspended if instalments not drawn

56L Commission may end suspension

56M Effect of cancellation or suspension

56N Changes to payments by computer

Division 16—Review of decisions

57 Persons who may seek review of certain decisions

57A Application for review

57B Commission’s powers where request for review

57C Date of effect of certain review decisions

57D Commission must make written record of review decision and reasons

57E Person who requested review to be notified of decision

57F Powers of Commission to gather evidence

57G Withdrawal of request for review

57H Commission may reimburse certain expenses

Division 17—Administration of payments

Subdivision A—General administration of payments

58 Application of Subdivision

58A Payment by instalments

58C Manner of payment

58D Agents

58E Pension payday falling on public holiday etc.

58F Payment into bank account etc.

58J Payments to Commissioner of Taxation or Child Support Registrar

Subdivision B—Payments outside Australia

58K Age, invalidity and partner service pensions, income support supplement and veteran payment generally portable

58L Manner of payment outside Australia

58M No portability if claim based on shortterm residence

58N Transfer to portable pension

Division 18—Indexation

Subdivision A—Preliminary

59 Analysis of Division

59A Indexed and adjusted amounts

Subdivision B—CPI indexation

59B CPI Indexation Table

59C Indexation of amounts

59D Indexation factor

59E Rounding off indexed amounts

59EAA Indexation using Pensioner and Beneficiary Living Cost Index

59EAB Living cost indexation factor

59EAC Rounding off amounts

59EA Certain indexed amounts to be increased in line with increases in Male Total Average Weekly Earnings

Subdivision C—Adjustment of other rates

59G Adjustment of single pension rate MBR amount

59GA Adjustment of rent free area

59GB Adjustment of adjusted income free area

59H Adjustment of pension single nonproperty owner AVL

59J Adjustment of special illness separated special resident AVL

59LA Adjustment of ceiling rate

59LB Adjustment of veteran payment maximum basic rates

Part IIIC—Compensation recovery

Division 1—General

59M General effect of Part

59N Certain lump sums to be treated as though they were received as periodic payments

59O Effect of certain State and Territory laws

Division 2—Enforcement of compensation rights

59P Commission may require person to take action to obtain compensation

Division 3—Receipt of compensation

59Q Pension etc. not payable during lump sum preclusion period

59QA Deemed lump sum payments arising from separate payments

59R Person may have to repay amount where both lump sum and pension have been received

59S Lump sum compensation not counted as ordinary income

59T Effect of periodic compensation payments on rate of person’s compensation affected pension

59TA Effect of periodic compensation payments on rate of partner’s compensation affected pension

59U Claim for compensation affected pension granted to person qualified for compensation affected payment under Social Security Act

59V Rate reduction under both income/assets test and this Part

59W Person may have to repay amount where both periodic compensation payments and pension have been received

59X Periodic compensation payments not counted as ordinary income

Division 4—Compensation payers

59Y Commission may send preliminary notice to potential compensation payer

59Z Potential compensation payer must notify Department of liability

59ZA Commission may send recovery notice to compensation payer

59ZB Preliminary notice or recovery notice suspends liability to pay compensation

59ZC Compensation payer’s payment to Commonwealth discharges liability to compensation recipient

59ZD Offence to make compensation payment after receiving preliminary notice or recovery notice

Division 5—Insurers

59ZE Commission may send preliminary notice to insurer

59ZF Insurer must notify Department of liability

59ZG Commission may send recovery notice to insurer

59ZH Preliminary notice or recovery notice to insurer suspends both insurer’s and compensation payer’s liability

59ZI Insurer’s payment to Commonwealth discharges liability

59ZJ Offence to make compensation payment after receiving preliminary notice or recovery notice

Division 6—Miscellaneous

59ZK Commission may give recovery notice either to compensation payer or to insurer but not to both

59ZL Commission may disregard some payments

59ZM Part to bind Crown

Part IIID—Quarterly pension supplement

60 When this Part applies

60A Quarterly pension supplement

60B Rate of quarterly pension supplement

60C Payment of quarterly pension supplement

Part IIIE—Clean energy payments

Division 2—Energy supplements

Subdivision A—Energy supplements for pensions under Parts II and IV

62A Energy supplement for veterans and members of Defence Force or Peacekeeping Force

62B Energy supplement for war widow/war widower pension

62C Disregard nil rate in certain circumstances

62D Electing for quarterly payment of energy supplement for pension under Part II or IV

Subdivision B—Quarterly energy supplement for service pension

62E Quarterly energy supplement for service pension

Division 3—Essential medical equipment payment

Subdivision A—Definitions

63A Definitions

Subdivision B—Eligibility for essential medical equipment payment

63B Eligibility for essential medical equipment payment

63C The medical needs requirement

63D The concession requirement

63E The energy account requirement

63F Availability of payments

63G Amount of payment

63H Debts arising in respect of essential medical equipment payments

Subdivision C—Claim for essential medical equipment payment

63J Need for a claim

63K Special requirements regarding claims for essential medical equipment payment

63L Who can claim?

63M Making a claim

63N Claimant must be an Australian resident

63P Claim may be withdrawn

Subdivision D—Investigation of claim

63Q Secretary to investigate claim and submit it to Commission

Subdivision E—Consideration and determination of claim

63R Duties of Commission in relation to claim

63S Entitlement determination

63T Date of effect of determination

Division 4—Review of decisions

64A Review of certain decisions

64B Application for review

64C Commission’s powers where request for review

64D Date of effect of certain review decisions

64E Commission must make written record of review decision and reasons

64F Person who requested review to be notified of decision

64G Powers of Commission to gather evidence

64H Withdrawal of request for review

Division 5—Multiple entitlement exclusions

65A Multiple entitlement exclusions

Part IIIF—Oneoff energy assistance payment

66 Oneoff energy assistance payment—this Act

67 Oneoff energy assistance payment—MRCA

67A Oneoff energy assistance payment—Safety, Rehabilitation and Compensation Act 1988

67B More than one entitlement

67C Claim not required for oneoff energy assistance payment

67D Payment of oneoff energy assistance payment

Part IIIG—2019 oneoff energy assistance payment

67E Oneoff energy assistance payment—this Act

67F Oneoff energy assistance payment—MRCA

67G Oneoff energy assistance payment—Safety, Rehabilitation and Compensation (Defencerelated Claims) Act 1988

67H More than one entitlement

67J Claim not required for oneoff energy assistance payment

67K Payment of oneoff energy assistance payment

Part IIIH—2020 economic support payment

Division 1—First 2020 economic support payment

67L First 2020 economic support payment

67M More than one entitlement

67N Claim not required for first 2020 economic support payment

67P Payment of first 2020 economic support payment

Division 2—Second 2020 economic support payment

67Q Second 2020 economic support payment

67R More than one entitlement

67S Claim not required for second 2020 economic support payment

67T Payment of second 2020 economic support payment

Division 3—Eligibility

67U Purpose of this Division

67V Payments under this Act

67W Veterans’ Children Education Scheme

67X Seniors health card, gold card etc.

67Y MRCA

67Z Education scheme under MRCA

67ZA Safety, Rehabilitation and Compensation (Defencerelated Claims) Act 1988

67ZB Residence requirement

Part IIIJ—Additional economic support payments

Division 1—Additional economic support payment 2020

67ZC Additional economic support payment 2020

67ZD More than one entitlement

67ZE Claim not required for additional economic support payment 2020

67ZF Payment of additional economic support payment 2020

Division 2—Additional economic support payment 2021

67ZG Additional economic support payment 2021

67ZH More than one entitlement

67ZI Claim not required for additional economic support payment 2021

67ZJ Payment of additional economic support payment 2021

Division 3—Eligibility

67ZK Purpose of this Division

67ZL Payments under this Act

67ZM Seniors health card, gold card etc.

67ZN MRCA

67ZO Safety, Rehabilitation and Compensation (Defencerelated Claims) Act 1988

Part IIIK—2022 cost of living payment

Division 1—2022 cost of living payment

67ZP 2022 cost of living payment

67ZQ More than one entitlement

67ZR Claim not required for 2022 cost of living payment

67ZS Payment of 2022 cost of living payment

Division 2—Eligibility

67ZT Purpose of this Division

67ZU Payments under this Act

67ZV Veterans’ Children Education Scheme

67ZW Seniors health card, gold card etc.

67ZX MRCA

67ZY Education scheme under MRCA

67ZZ Safety, Rehabilitation and Compensation (Defencerelated Claims) Act 1988

67ZZA Residence requirement

Part IV—Pensions by way of compensation to members of Defence Force or Peacekeeping Force and their dependants

Division 1—Interpretation

68 Interpretation

69 Application of Part to members of the Forces

69A Application of Part to members of the Forces who render hazardous service

69B Application of Part to persons who rendered British nuclear test defence service

Division 2—Eligibility for pensions by way of compensation to members of Defence Force or Peacekeeping Force and their dependants

70 Eligibility for pensions by way of compensation to members of Defence Force or Peacekeeping Force and their dependants

70A Most defencecaused injuries, diseases and deaths of members of the Defence Force no longer covered by this Act

71 Application of certain provisions of Part II

72 Dual entitlement to pension

Division 3—Rates of pension

73 Application of Divisions 4 and 5 of Part II

Division 4—Pension and other compensation

73A This Division does not apply to certain payments

74 Payments by way of compensation or damages

75 Proceedings against third party

76 Payment of damages to Commonwealth

77 Discharge of liability of Commonwealth to pay damages

78 Other payments of compensation

79 Overpayments of pension

Part IVA—Advance payments of pension and income support supplement

Division 1—General

79A Definition

Division 2—Eligibility for advance payment

79B Eligibility for advance payment

Division 3—Applying for advance payment

79C Application

79D Who can apply

79E Making an application

79G Applicant must be Australian resident and in Australia

79H Application may be withdrawn

Division 4—Determination of application and payment of advance payment

79I Commission to determine application

79J Payment of advance payment

Division 5—Amount of advance payment

79K Amount of advance payment

Division 6—Advance payment deductions

79L Advance payment deduction

79M Amount of advance payment deduction—basic calculation

79N Person may request larger advance payment deduction

79O Reduction of advance payment deduction in cases of severe financial hardship

79P The final advance payment deduction

79Q Payment rate insufficient to cover advance payment deduction

79R Rounding of amounts

79S Unrepaid advance payments to deceased partner to be disregarded

Division 7—Review by Commission

79T Request for review

79U Commission’s powers

79V Commission must make written record of review decision and reasons

79W Person who requested review to be notified of decision

79X Powers of Commission to gather evidence

79Y Withdrawal of request for review

Part V—Medical and other treatment

80 Interpretation

81 Application of Part V

84 Provision of treatment

85 Veterans eligible to be provided with treatment

85A Treatment under section 279 or 280 of the MRCA for aggravated injuries or diseases

85B Treatment under section 279 or 280 of the MRCA if a person is entitled to treatment under the VEA for a separate injury or disease

86 Dependants eligible to be provided with treatment

88A Commission may determine specified veterans and others are eligible to be provided with specified treatment

88B Provision of services under the Veteran Suicide Prevention pilot

89 Treatment at hospitals and other institutions

90 Treatment Principles

90AA Provision of services under the Coordinated Veterans’ Care mental health pilot

90A Repatriation Private Patient Principles

90B Application of Repatriation Private Patient Principles

91 Repatriation Pharmaceutical Benefits Scheme

92 Counselling services and psychiatric assessment

93 Recovery of cost of treatment

93A Charges payable to Commonwealth

93B False statements relating to treatment

93C Knowingly making false statements relating to treatment

93D Bribery etc.

93E Prohibited practices in relation to the rendering of pathology services

93F Offences against 2 or more provisions

93G Statements inadmissible in evidence

93H Recovery of amounts paid because of false statements

93J Prosecution of offences

Part VA—Extension of Repatriation Pharmaceutical Benefits Scheme

Division 1—Definitions

93K Definitions

Division 2—Pharmaceutical benefits may be obtained

93L Certain veterans and mariners may obtain pharmaceutical benefits

Division 3—Eligibility for, and entitlement to, pharmaceutical benefits card

Subdivision A—Eligibility

93M Who is eligible?

Subdivision B—Entitlement

93N Entitlement to a pharmaceutical benefits card under this Part

Division 4—Claim for pharmaceutical benefits card under this Part

93P Need for a claim

93Q Who can claim?

93R Making a claim

93T Claimant must be an Australian resident and in Australia

93U Claim may be withdrawn

Division 5—Investigation of claim

93V Secretary to investigate claim and submit it to Commission

Division 6—Consideration and determination of claim

93W Duties of Commission in relation to claim

93X Entitlement determination

93Y Date of effect of determination

Division 7—Review of decisions

93Z Review of certain decisions

93ZA Application for review

93ZB Commission’s powers where request for review

93ZC Date of effect of certain review decisions

93ZD Commission must make written record of review decision and reasons

93ZE Person who requested review to be notified of decision

93ZF Powers of Commission to gather evidence

93ZG Withdrawal of request for review

Part IIIBProvisions applying to service pension, income support supplement and veteran payment

Division 1Ordinary income concept

46  General meaning of ordinary income

  A reference in this Act to a person’s ordinary income for a period is a reference to the person’s gross ordinary income from all sources for the period calculated without any reduction, other than a reduction under Division 2.

Note 1: For ordinary income see subsection 5H(1).

Note 2: For other provisions affecting the amount of a person’s ordinary income see section 46AA (work bonus), sections 46B and 46C (business income), Division 3 (income from financial assets (including income streams (short term) and certain income streams (long term)) and Division 4 (income from income streams not covered by Division 3).

46A  Certain amounts taken to be received over 12 months

  If a person receives, whether before or after the commencement of this section, an amount that:

 (a) is not income within the meaning of Division 3 or 4 of this Part; and

 (b) is not:

 (i) income in the form of periodic payments; or

 (ii) ordinary income from remunerative work undertaken by the person; or

 (iii) an exempt lump sum;

the person is, for the purposes of this Act, taken to receive one fiftysecond of that amount as ordinary income of the person during each week in the 12 months commencing on the day on which the person becomes entitled to receive that amount.

Division 1AWork bonus

46AA  Income concession

 (1) This section applies to a person if:

 (a) the person’s rate of service pension or income support supplement is calculated in accordance with the Rate Calculator; and

 (b) the person has reached qualifying age.

Note: For qualifying age see section 5Q.

Work bonus income greater than or equal to income concession amount

 (2) If the person’s work bonus income for a pension period is greater than or equal to the income concession amount for that period, then, for the purposes of Module E of that Rate Calculator, the amount of the person’s work bonus income for that period is reduced by an amount equal to the income concession amount.

Note: For work bonus income, see subsection (4BA).

Example 1: David has $2,300 of work bonus income in a pension period. David’s rate of service pension or income support supplement for that period is greater than nil.

 David’s work bonus income for that period is reduced by $300, leaving David $2,000 of work bonus income for that period.

Example 2: Amy has $1,000 of work bonus income in a pension period. Amy’s rate of service pension or income support supplement for that period is greater than nil.

 Amy’s work bonus income for that period is reduced by $300, leaving Amy $700 of work bonus income for that period.

 (3) If the person’s unused concession balance (see section 46AC) is greater than or equal to the amount (the current amount) of the person’s work bonus income that remains after applying subsection (2) of this section in relation to a pension period:

 (a) for the purposes of Module E of that Rate Calculator, the person’s work bonus income for that period is further reduced to nil; and

 (b) if the person’s rate of service pension or income support supplement for that period is greater than nil—the person’s unused concession balance is reduced by an amount equal to the current amount.

Example 1: To continue example 1 in subsection (2), assume David’s unused concession balance is $2,000. The current amount is $2,000.

 David’s work bonus income for that period is further reduced to nil.

 David’s unused concession balance is now nil.

Example 2: To continue example 2 in subsection (2), assume Amy’s unused concession balance is $1,600. The current amount is $700.

 Amy’s work bonus income for that period is further reduced to nil.

 Amy’s unused concession balance is now $900.

 (4) If the person’s unused concession balance (see section 46AC) is greater than nil but less than the amount of the person’s work bonus income that remains after applying subsection (2) of this section in relation to a pension period:

 (a) for the purposes of Module E of that Rate Calculator, the person’s work bonus income for that period is further reduced by an amount equal to that unused concession balance; and

 (b) if the person’s rate of service pension or income support supplement for that period is greater than nil—the person’s unused concession balance is reduced to nil.

Example: Bill has $1,300 of work bonus income in a pension period. Bill’s rate of service pension or income support supplement for that period is greater than nil.

 Under subsection (2), Bill’s work bonus income for that period is reduced by $300, leaving Bill $1,000 of work bonus income for that period.

 Assume Bill’s unused concession balance is $800.

 Under subsection (4), Bill’s work bonus income for that period is further reduced by $800 leaving Bill $200 of work bonus income for that period.

 Bill’s unused concession balance is now nil.

Work bonus income less than income concession amount

 (4A) If the person has work bonus income for a pension period but that income is less than the income concession amount for that period:

 (a) for the purposes of Module E of that Rate Calculator, the person’s work bonus income for that period is reduced to nil; and

 (b) if the person’s rate of service pension or income support supplement for that period is greater than nil—the person’s unused concession balance (see section 46AC) is increased, subject to subsection 46AC(2), by an amount equal to the difference between that income concession amount and that work bonus income (before it was reduced).

Note: For work bonus income, see subsection (4BA).

Example: Emma has $100 of work bonus income in a pension period. Emma’s rate of service pension or income support supplement for that period is greater than nil.

 Emma’s work bonus income for that period is reduced to nil.

 Emma’s unused concession balance is increased by $200.

No work bonus income

 (4B) If:

 (a) the person has no work bonus income for a pension period; and

 (b) the person’s rate of service pension or income support supplement for that period is greater than nil;

the person’s unused concession balance (see section 46AC) is increased, subject to subsection 46AC(2), by an amount equal to the income concession amount for that period.

Note: For work bonus income, see subsection (4BA).

Definitions

 (4BA) For the purposes of this section, a person’s work bonus income for a pension period is the sum of the following:

 (a) the person’s employment income received in that period;

 (b) the person’s gainful work income for that period.

Note: For employment income, see section 46AB.

 (4BB) For the purposes of this section, a person’s gainful work income for a pension period is the amount worked out using the following formula:

Start formula Annual amount over 26 end formula

where:

annual amount means the annual amount of ordinary income of the person that is earned, derived or received by the person from gainful work (within the meaning of section 46ABA) undertaken by the person, being the annual amount as last determined by the Commission.

 (4C) The income concession amount for a pension period is $300.

Interpretation

 (5) If the person is a member of a couple, apply this section in relation to the person, and to the person’s partner, before applying Point SCH6E3 of Schedule 6.

 (5A) If:

 (a) the person is a member of a couple; and

 (b) the person’s partner’s work bonus income (within the meaning of section 1073AA of the Social Security Act 1991) is reduced by one or more amounts (each of which is a reduction amount) under section 1073AA of that Act;

then, in applying point SCH6E3 of Schedule 6, the ordinary/adjusted income of the person’s partner is to be reduced by an amount equal to the total of the reduction amounts.

 (6) This section is subject to section 46AD (about no double income reductions under this section and section 115G).

46AB  Meaning of employment income

 (1) For the purposes of section 46AA, employment income, in relation to a person, is ordinary income of the person:

 (a) that is for remunerative work of the person as an employee in an employer/employee relationship; and

 (b) that includes, but is not limited to:

 (i) salary, wages, commissions and employmentrelated fringe benefits; and

 (ii) if the person is engaged on a continuing basis in that employer/employee relationship—a leave payment to the person;

but does not include:

 (c) a superannuation payment to the person; or

 (d) a payment of compensation, or a payment to the person under an insurance scheme, in relation to the person’s inability to earn, derive or receive income from that remunerative work; or

 (e) if the person is not engaged on a continuing basis in that employer/employee relationship—a leave payment to the person; or

 (f) a payment to the person by a former employer of the person in relation to the termination of the person’s employment; or

 (g) a comparable foreign pension; or

 (h) an instalment of parental leave pay.

 (2) For the purposes of subsection (1), a leave payment:

 (a) includes a payment in respect of personal/carer’s leave, annual leave, maternity leave or long service leave; and

 (b) may be made as a lump sum payment, a payment that is one of a series of regular payments or otherwise; and

 (c) is taken to be made to a person if it is made to another person:

 (i) at the direction of the person or of a court; or

 (ii) on behalf of the person; or

 (iii) for the benefit of the person; or

 (iv) if the person waives or assigns his or her right to the payment.

46ABA  Meaning of gainful work

 (1) For the purposes of this Division, gainful work is work for financial gain or reward (other than as an employee), where:

 (a) the work involves personal exertion on the part of the person concerned; and

 (b) the work is carried on within or outside Australia.

Disregard managing or administering family financial investments and real property

 (2) Work undertaken by a person is taken not to be gainful work for the purposes of this Division to the extent to which the work consists of the management or administration of any financial investment, or any real property, in which any of the following has a legal or equitable interest:

 (a) a member of the person’s family group;

 (b) a company that is a family company in relation to the person;

 (c) the trustee or trustees of a trust that is a family trust in relation to the person.

Note: For financial investment, see subsection 5J(1).

Disregard domestic duties

 (3) Work undertaken by a person is taken not to be gainful work for the purposes of this Division if the work consists of carrying out:

 (a) domestic tasks; or

 (b) household maintenance tasks; or

 (c) gardening tasks; or

 (d) similar tasks;

in relation to:

 (e) the person’s place of residence; or

 (f) if the person has 2 or more places of residence—any of those places of residence.

Definitions

 (4) For the purposes of this section, a place of residence includes:

 (a) if the place is a dwellinghouse—any land or building that is adjacent to the dwellinghouse and that is used primarily for private or domestic purposes in association with that dwellinghouse; or

 (b) if the place is a flat or home unit—a garage or storeroom that is used for private or domestic purposes in association with the flat or home unit.

 (5) In this section:

family company, in relation to a person, means a company where:

 (a) the company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of any or all of the members of the person’s family group; or

 (b) any or all of the members of the person’s family group are in a position to cast, or control the casting of, more than 50% of the maximum number of votes that may be cast at a general meeting of the company; or

 (c) both:

 (i) the company has one or more shareholders; and

 (ii) each shareholder is a member of the person’s family group.

family group, in relation to a person, means the group consisting of the person and the family members of the person. If the person has no family members, the person is taken to be a family group in the person’s own right.

Note: For family member, see subsection 5L(1).

family trust, in relation to a person, means a trust where a member of the person’s family group benefits, or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust.

46AC  Unused concession balance

Existing unused concession balances before 1 January 2024

 (1) If, immediately before 1 January 2024, a person has an unused concession balance (including a balance of nil or a retained balance under subsection (3)), the person retains that unused concession balance on 1 January 2024.

Initial unused concession balance after 1 January 2024

 (1A) A person has an unused concession balance of $4,000 on the first day that is on or after 1 January 2024 and is a day on which section 46AA applies to the person.

 (1B) Subsection (1A) does not apply on a day if the person has an unused concession balance (including a balance of nil or a retained balance under subsection (3)) immediately before that day.

Increase of unused concession balance in specified circumstances

 (1C) If:

 (a) a person ceases to receive service pension or income support supplement; and

 (b) the person retains an unused concession balance (the old balance) under subsection (3) of less than $4,000; and

 (c) neither this subsection nor subsection (1A) has previously applied in relation to the person within the most recent 2 year period that starts on or after 1 July 2024;

then, on the first day that is on or after 1 July 2024 and is a day on which section 46AA applies to the person again, the person’s unused concession balance is increased by an amount equal to the difference between the old balance and $4,000.

 (1D) Subsection (1C) does not apply if section 46AA applies to the person again following the person’s service pension or income support supplement being suspended.

Maximum unused concession balance

 (2) If, apart from this subsection, the person’s unused concession balance would exceed $11,800, that balance is instead taken to be $11,800.

Example: John has an unused concession balance of $11,700. John has $100 of work bonus income in a pension period.

 Instead of John’s unused concession balance increasing to $11,900 under subsection 46AA(4A), John’s unused concession balance increases to $11,800.

Effect of ceasing to receive service pension or income support supplement

 (3) If the person ceases to receive service pension or income support supplement, the person retains the person’s unused concession balance immediately before that cessation.

Note: If section 46AA applies to the person again, the person’s unused concession balance will be that retained balance.

46AD  No double income reductions under sections 46AA and 115G

Scope

 (1) This section applies if, apart from this section:

 (a) an amount (the initial amount) would be an excluded amount under subsection 115G(1) or (2) in respect of a veteran and a pension period; and

 (b) the veteran’s work bonus income (within the meaning of section 46AA) would be reduced by one or more amounts (each of which is a reduction amount) under section 46AA in relation to that period.

Income reduction under section 46AA

 (2) If the total of the reduction amounts is more than the initial amount:

 (a) subsection 115G(1) or (2), as the case may be, does not apply in relation to that veteran and that period; and

 (b) subsections 46AA(2) to (4A) do apply in relation to that veteran and that period.

Income reduction under section 115G

 (3) If the total of the reduction amounts is less than or equal to the initial amount:

 (a) subsections 46AA(2) to (4A) do not apply to reduce the veteran’s work bonus income in relation to that period, but they do apply for the purposes of working out any adjustment to the veteran’s unused concession balance in relation to that period (as if those reductions had occurred); and

 (b) subsection 115G(1) or (2), as the case may be, does apply in relation to that veteran and that period.

Note: Subsections 115G(1) and (2) are about excluding income amounts for certain veterans.

Example: Jim has $100 of work bonus income in a pension period. Jim’s rate of service pension or income support supplement for that period is greater than nil. Assume Jim also has an amount of $100 worked out under subsection 115G(1) in relation to that period.

 There is no reduction in Jim’s work bonus income under section 46AA for that period, but $100 is excluded under subsection 115G(1).

 Under subsection 46AA(4A), Jim’s unused concession balance is increased by $200.

Division 2Business income

46B  Ordinary income from a business—treatment of trading stock

 (1) If:

 (a) a person carries on a business; and

 (b) the value of all the trading stock on hand at the end of a tax year is greater than the value of all the trading stock on hand at the beginning of that tax year;

the person’s ordinary income for that tax year in the form of profits from the business is to include the amount of the difference in values.

 (2) If:

 (a) a person carries on a business; and

 (b) the value of all the trading stock on hand at the end of a tax year is less than the value of all the trading stock on hand at the beginning of that tax year;

the person’s ordinary income for that tax year in the form of profits from the business is to be reduced by the amount of the difference in values.

46C  Permissible reductions of business income

 (1) Subject to subsection (2), if a person carries on a business, the person’s ordinary income from the business is to be reduced by:

 (a) losses and outgoings that relate to the business and are allowable deductions for the purposes of section 81 of the Income Tax Assessment Act 1997; and

 (ba) amounts that relate to the business and can be deducted for the decline in value of depreciating assets under Subdivision 40B of the Income Tax Assessment Act 1997; and

 (c) amounts that relate to the business and are allowable deductions under section 29060 of the Income Tax Assessment Act 1997.

 (2) If, under Division 3, a person is taken to receive ordinary income on a financial investment, that ordinary income is not to be reduced by the amount of any expenses incurred by the person because of that investment.

Note: For financial investment see subsection 5J(1).

 (3) If a person’s ordinary income for a period includes rental income from a property that is not business income, the person’s ordinary income from that property is to be reduced by losses and outgoings that relate to the property and are allowable deductions for the purposes of section 81 of the Income Tax Assessment Act 1997 for that period.

 (4) If the amount of the allowable deductions relating to a property for a period under section 81 of the Income Tax Assessment Act 1997 exceeds the amount of the rental income from that property for that period, the amount of the ordinary income from the property for that period is taken to be nil.

Division 3Income from financial assets (including income streams (short term) and certain income streams (long term))

46D  Deemed income from financial assets—persons other than members of couples

 (1) This section applies to a person who is not a member of a couple.

 (2) A person who has financial assets is taken, for the purposes of this Act, to receive ordinary income on those assets in accordance with this section.

 (3) This is how to work out the ordinary income that the person is taken to receive:

Method statement

Step 1. Calculate the total value of the person’s financial assets and compare it with the person’s deeming threshold.

 Note 1: For financial assets see subsection 5J(1).

 Note 2: For deeming threshold see subsection 46H(1).

Step 2. This step applies only if the total value of the person’s financial assets is equal to or less than the person’s deeming threshold. Multiply the total value of the financial assets by the below threshold rate. The result represents the ordinary income that the person is taken to receive per year on his or her financial assets.

 Note: For below threshold rate see subsection 46J(1).

Step 3. This step applies only if the total value of the person’s financial assets is higher than the person’s deeming threshold. Work out the person’s deemed income as follows:

 (a) multiply the deeming threshold by the below threshold rate;

 (b) subtract the deeming threshold from the total value of the person’s financial assets;

 (c) multiply the remainder by the above threshold rate;

 Note: For above threshold rate see subsection 46J(2).

 (d) add up the amounts worked out at paragraph (a) and (c): the result represents the ordinary income that the person is taken to receive per year on his or her financial assets.

Example: How deemed income of a person who is not a member of a couple is worked out per year for the person’s financial assets other than financial assets described in subsection (3A) (using rates and deeming thresholds in force on 1 July 2022).

 Elaine, a single pensioner, has $164,000 worth of financial assets, made up of $150,000 in proceeds from the sale of Elaine’s principal home and $14,000 of other financial assets. Elaine intends to apply $100,000 of the proceeds of sale to purchase another residence that is to be Elaine’s principal home. The below threshold rate is 0.25%. The above threshold rate is 2.25%.

 The total value of Elaine’s financial assets ($64,000), disregarding part of the proceeds of sale ($100,000—see subsection (3A)), is higher than Elaine’s deeming threshold ($56,400—see subsection 46H(1)). So, the deeming threshold is multiplied by the below threshold rate (0.25%):

 Start formula $56,400 times start fraction 0.25 over 100 end fraction equals $141 end formula

 Elaine’s deeming threshold of $56,400 is subtracted from the total value of Elaine’s financial assets ($64,000), disregarding part of the proceeds of sale ($100,000—see subsection (3A)). The remainder is $7,600.

 The amount of $7,600 is multiplied by the above threshold rate (2.25%):

 Start formula $7,600 times start fraction 2.25 over 100 end fraction equals $171 end formula

 The ordinary income that Elaine is taken to receive on Elaine’s financial assets, other than financial assets described in subsection (3A), is $312 per year ($141 plus $171).

 (3A) However, if subsection 52(2) applies in relation to the person and:

 (a) the person has financial assets that are proceeds:

 (i) from the sale of the person’s principal home; and

 (ii) described in paragraph 52(2)(a) or (c); and

 (b) the earlier of the times mentioned in that paragraph has not occurred for the person and the proceeds;

then:

 (c) those financial assets are to be disregarded for the purposes of working out the ordinary income the person is taken to receive under subsection (3); and

 (d) the ordinary income the person is taken to receive per year on those financial assets is the amount worked out by multiplying the value of those financial assets by the below threshold rate.

Example: To continue the example in subsection (3), Elaine’s financial assets ($100,000) described in this subsection are multiplied by the below threshold rate (0.25%):

 Start formula $100,000 times start fraction 0.25 over 100 end fraction equals $250 end formula

 The ordinary income that Elaine is taken to receive on Elaine’s financial assets described in this subsection is $250 per year.

 (4) The person is taken, for the purposes of this Act, to receive one fiftysecond of the sum of the amount calculated under subsection (3) and the amount (if any) calculated under paragraph (3A)(d) as ordinary income of the person during each week.

46E  Deemed income from financial assets—members of a couple

 (1) This section applies to the members of a couple.

 (2) If one or both of the members of a couple have financial assets, the members of the couple are taken, for the purposes of this Act, to receive together ordinary income on those assets in accordance with this section.

 (3) This is how to work out the ordinary income that the couple is taken to receive:

Method statement

Step 1. Calculate the total value of the couple’s financial assets and compare it with the couple’s deeming threshold.

 Note 1: For financial assets see subsection 5J(1).

 Note 2: For deeming threshold see subsection 46H(2).

Step 2. This step applies only if the total value of the couple’s financial assets is equal to or less than the couple’s deeming threshold. Multiply the total value of the financial assets by the below threshold rate. The result represents the ordinary income that the couple is taken to receive per year on their financial assets.

 Note: For below threshold rate see subsection 46J(1).

Step 3. This step applies only if the total value of the couple’s financial assets is higher than the couple’s deeming threshold. Work out the couple’s deemed income as follows:

 (a) multiply the deeming threshold by the below threshold rate;

 (b) subtract the deeming threshold from the total value of the couple’s assets;

 (c) multiply the remainder by the above threshold rate;

 Note: For above threshold rate see subsection 46J(2).

 (d) add up the amounts worked out at paragraph (a) and (c): the result represents the ordinary income that the couple is taken to receive per year on their financial assets.

Example: How deemed income of a couple is worked out per year for the couple’s financial assets other than financial assets described in subsection (3A) (using rates and deeming thresholds in force on 1 July 2022).

 Maree and Peter, a couple, have $622,000 worth of financial assets, made up of $500,000 in proceeds from the sale of the couple’s principal home and $122,000 of other financial assets. Maree and Peter intend to apply the whole of the proceeds of sale to build another residence that is to be the couple’s principal home. The below threshold rate is 0.25%. The above threshold rate is 2.25%.

 The total value of the couple’s financial assets ($122,000), disregarding the whole of the proceeds of sale ($500,000—see subsection (3A)), is higher than the couple’s deeming threshold ($93,600—see subsection 46H(2)). So, the deeming threshold is multiplied by the below threshold rate (0.25%):

 Start formula $93,600 times start fraction 0.25 over 100 end fraction equals $234 end formula

 The couple’s deeming threshold of $93,600 is subtracted from the total value of the couple’s financial assets ($122,000), disregarding the whole of the proceeds of sale ($500,000—see subsection (3A)). The remainder is $28,400.

 The amount of $28,400 is multiplied by the above threshold rate (2.25%):

 Start formula $28,400 times start fraction 2.25 over 100 end fraction equals $639 end formula

 The ordinary income that the couple is taken to receive on the couple’s financial assets, other than financial assets described in subsection (3A), is $873 per year ($234 plus $639).

 (3A) However, if subsection 52(2) applies in relation to a member of the couple and:

 (a) the couple have financial assets that are proceeds:

 (i) from the sale of the principal home of a member of the couple; and

 (ii) described in paragraph 52(2)(a) or (c); and

 (b) the earlier of the times mentioned in that paragraph has not occurred for the member of the couple and the proceeds;

then:

 (c) those financial assets are to be disregarded for the purposes of working out the ordinary income the couple is taken to receive under subsection (3); and

 (d) the ordinary income the couple is taken to receive per year on those financial assets is the amount worked out by multiplying the value of those financial assets by the below threshold rate.

Example: To continue the example in subsection (3), Maree and Peter’s financial assets ($500,000) described in this subsection are multiplied by the below threshold rate (0.25%):

 Start formula $500,000 times start fraction 0.25 over 100 end fraction equals $1,250 end formula

 The ordinary income that the couple is taken to receive on the couple’s financial assets described in this subsection is $1,250 per year.

 (4) Each member of the couple is taken, for the purposes of this Act, to receive, as ordinary income during each week, an amount calculated according to the formula:

Start formula start fraction Sum of the amount calculated under subsection (3) and the amount (if any) calculated under paragraph (3A)(d) over 52 end fraction times 0.5 end formula

46H  Deeming threshold

 (1) The deeming threshold for a person who is not a member of a couple is $30,000.

 (2) The deeming threshold for a couple is $50,000.

Note: The amounts fixed by subsections (1) and (2) are indexed every 1 July. See sections 59A to 59C.

46J  Below threshold rate, above threshold rate

 (1) For the purposes of this Division, the below threshold rate is the rate that is the below threshold rate for the purposes of Division 1B of Part 3.10 of the Social Security Act.

 (2) For the purposes of this Division, the above threshold rate is the rate that is the above threshold rate for the purposes of Division 1B of Part 3.10 of the Social Security Act.

46K  Actual return on financial assets not treated as ordinary income

 (1) Subject to subsection (2), any return on a financial asset that a person actually earns, derives or receives is taken, for the purposes of this Act, not to be ordinary income of the person.

 (2) If, because of:

 (a) a determination under subsection 46L(1); or

 (b) the operation of subsection 46L(1A);

a financial investment is not to be regarded as a financial asset for the purposes of section 46D or 46E, subsection (1) of this section does not apply to any return on the investment that the person actually earns, derives or receives.

46L  Certain money and financial investments not taken into account

 (1) The Minister may determine that:

 (a) specified financial investments; or

 (b) a specified class of financial investments;

are not to be regarded as financial assets for the purposes of section 46D or 46E.

 (1A) If the Commission makes a determination under section 52Y in relation to a person, any unrealisable asset of the person or the person’s partner is not regarded as a financial asset for the purposes of section 46D or 46E.

 (3) A determination under subsection (1) must be in writing.

 (4) A determination under subsection (1) takes effect on the day on which it is made or on such other day (whether earlier or later) as is specified in the determination.

46M  Valuation and revaluation of certain financial investments

  The total value of a person’s listed securities and managed investments (being listed securities and managed investments that fluctuate depending on the market) (the relevant investments) is determined in accordance with the following:

 (a) an initial total valuation is to be given to the relevant investments on 1 July 1996, or when a new claim is determined, by the method set out in departmental guidelines;

 (b) that total valuation continues in effect until the relevant investments are revalued by the method set out in departmental guidelines, and that revaluation must occur:

 (i) on 20 March in each calendar year after 1996; and

 (ii) on 20 September in each calendar year after 1996; and

 (iii) when the person requests a revaluation of one or more of the person’s listed securities and managed investments; and

 (iv) following an event that affects the relevant investments and is the subject of a recipient notification notice.

Division 4Income from income streams not covered by Division 3

Subdivision BIncome streams that are not family law affected income streams

46SA  Scope of Subdivision

 (1) This Subdivision applies to income streams that are not family law affected income streams.

 (2) However, this Subdivision does not apply to:

 (a) an assettested income stream (long term) that is an accountbased pension within the meaning of the Superannuation Industry (Supervision) Regulations 1994; or

 (b) an assettested income stream (long term) that is an annuity (within the meaning of the Superannuation Industry (Supervision) Act 1993) provided under a contract that meets the requirements determined in an instrument under subsection 5J(1G) of this Act.

Note 1: For treatment of an income stream mentioned in subsection (2), see Division 3.

Note 2: Part 2 of Schedule 11 to the Social Services and Other Legislation Amendment Act 2014 preserves the rules in this Subdivision for a certain kind of income stream that was being provided to a person immediately before 1 January 2015 where the person was receiving an income support payment immediately before that day provided that, since that day, that income stream has been provided to the person and the person has been continuously receiving an income support payment.

46T  Income from assettest exempt income stream

 (1) For the purpose of working out the annual rate of ordinary income of a person from an assettest exempt income stream to which this Subdivision applies, the person is taken to receive from that income stream each year the amount worked out under section 46U or 46V.

Note: For assettest exempt income stream see sections 5JA, 5JB and 5JBA.

 (2) Sections 46U and 46V do not apply if:

 (a) the income stream is covered by subsection 5JBA(1); or

 (b) on the income stream’s commencement day, there was a reasonable likelihood that the income stream would have been covered by subsection 5JBA(1), but the income stream is no longer covered by that subsection.

Note: See section 46VA.

46U  Income—income stream not a defined benefit income stream

  If the assettest exempt income stream to which this Subdivision applies is not a defined benefit income stream, the amount that the person is taken to receive from the income stream each year is worked out as follows:

Start formula Annual payment minus start fraction Purchase price over Relevant number end fraction end formula

where:

annual payment means the amount payable to the person for the year under the income stream.

purchase price has the meaning given by subsection 5J(1).

relevant number has the meaning given by subsection 5J(1).

Example: Mark is 65 years old and single. He purchases an annuity for $100,000 with a term based on life expectancy (i.e. 15.41 years, which he chooses to round up to 16 years). The annuity has all the revised characteristics listed in the legislation. His annual payment from the annuity totals $9,895. Mark’s assessable income from this income stream is:

Start formula $9,895 minus open bracket start fraction $100,000 over 16 years end fraction close bracket equals $3,645 end formula

46V  Income—income stream is a defined benefit income stream

  If the assettest exempt income stream to which this Subdivision applies is a defined benefit income stream, the amount that the person is taken to receive from the income stream each year is worked out as follows:

Start formula Annual payment minus Deductible amount end formula

where:

annual payment means the amount payable to the person for the year under the income stream.

deductible amount has the meaning given by subsection 5J(1).

46VA  Income from marketlinked assettest exempt income stream

 (1) If either of the following conditions is satisfied in relation to the assettest exempt income stream to which this Subdivision applies:

 (a) the income stream is covered by subsection 5JBA(1);

 (b) on the income stream’s commencement day, there was a reasonable likelihood that the income stream would have been covered by subsection 5JBA(1), but the income stream is no longer covered by that subsection;

the annual rate of ordinary income of a person from the income stream is worked out under whichever of subsections (2) and (3) is applicable.

Recipient makes election

 (2) If:

 (a) the person has elected that a particular amount is to be the payment, or the total of the payments, to be made under the income stream in respect of a period (the payment period) that:

 (i) consists of the whole or a part of a particular financial year; and

 (ii) begins on or after the income stream’s commencement day; and

 (b) the election is in force on a particular day in the payment period;

the annual rate of ordinary income of the person from the income stream on that day is worked out using the following formula:

Start formula open square bracket start fraction Total payments over Days in payment period end fraction minus start fraction Purchase price over Relevant number times 365 end fraction close square bracket times 365 end formula

where:

purchase price has the meaning given by subsection 5J(1).

relevant number has the meaning given by subsection 5J(1).

total payments means the payment, or the total of the payments, to be made under the income stream in respect of the payment period.

Recipient does not make election

 (3) If the person has not elected that a particular amount is to be the payment, or the total of the payments, to be made under the income stream in respect of a period (the payment period) that:

 (a) consists of the whole or a part of a particular financial year; and

 (b) begins on or after the income stream’s commencement day;

the annual rate of ordinary income of the person from the income stream on each day during the payment period is worked out using the following formula:

Start formula open square bracket start fraction Default amount over Days in payment period end fraction minus start fraction Purchase price over Relevant number times 365 end fraction close square bracket time 365 end formula

where:

default amount means 100% of the amount worked out for the financial year using the formula in subsection 5JBA(5) (for prorating, see subsection (4)).

purchase price has the meaning given by subsection 5J(1).

relevant number has the meaning given by subsection 5J(1).

 (4) If the income stream’s commencement day is not a 1 July, the default amount (within the meaning of subsection (3)) for the financial year starting on the preceding 1 July must be reduced on a prorata basis by reference to the number of days in the financial year that are on and after the commencement day.

Exception—income stream’s commencement day happens in June

 (5) If:

 (a) the income stream’s commencement day happens in June; and

 (b) no payment is made under the income stream for the financial year in which the commencement day happens;

subsections (2), (3) and (4) do not apply in working out the annual rate of ordinary income of the person from the income stream on a day in that financial year.

46W  Income from assettested income stream (long term)

 (1) For the purpose of working out the annual rate of ordinary income of a person from an assettested income stream (long term) to which this Subdivision applies, the person is taken to receive from that income stream each year the amount worked out under section 46X or 46Y.

 (2) Sections 46X and 46Y do not apply to an income stream if section 46YA applies to the income stream.

46X  Income—assettested income stream (long term) that is not a defined benefit income stream

  If the assettested income stream (long term) to which this Subdivision applies is not a defined benefit income stream, the amount that the person is taken to receive from the income stream each year is worked out as follows:

Start formula Annual payment minus open bracket start fraction Purchase price minus Residual capital value over Relevant number end fraction close bracket end formula

where:

annual payment means the amount payable to the person for the year under the income stream.

purchase price has the meaning given by subsection 5J(1).

relevant number has the meaning given by subsection 5J(1).

residual capital value has the meaning given by subsection 5J(1).

Note: For treatment of assettested income streams (short term) see Division 3 of Part IIIB.

Example: Sally is 65 years old and single. She purchases a 10 year annuity for $150,000, with a residual capital value of $20,000. Her total annual annuity payment is $18,337. Sally’s assessable income from her 10 year annuity is:

Start formula $18,337 minus start fraction $150,000 minus $20,000 over 10 end fraction equals $5,337 end formula

46Y  Income—assettested income stream (long term) that is a defined benefit income stream

  If the assettested income stream (long term) to which this Subdivision applies is a defined benefit income stream, the amount that the person is taken to receive from the income stream each year is worked out as follows:

Start formula Annual payment minus Deductible amount end formula

where:

annual payment means the amount payable to the person for the year under the income stream.

deductible amount has the meaning given by subsection 5J(1).

46YA  Income from certain lowpayment assettested income streams

 (1) If:

 (a) an income stream is an assettested income stream (long term) to which this Subdivision applies; and

 (b) the income stream is an allocated pension within the meaning of the Superannuation Industry (Supervision) Regulations 1994; and

 (c) one or more payments have been, or are to be, made under the income stream in respect of a period (the payment period) that:

 (i) consists of the whole or a part of a financial year; and

 (ii) begins on or after the income stream’s commencement day; and

 (d) on a day in the payment period, the amount worked out using the formula in subsection (2) is less than the amount worked out using the formula in subsection (3);

the annual rate of ordinary income of a person from the income stream on that day is worked out under subsection (3).

Annual rate based on total payments

 (2) For the purposes of paragraph (1)(d), the formula in this subsection is:

Start formula open square bracket start fraction Total payments over Days in payment period end fraction minus start fraction Purchase price over Relevant number times 365 end fraction close square bracket times 365 end formula

where:

purchase price has the meaning given by subsection 5J(1).

relevant number has the meaning given by subsection 5J(1).

total payments means the payment, or the total of the payments, made, or to be made, under the income stream in respect of the payment period.

Annual rate based on minimum amount

 (3) For the purposes of paragraph (1)(d), the formula in this subsection is:

Start formula open bracket start fraction Minimum amount over Days in payment period end fraction minus start fraction Purchase price over Relevant number times 365 end fraction close bracket times 365 end formula

where:

minimum amount means the minimum amount calculated in accordance with the method determined, by legislative instrument, by the Minister for the purposes of this definition.

purchase price has the meaning given by subsection 5J(1).

relevant number has the meaning given by subsection 5J(1).

Exception—income stream’s commencement day happens in June

 (4) If:

 (a) the income stream’s commencement day happens in June; and

 (b) no payment is made under the income stream for the financial year in which the commencement day happens;

subsections (2) and (3) do not apply in working out the annual rate of ordinary income of the person from the income stream on a day in that financial year.

46YB  Income—assettested income stream (lifetime)

  If the income stream is an assettested income stream (lifetime), the amount that the person is taken to receive from the income stream each year is worked out as follows:

Start formula Annual payment times 0.6 end formula

where:

annual payment means the amount payable to the person for the year under the income stream.

Subdivision CFamily law affected income streams

46Z  Scope of Subdivision

 (1) This Subdivision applies to family law affected income streams.

 (2) However, this Subdivision does not apply to:

 (a) an assettested income stream (long term) that is an accountbased pension within the meaning of the Superannuation Industry (Supervision) Regulations 1994; or

 (b) an assettested income stream (long term) that is an annuity (within the meaning of the Superannuation Industry (Supervision) Act 1993) provided under a contract that meets the requirements determined in an instrument under subsection 5J(1G) of this Act.

Note 1: For treatment of an income stream mentioned in subsection (2), see Division 3.

Note 2: Part 2 of Schedule 11 to the Social Services and Other Legislation Amendment Act 2014 preserves the rules in this Subdivision for a certain kind of income stream that was being provided to a person immediately before 1 January 2015 where the person was receiving an income support payment immediately before that day provided that, since that day, that income stream has been provided to the person and the person has been continuously receiving an income support payment.

46ZA  Income from assettest exempt income streams

 (1) For the purpose of working out the annual rate of ordinary income of a person from an assettest exempt income stream to which this Subdivision applies, the person is taken to receive from that income stream each year:

 (a) if the income stream is not a defined benefit income stream—the amount determined by the Commission under this paragraph; or

 (b) if the income stream is a defined benefit income stream—the amount determined by the Commission under this paragraph.

 (2) In making a determination under paragraph (1)(a) or (b), the Commission must comply with any relevant decisionmaking principles in force under section 46ZC.

46ZB  Income from assettested income stream (long term)

 (1) For the purpose of working out the annual rate of ordinary income of a person from an assettested income stream (long term) to which this Subdivision applies, the person is taken to receive from that income stream each year:

 (a) if the income stream is not a defined benefit income stream—the amount determined by the Commission under this paragraph; or

 (b) if the income stream is a defined benefit income stream—the amount determined by the Commission under this paragraph.

 (2) In making a determination under paragraph (1)(a) or (b), the Commission must comply with any relevant decisionmaking principles in force under section 46ZC.

46ZBA  Income from assettested income stream (lifetime)

 (1) For the purpose of working out the annual rate of ordinary income of a person from an assettested income stream (lifetime) to which this Subdivision applies, the person is taken to receive from that income stream each year the amount determined by the Commission under this subsection.

 (2) In making a determination under subsection (1), the Commission must comply with any relevant decisionmaking principles in force under section 46ZC.

46ZC  Decisionmaking principles

  The Commission may, by legislative instrument, formulate principles (decisionmaking principles) to be complied with by it in making decisions under:

 (a) paragraph 46ZA(1)(a); or

 (b) paragraph 46ZA(1)(b); or

 (c) paragraph 46ZB(1)(a); or

 (d) paragraph 46ZB(1)(b); or

 (e) subsection 46ZBA(1).

Division 6Income tests—conversion of foreign currency amounts

47  Application of Division

 (1) The Commission may determine in writing that this Division applies in relation to a foreign currency.

 (2) This Division applies in relation to a foreign currency in relation to which a determination under subsection (1) is in force.

 (3) This Division applies for the purposes of the Rate Calculator.

47A  Conversion of foreign currency amounts

  The value in Australian currency of a payment received by a person in foreign currency is to be worked out using:

 (a) if section 47C applies—the reassessed exchange rate; or

 (b) in any other case—the base exchange rate (see section 47B).

47B  Base exchange rate

  The base exchange rate for a foreign currency for a foreign exchange period is the average (calculated to 4 decimal places) of the actual market exchange rates available on each working day of the first month of the year to start during the immediately preceding foreign exchange period.

47C  Reassessed exchange rate

 (1) If for 10 consecutive working days:

 (a) starting after a month of the year in relation to which section 47B operates; and

 (b) ending before the next month of the year in relation to which section 47B operates;

the actual market exchange rate available differs, by at least 10%, from:

 (c) unless paragraph (d) applies—the base exchange rate for the next foreign exchange period; or

 (d) if a reassessed exchange rate has already been worked out under this subsection for the purposes of the next foreign exchange period—the last reassessed exchange rate so worked out;

the reassessed exchange rate for a foreign currency is the average (calculated to 4 decimal places) of the actual market exchange rates available on those consecutive working days.

 (2) Subsection (1) does not apply to a working day if the actual market exchange rate available on that day has been used to work out a reassessed exchange rate in a previous application of that subsection.

47D  Applicability of reassessed exchange rate

 (1) The Commission must determine in writing the day on which a reassessed exchange rate becomes applicable.

 (2) The day determined under subsection (1) is to be no later than 6 weeks after the tenth consecutive working day covered by subsection 47C(1).

 (3) A reassessed exchange rate:

 (a) becomes applicable on the day determined under subsection (1), unless a new reassessed exchange rate has already become applicable; and

 (b) remains applicable until:

 (i) a new reassessed exchange rate becomes applicable; or

 (ii) the commencement of the next exchange period the base exchange rate for which has been worked out by reference to working days later than those by reference to which the reassessed exchange rate was worked out.

47E  Rounding off exchange rates

  If an exchange rate worked out under this Division would, if it were calculated to 5 decimal places, end in a number greater than 4, the rate worked out is to be taken to be the rate calculated to 4 decimal places and increased by 0.0001.

Division 7Income tests—disposal of ordinary income

48  Disposal of ordinary income

 (1) For the purposes of this Act, a person disposes of ordinary income of the person if the person engages in a course of conduct that diminishes, directly or indirectly, the rate of the person’s ordinary income and either:

 (a) the person receives no consideration in money or money’s worth for the diminution; or

 (b) the person receives inadequate consideration in money or money’s worth for the diminution; or

 (c) the Commission is satisfied that the purpose, or the dominant purpose, of the person in engaging in that course of conduct was:

 (i) to obtain or enable the person’s partner to obtain a service pension, income support supplement, a veteran payment or a social security pension or benefit; or

 (ii) to obtain or enable the person’s partner to obtain a service pension, income support supplement, a veteran payment or a social security pension or benefit at a higher rate than that which would otherwise have been payable; or

 (iii) to ensure that the person or the person’s partner would be eligible for benefits under Division 12 of this Part or fringe benefits under the Social Security Act.

Note: For amount of disposition see section 48A.

 (2) Subsection (1) does not apply to a course of conduct consisting of the provision of shortterm or longterm residential accommodation to a family member of the person for no payment or payment less than the market value of the provision of the accommodation.

Note: For family member see subsection 5L(1).

48A  Amount of disposition

  If a person disposes of ordinary income, the amount of the disposition is the amount that, in the Commission’s opinion, is:

 (a) if the person receives no consideration for the diminution in the rate of the person’s ordinary income—the annual rate of the diminution of the person’s ordinary income; or

 (b) if the person receives consideration for the diminution in the rate of the person’s ordinary income—the annual rate of the diminution less the part (if any) of the consideration that the Commission determines, in writing, to be fair and reasonable in all the circumstances of the case.

48B  Disposal of ordinary income—not a member of a couple

  If a person who is not a member of a couple has, on or after 1 June 1984, disposed of ordinary income of the person, the amount of that disposition is to be included in the person’s ordinary income for the purposes of this Act.

Note 1: For disposes of income see section 48.

Note 2: For amount of disposition see section 48A.

Note 3: For ordinary income see subsection 5H(1): ordinary income includes investment income but does not include maintenance income.

48C  Disposal of ordinary income—members of couples

 (1) Subject to subsections (2), (3) and (4), if a person who is a member of a couple has, on or after 1 June 1984, disposed of ordinary income of the person:

 (a) 50% of the amount of the disposition is to be included in the person’s ordinary income; and

 (b) 50% of the amount of the disposition is to be included in the person’s partner’s ordinary income.

Note 1: For disposes of income see section 48.

Note 2: For amount of disposition see section 48A.

 (2) If:

 (a) amounts are included under subsection (1) in the ordinary income of a person who is a member of a couple and in the person’s partner’s ordinary income because the person has disposed of ordinary income; and

 (b) the person and the person’s partner cease to be members of the same couple;

any amount that was included in the ordinary income of the person’s former partner because of the disposition is to be included in the person’s ordinary income.

 (3) If:

 (a) amounts are included under subsection (1) in the ordinary income of a person who is a member of a couple and in the person’s partner’s ordinary income because the person has disposed of ordinary income; and

 (b) the person dies;

no amount is to be included in the ordinary income of the person’s partner because of the disposition.

 (4) If:

 (a) an amount is included under subsection (1) in the ordinary income of a person who is a member of a couple and in the person’s partner’s ordinary income because the person has disposed of ordinary income; and

 (b) the person’s partner dies;

any amount that would, if the person’s partner had not died, be included in the ordinary income of the person’s partner because of the disposition is to be included in the person’s ordinary income.

Note: For ordinary income see subsection 5H(1): ordinary income includes investment income but does not include maintenance income.

48E  Dispositions more than 5 years old to be disregarded

  This Division does not apply to a disposition of ordinary income that took place:

 (a) more than 5 years before the time when:

 (i) the person who disposed of the ordinary income; or

 (ii) if the person who disposed of the ordinary income was, at the time of disposition, a member of a couple—the person’s partner;

  became eligible to receive a service pension, income support supplement or a veteran payment; or

 (b) less than 5 years before the time referred to in paragraph (a) and before the time when the Commission is satisfied that the person who disposed of the ordinary income could reasonably have expected that the person or the person’s partner would become eligible to receive a service pension, income support supplement or a veteran payment.

Division 9Selfemployment programs

50  General effect of Division

  This Division adjusts the service pension rate, income support supplement rate or veteran payment rate of a person who is receiving, or whose partner is receiving, payments under a selfemployment program.

Note: Payments under a selfemployment program do not count as ordinary income for the purposes of the ordinary income test: see paragraph 5H(8)(x).

50A  Reduction in rate of payments under this Part if recipient or partner also receiving payments under a selfemployment program

 (1) If:

 (a) an instalment of service pension, income support supplement or veteran payment is payable to a person during a pension period; and

 (b) a payment under a selfemployment program is payable to the person during that pension period;

the rate of the payment referred to in paragraph (a) is to be reduced under this Division.

 (2) If:

 (a) an instalment of age or invalidity service pension or veteran payment is payable to a person during a pension period; and

 (b) a payment under a selfemployment program is payable to the person during that pension period; and

 (c) an instalment of partner service pension or veteran payment in respect of the person is payable to the person’s partner during a pension period;

the rate of the partner’s payment is also to be reduced under this Division.

 (3) If:

 (a) an instalment of income support supplement or veteran payment is payable to a person during a pension period; and

 (b) a payment under a selfemployment program is payable to the person during that pension period; and

 (c) an instalment of:

 (i) age service pension; or

 (ii) invalidity service pension; or

 (iii) veteran payment;

  is payable to the person’s partner during a pension period;

the rate of the partner’s payment is also to be reduced under this Division.

50B  Rate reduction under this Division

 (1) Subject to subsection (2), if a person’s rate of payment under Part III or IIIA, or rate of veteran payment, is to be reduced under this Division because of a payment under a selfemployment program (a selfemployment program payment), the amount of rate reduction is to be equal to the amount of the selfemployment program payment.

 (2) If:

 (a) a person’s rate of payment under Part III or IIIA, or rate of veteran payment, is to be reduced under this Division because of a selfemployment program payment; and

 (b) the person’s partner’s rate of payment under Part III or IIIA, or rate of veteran payment, is also to be reduced under this Division (see subsection 50A(2) or (3)) because of the selfemployment program payment;

the amount of rate reduction for both the person and the person’s partner is to be equal to 50% of the amount of the selfemployment program payment.

 (3) A person’s rate of payment under Part III or IIIA, or rate of veteran payment, is not to be reduced below nil under subsection (1) or (2).

Division 11General provisions relating to the assets test

Subdivision AValue of person’s assets

52  Certain assets to be disregarded in calculating the value of a person’s assets

 (1) In calculating the value of a person’s assets for the purposes of this Act (other than sections 52G, 52H, 52JA, 52JB, 52JC, 52JD, 52ZA and 52ZCA), disregard the following:

 (a) if the person is not a member of a couple—the value of any right or interest of the person in the person’s principal home that is a right or interest that gives the person reasonable security of tenure in the home;

 (b) if the person is a member of a couple—the value of any right or interest of the person in one residence that is the principal home of the person, of the person’s partner or of both of them that is a right or interest that gives the person or the person’s partner reasonable security of tenure in the home;

 (c) the value of any life interest of the person other than:

 (i) a life interest in the principal home of the person, of the person’s partner or of both of them; or

 (ii) a life interest created by the person, by the person’s partner or by both of them; or

 (iii) a life interest created on the death of the person’s partner;

Note: The exclusion from paragraph (1)(c) of the value of a person’s life interest mentioned in subparagraph (i), (ii) or (iii) does not result in the value of the interest being included in the person’s assets if the interest falls within paragraph (1)(a) or (b).

 (d) the value of any assettest exempt income stream of the person, other than a partially assettest exempt income stream;

 (daa) half of the value of any partially assettest exempt income stream of the person;

Note: For partially assettest exempt income stream, see subsection (1AA).

 (da) the value of any foreign superannuation pension of the person;

 (e) any amount that is:

 (i) received by the person within the immediately preceding period of 90 days; and

 (ii) is excluded from the definition of income in subsection 5H(1) by subsection 5H(4) or (5);

 (f) the value of the person’s investment in:

 (i) a superannuation fund; or

 (ii) an approved deposit fund; or

 (iiia) an ATO small superannuation account;

  until the person:

 (iv) reaches pension age; or

 (v) commences to receive a pension or annuity out of the fund;

Note: Some investments in superannuation funds, approved deposit funds and ATO small superannuation accounts may be disregarded—see section 52AA.

 (fa) if:

 (i) the person has a granny flat interest in the person’s principal home; and

 (ii) the granny flat interest gives the person reasonable security of tenure in the home; and

 (iii) the person acquired or retained the granny flat interest before 22 August 1990;

  the value of the granny flat interest;

 (fb) if:

 (i) the person has a granny flat interest in the person’s principal home; and

 (ii) the person is a person to whom subsection 52Q(2), 52R(2), 52S(2), 52S(5), 52T(2), 52U(2) or 52V(2) applies;

  the value of the granny flat interest;

Note: A person described in subparagraph (ii) will have acquired or retained the granny flat interest on or after 22 August 1990 (see section 52KA).

 (fc) if:

 (i) the person is a sale leaseback resident; and

 (ii) the person is a person to whom subsection 52Q(2), 52R(2), 52S(2), 52S(5), 52T(2), 52U(2) or 52V(2) applies;

  the value of any right or interest of the person in the sale leaseback home;

 (g) the value of any contingent, remainder or reversionary interest of the person (other than an interest created by the person, by the person’s partner or by both of them);

 (h) the value of any assets (other than a contingent, remainder or reversionary interest) to which the person is entitled from the estate of a deceased person but which has not been, and is not able to be, received;

 (i) the value of any medal or other decoration awarded (whether to the person or another person) for valour that is owned by the person otherwise than for the purposes of investment or a hobby;

 (j) the value of:

 (i) any cemetery plot acquired by the person for the burial of the person or the person’s partner; and

 (ii) any funeral expenses paid in advance by the person in respect of the funeral of the person or the person’s partner;

 (ja) an amount invested in an exempt funeral investment and any return on the investment;

Note: For exempt funeral investment see section 5PC.

 (k) if:

 (i) personal property of the person is designed for use by a disabled person; and

 (ii) the person, the person’s partner or a child who is dependent on the person or the person’s partner is disabled;

  the value of the property;

 (l) if:

 (i) personal property of the person is modified so that it can be used by a disabled person; and

 (ii) the person, the person’s partner or a child who is dependent on the person or the person’s partner is disabled;

  the part of the value of the property that is attributable to the modifications;

 (m) if the person is provided with a motor vehicle under the Vehicle Assistance Scheme—the value of that motor vehicle;

 (ma) if the person is provided with a motor vehicle under the Motor Vehicle Compensation Scheme under section 212 of the MRCA—the value of that motor vehicle;

 (n) if the person has sold a residence that was the principal home of the person on terms and has purchased, also on terms, another residence that is the principal home of the person—so much of the balance due to the person in respect of the sale as will be applied by the person in respect of the purchase of the other residence;

Note: For principal home and other assets test definitions, see sections 5L and 5LA.

 (o) the amount of any insurance or compensation payments received by the person because of the loss of, or damage to, buildings, plant or personal effects within the immediately preceding 12 months, or such longer period as the Commission determines for any special reason for a particular payment;

Note: The payments in paragraph (o) are not income for the purposes of this Act (see paragraph 5H(8)(q)).

 (oa) if subsection (1C) applies (application of insurance etc. payments to rebuilding etc.)—the amount worked out under that subsection, during the period mentioned in subsection (1D);

 (oaa) if a person has received an NDIS amount—the amount worked out under subsection (1DAA);

 (ob) the value of any native title rights and interests of the person, or of a community or group of which the person is a member;

 (p) the amount of any accommodation bond balance in respect of an accommodation bond paid by the person;

 (pa) the amount of any refundable deposit balance in respect of a refundable deposit paid by the person;

 (q) the amount (if any) that the person has retained from a payment made to the person by the Mark Fitzpatrick Trust.

Definitions

 (1AA) For the purposes of paragraphs (1)(d) and (daa):

partially assettest exempt income stream means:

 (a) an assettest exempt income stream that:

 (i) is an income stream (other than a defined benefit income stream) covered by subsection 5JA(1) or (1A), 5JB(1) or 5JBA(1); and

 (ii) has a commencement day during the period from 20 September 2004 to 19 September 2007 (both dates inclusive); and

 (iii) is not covered by principles (if any) determined for the purposes of this subparagraph, by legislative instrument, by the Commission; or

 (b) an income stream that:

 (i) has a commencement day happening on or after 20 September 2007; and

 (ii) is covered by principles determined for the purposes of this subparagraph, by legislative instrument, by the Commission.

 (1AB) The Commission may determine principles for the purposes of subparagraph (a)(iii) of the definition of partially assettest exempt income stream in subsection (1AA).

 (1AC) The Commission may determine principles for the purposes of subparagraph (b)(ii) of the definition of partially assettest exempt income stream in subsection (1AA).

 (1A) For the purposes of the application of this section in relation to income support supplement, the reference in subparagraph (1)(f)(iv) to pension age is taken to be a reference to the qualifying age.

Note: For qualifying age see section 5Q.

Application of insurance etc. payments to rebuilding etc.

 (1B) Subsection (1C) applies if:

 (a) a person receives any insurance or compensation payments because of loss of or damage to a building (including the person’s principal home) or plant; and

 (b) either:

 (i) if the building or plant was lost—the person applies the whole or a part of those payments to build another building or plant to replace the building or plant that was lost; or

 (ii) if the building or plant was damaged—the person applies the whole or a part of those payments to rebuild, repair or renovate the building or plant.

 (1C) For the purposes of paragraph (1)(oa), the amount that may be disregarded is:

 (a) the value of the building or plant that is being built, rebuilt, repaired or renovated, to the extent that those payments are so applied; and

 (b) if a building whose value is being disregarded under paragraph (a) of this subsection is to be the person’s principal home:

 (i) the value of the land on which the building is being built, rebuilt, repaired or renovated to the extent that, once the building becomes the person’s principal home, the land will, under section 5LA, be included in a reference to the principal home; and

 (ii) the value of any other structure, on that land, that is to be the person’s principal home to the extent that the structure was built before the person began applying the payments.

 (1D) For the purposes of paragraph (1)(oa), the amount worked out under subsection (1C) may be disregarded during the period:

 (a) beginning when the payments are received; and

 (b) ending at the earlier of the following times:

 (i) 12 months, or such longer period as the Commission determines for any special reason, after that time;

 (ii) when the building, rebuilding, repair or renovation of the building or plant is complete.

NDIS amounts

 (1DAA) For the purposes of paragraph (1)(oaa), the amount that may be disregarded is the value of the sum of:

 (a) the NDIS amounts received by the person; and

 (b) any return on those amounts that the person earns, derives or receives;

less the sum of the amounts spent by the person in accordance with an NDIS plan (whether in the person’s capacity as an NDIS participant or as a person managing the funding under an NDIS plan for an NDIS participant).

Native title rights and interests

 (1DA) In this section:

native title rights and interests means:

 (a) native title rights and interests within the meaning of section 223 of the Native Title Act 1993; or

 (b) any rights and interests of a similar nature under any law of a State, a Territory or a foreign country (whether or not the rights and interests relate to land or waters outside Australia);

but, to avoid any doubt, does not include any right or interest in a lease or licence, or in a freehold estate.

Application of proceeds of sale of principal home

 (1E) Subsection (2) applies if:

 (a) a person sells the person’s principal home; and

 (b) either:

 (i) the person does not have a right or interest in a principal home; or

 (ii) the person has a right or interest in a principal home that does not give the person reasonable security of tenure in the home; and

 (c) before the end of 24 months, or any longer period determined under subsection (2A), after the sale, one or more of the following applies:

 (i) the person intends to apply the whole or a part of the proceeds of the sale to build, rebuild, repair or renovate another residence that is to be the person’s principal home;

 (ii) the person applies the whole or a part of the proceeds of the sale to build, rebuild, repair or renovate another residence that is to be the person’s principal home;

 (iii) the person intends to apply the whole or a part of the proceeds of the sale to purchase another residence that is to be the person’s principal home.

 (2) For the purposes of this Part (other than Subdivision B of this Division and Division 3):

 (a) if subparagraph (1E)(c)(i) applies—disregard the proceeds, to the extent that the person intends to apply those proceeds to build, rebuild, repair or renovate the other residence, until the earlier of the following times:

 (i) the period mentioned in paragraph (1E)(c) ends;

 (ii) the Commission becomes satisfied that the person has ceased to have that intention; or

 (b) if subparagraph (1E)(c)(ii) applies—disregard the value of the following, until the end of the period mentioned in paragraph (1E)(c), to the extent that the person applies those proceeds to build, rebuild, repair or renovate that other residence:

 (i) the value of the other residence;

 (ii) the value of the land on which the other residence is being built, rebuilt, repaired or renovated to the extent that, once the building becomes the person’s principal home, the land will, under section 5LA, be included in a reference to the principal home;

 (iii) the value of any other structure, on that land, that is to be the person’s principal home to the extent that the structure was built before the person began applying those proceeds; or

 (c) if subparagraph (1E)(c)(iii) applies—disregard the proceeds, to the extent that the person intends to apply those proceeds to purchase the other residence, until the earlier of the following times:

 (i) the period mentioned in paragraph (1E)(c) ends;

 (ii) the Commission becomes satisfied that the person has ceased to have that intention.

 (2A) For the purposes of subsection (1E), the Commission may determine, in writing, a period of up to 36 months if:

 (a) a person who has sold his or her principal home is making reasonable attempts to purchase, build, repair or renovate another residence; and

 (b) the person has been making those attempts within a reasonable period after selling the principal home; and

 (c) the person has experienced delays beyond his or her control in purchasing, building, repairing or renovating the other residence.

Value of certain personal effects of less than $10,000

 (3) For the purposes of this section, where:

 (a) the value of any assets of a person or, if the person is a member of a couple, of the person and the person’s partner, that consists of the contents of a principal home and of other personal effects that are used primarily within the principal home does not exceed $10,000; and

 (b) the assets are used primarily for private or domestic purposes;

the value of the assets is to be taken to be $10,000 unless the person satisfies the Commission that the value of the assets is less than $10,000.

This section subject to sections 52KA to 52X

 (4) This section has effect subject to sections 52KA to 52X (special residences).

Note: The total value of the person’s assets may be reduced in some circumstances if the person has an exempt bond amount (see clause 15 of Schedule 5) or a refunded amount (see clause 17D of Schedule 5).

52AA  Value of superannuation investments determined by Minister to be disregarded

 (1) The value of a person’s investment in a superannuation fund, an approved deposit fund or an ATO small superannuation account is to be disregarded in calculating the value of the person’s assets for the purposes of this Act (other than Division 3 or section 52FA, 52G, 52GA, 52H, 52JA, 52JB, 52JC, 52JD, 52ZA or 52ZCA) if the investment is specified in a determination made under subsection (2).

 (2) The Minister may specify:

 (a) a specified investment in a superannuation fund, an approved deposit fund or an ATO small superannuation account; or

 (b) a specified class of investments in a superannuation fund, an approved deposit fund or an ATO small superannuation account;

in a determination.

 (3) A determination must be in writing.

 (4) A determination takes effect on the day on which it is made or on such other day (whether earlier or later) as is specified in the determination.

52A  Value of assettested income streams that are not defined benefit income streams, assettested income streams (lifetime) or family law affected income streams

 (1) This section applies to a person’s assettested income stream if it is not a defined benefit income stream, it is not an assettested income stream (lifetime) and it is not a family law affected income stream.

Note: For defined benefit income streams, see section 52B. For assettested income streams (lifetime), see sections 52BAA and 52BAB. For family law affected income streams, see section 52BA.

 (2) The value of the income stream is, for the purposes of the assets test, worked out:

 (a) if the person receives payments from the income stream 2 or more times a year—in relation to each 6 month period of the income stream’s term; and

 (b) if the person receives a payment from the income stream only once a year—in relation to each 12 month period of the income stream’s term.

 (3) If the income stream has an account balance, the value of the income stream, for the purposes of the assets test, is the value of the account balance at the beginning of the 6 month or 12 month period (as the case requires) referred to in subsection (2).

 (4) If the income stream does not have an account balance, the value of the income stream is, for the purposes of the assets test, worked out as follows:

Start formula Purchase price minus open square bracket open round bracket start fraction Purchase price minus Residual capital value over Relevant number end fraction close round bracket times Term elapsed close square bracket end formula

where:

purchase price has the meaning given by subsection 5J(1).

relevant number has the meaning given by subsection 5J(1).

residual capital value has the meaning given by subsection 5J(1).

term elapsed is the number of years of the term that have elapsed since the commencement day of the income stream, rounded down:

 (a) in the case of an income stream referred to in paragraph (2)(a)—to the nearest halfyear; and

 (b) in the case of an income stream referred to in paragraph (2)(b)—to the nearest whole year.

Example: Sally is 65 years old and single. She purchases a 10 year annuity for $150,000 with a residual capital value of $20,000. Her total annual annuity payment is $18,337. Monthly payments commence on 1 January. Her assessable asset for the first six months will be:

Start formula $150,000 minus open square bracket open round bracket start fraction $150,000 minus $20,000 over 10 years end fraction close round bracket times 0 year close square bracket equals $150,000 end formula

 Her assessable asset after 30 June in that year will be:

Start formula $150,000 minus open square bracket open round bracket start fraction $150,000 minus $20,000 over 10 years end fraction close round bracket times 0.5 year close square bracket equals $143,500 end formula

52B  Value of assettested income streams that are defined benefit income streams

 (1) This section applies to a person’s assettested income stream if it is a defined benefit income stream and it is not a family law affected income stream.

Note: For family law affected income streams, see section 52BA.

 (2) The value of the income stream is, for the purposes of the assets test, worked out in relation to each 12 month period of the income stream’s term.

 (3) The value of the income stream is, for the purposes of the assets test, worked out as follows:

Start formula Annual payment times Pension valuation factor end formula

where:

annual payment means the amount payable to the person for the relevant 12 month period under the income stream.

pension valuation factor means the pension valuation factor that applies to the person in accordance with the determination made by the Minister under subsection (4).

 (4) The Minister must, by legislative instrument, make a determination for the purposes of the definition of pension valuation factor in subsection (3).

52BAA  Value of assettested income streams (lifetime) that are managed investments

 (1) This section applies to a person’s assettested income stream (lifetime), that does not arise under arrangements that are regulated by the Superannuation Industry (Supervision) Act 1993, in relation to a day that is before the person’s assessment day (within the meaning of section 52BAB) for the income stream.

Note: For assettested income stream (lifetime), see subsection 5J(1).

 (2) However, this section does not apply to a family law affected income stream.

Note: For family law affected income streams, see section 52BA.

Value of income stream

 (3) Subject to this section, the value of the person’s income stream is, for the purposes of the assets test, the purchase amount for the income stream.

Purchase amount

 (4) For the purposes of this section, the purchase amount for the income stream is:

 (a) subject to paragraph (b)—if one or more amounts have been paid for the income stream, the sum of each compounded amount in relation to an amount paid for the income stream, as worked out under subsection (5), less any commuted amounts; or

 (b) if the circumstances determined in an instrument under subsection (7) apply in relation to the income stream—the amount worked out in accordance with that instrument.

 (5) A compounded amount in relation to an amount paid for the income stream is worked out by applying the following formula for each relevant adjustment day (from the earliest to the latest):

Start formula Compounded amount for the relevant adjustment day times open bracket 1 plus Relevant above threshold rate for the relevant adjustment day close bracket end formula

where:

compounded amount for the relevant adjustment day means:

 (a) for the earliest relevant adjustment day—the amount that was paid for the income stream; or

 (b) for each later relevant adjustment day—the result of applying the formula for the most recent earlier relevant adjustment day.

relevant above threshold rate for the relevant adjustment day means the following:

 (a) if the relevant adjustment day is the relevant payment day—zero;

 (b) if the relevant adjustment day is a 12month anniversary of the relevant payment day—the rate applicable under subsection 46J(2) for that relevant adjustment day, expressed as a decimal fraction.

relevant adjustment day means each of the following:

 (a) the relevant payment day;

 (b) each 12month anniversary of the relevant payment day.

relevant payment day means the day that the amount was paid for the income stream.

 (6) If the income stream is a joint income stream, then, for the purposes of applying subsections (4) and (5) to the person and to a day covered by subsection (1), an amount paid for the income stream is taken to be that amount multiplied by the proportion of the income stream attributable to the person on that day.

 (7) The Commission may make a legislative instrument for the purposes of paragraph (4)(b).

52BAB  Value of assettested income streams (lifetime) that are not managed investments

 (1) This section applies to a person’s assettested income stream (lifetime) in relation to a day that is on or after the person’s assessment day for the income stream.

Note 1: For assettested income stream (lifetime), see subsection 5J(1). For assessment day, see subsections (6) and (7) of this section.

Note 2: This section applies separately in relation to each assettested income stream (lifetime) of a person.

 (2) However, this section does not apply to a family law affected income stream.

Note: For family law affected income streams, see section 52BA.

Value of income stream

 (3) Subject to this section, the value of the person’s income stream is, for the purposes of the assets test, worked out as follows:

 (a) for a day in the period beginning on the person’s assessment day for the income stream and ending at the end of the person’s threshold day for the income stream:

  Start formula Purchase amount times 0.6 end formula

 (b) for a day after the person’s threshold day for the income stream:

  Start formula Purchase amount times 0.3 end formula

Note: For threshold day, see subsections (10) and (11). For purchase amount, see subsection (13).

 (4) The Commission may, by legislative instrument, determine one or more methods for working out the value of an assettested income stream (lifetime) for persons to whom this section applies.

 (5) If one or more amounts worked out in accordance with the instrument are higher than the amount under subsection (3), then the value of the person’s income stream is, for the purposes of the assets test, the highest of those amounts.

Assessment day

 (6) Subject to subsection (7), for the purposes of this section, a person’s assessment day for an assettested income stream (lifetime) is:

 (a) if the income stream arises under arrangements that are regulated by the Superannuation Industry (Supervision) Act 1993—the latest of the following:

 (i) the day the person first satisfies a condition of release that is mentioned in regulations under the Superannuation Industry (Supervision) Act 1993 and is of a kind determined in an instrument under subsection (9);

 (ii) the day the first amount was paid for the income stream;

 (iii) the day the person acquired the income stream (if no amount is identifiable as having been paid for the income stream); or

 (b) otherwise:

 (i) if the commencement day in relation to the income stream is before the day the person reaches pension age—the commencement day in relation to the income stream; or

 (ii) in any other case—the latest of the day the first amount was paid for the income stream, the day the person reaches pension age and the day the person acquired the income stream (if no amount is identifiable as having been paid for the income stream).

Note: For commencement day, see subsection 5J(1). For pension age, see section 5Q.

 (7) For the purposes of this section, a person’s assessment day for an assettested income stream (lifetime) that reverted to the person as a reversionary beneficiary is:

 (a) if the income stream reverted to the person on or after the commencement day in relation to the income stream—the day of the reversion; or

 (b) if the income stream reverted to the person before the commencement day in relation to the income stream and the income stream arises under arrangements that are regulated by the Superannuation Industry (Supervision) Act 1993:

 (i) if the commencement day in relation to the income stream is before the day the person first satisfies a condition of release that is mentioned in regulations under the Superannuation Industry (Supervision) Act 1993 and is of a kind determined in an instrument under subsection (9)—the commencement day in relation to the income stream; or

 (ii) in any other case—the later of the day of the reversion and the day the person first satisfies a condition of release that is mentioned in regulations under the Superannuation Industry (Supervision) Act 1993 and is of a kind determined in an instrument under subsection (9); or

 (c) if the income stream reverted to the person before the commencement day in relation to the income stream and the income stream does not arise under arrangements that are regulated by the Superannuation Industry (Supervision) Act 1993:

 (i) if the commencement day in relation to the income stream is before the day the person reaches pension age—the commencement day in relation to the income stream; or

 (ii) in any other case—the later of the day of the reversion and the day the person reaches pension age.

Note: For commencement day, see subsection 5J(1). For pension age, see section 5Q.

 (8) For the purposes of the application of subsection (6) or (7) in relation to income support supplement, the references in that subsection to pension age are taken to be references to qualifying age.

Note: For qualifying age, see section 5Q.

 (9) The Commission may, by notifiable instrument, determine a kind of condition of release for the purposes of subparagraphs (6)(a)(i) and (7)(b)(i) and (ii).

Threshold day

 (10) Subject to subsection (11), for the purposes of this section, a person’s threshold day for an assettested income stream (lifetime) is worked out using the following method statement:

Method statement

Step 1. Work out, in relation to a man aged 65 on the person’s assessment day for the income stream, the number of expected years remaining in the man’s life, by reference to the instrument in force under subsection (12) on that assessment day, rounded down to the nearest whole number of years.

 Note: The number of expected years remaining in a 65year old man’s life is used no matter how old the person is and whether the person is a man or a woman.

Step 2. Increase the number of years at step 1 by 65.

Step 3. Subject to step 4, the person’s threshold day for the income stream is the later of the following days:

 (a) the day before the person reaches the age in years worked out at step 2;

 (b) the last day of the 5year period beginning on the person’s assessment day for the income stream.

Step 4. If the income stream is a joint income stream, the person’s threshold day for the income stream is the later of the following days:

 (a) the day before the oldest of the persons, to whom a proportion of the income stream is attributable on the person’s assessment day for the income stream, reaches the age in years worked out at step 2;

 (b) the last day of the 5year period beginning on the person’s assessment day for the income stream.

 (11) If:

 (a) an assettested income stream (lifetime) reverts to a person as a reversionary beneficiary on the death of another person; and

 (b) before the death of the other person, the other person’s assessment day for the income stream had occurred;

then:

 (c) if, before the death of the other person, the other person’s threshold day for the income stream had not occurred—the reversionary beneficiary’s threshold day for the income stream is taken to be the day that would have been the other person’s threshold day if the other person had not died; and

 (d) if, before the death of the other person, the other person’s threshold day for the income stream had occurred—the reversionary beneficiary’s threshold day for the income stream is taken to be the other person’s threshold day; and

 (e) if the reversionary beneficiary’s assessment day for the income stream worked out under subsection (7) is on or after the reversionary beneficiary’s threshold day for the income stream worked out under paragraph (c) or (d) of this subsection:

 (i) paragraph (3)(a) is taken not to apply to the reversionary beneficiary and the income stream; and

 (ii) paragraph (3)(b) is taken to apply to the reversionary beneficiary and the income stream for a day that is on or after the reversionary beneficiary’s assessment day for the income stream.

 (12) The Commission may make a notifiable instrument for the purposes of step 1 of the method statement in subsection (10). If there are Life Tables published by the Australian Government Actuary, the Commission must be satisfied that the instrument is consistent with the latest of those Life Tables.

Purchase amount

 (13) For the purposes of this section, the purchase amount for the income stream is:

 (a) subject to paragraph (b)—if one or more amounts have been paid for the income stream—the sum of:

 (i) each compounded amount in relation to an amount paid for the income stream before the person’s assessment day for the income stream, as worked out under subsection (14); and

 (ii) each amount paid for the income stream on or after that assessment day;

  less any commuted amounts; or

 (b) if the circumstances determined in an instrument under subsection (16) apply in relation to the income stream—the amount worked out in accordance with that instrument.

 (14) A compounded amount in relation to an amount paid for the income stream before the person’s assessment day for the income stream is worked out by applying the following formula for each relevant adjustment day (from the earliest to the latest):

Start formula Compounded amount for the relevant adjustment day times open bracket 1 plus Relevant above threshold rate for the relevant adjustment date close bracket end formula

where:

compounded amount for the relevant adjustment day means:

 (a) for the earliest relevant adjustment day—the amount that was paid for the income stream; or

 (b) for each later relevant adjustment day—the result of applying the formula for the most recent earlier relevant adjustment day.

relevant above threshold rate for the relevant adjustment day means:

 (a) if the relevant adjustment day is a 12month anniversary of the relevant payment day—the rate applicable under subsection 46J(2) for that relevant adjustment day, expressed as a decimal fraction; or

 (b) if the relevant adjustment day is the assessment day—the amount worked out in accordance with the following formula:

  Start formula The rate applicable under subsection 46J(2) for that day, expressed as a decimal fraction times start fraction Relevant number of days over 365 end fraction end formula

relevant adjustment day means each of the following:

 (a) each 12month anniversary of the relevant payment day that happens before the person’s assessment day;

 (b) the person’s assessment day.

Note: For assessment day, see subsections (6) and (7).

relevant number of days means the number of days in the period:

 (a) beginning on the day after:

 (i) if the assessment day is at least 12 months after the relevant payment day—the most recent 12month anniversary of the relevant payment day; or

 (ii) otherwise—the relevant payment day; and

 (b) ending at the end of the assessment day.

relevant payment day means the day that the amount was paid for the income stream.

 (15) If the income stream is a joint income stream, then, for the purposes of applying subsections (13) and (14) to the person and to a day covered by subsection (1), an amount paid for the income stream is taken to be that amount multiplied by the proportion of the income stream attributable to the person on that day.

 (16) The Commission may make a legislative instrument for the purposes of paragraph (13)(b).

52BA  Value of assettested FLA income streams

 (1) This section applies to family law affected income streams.

 (2) The value of an income stream that is not a defined benefit income stream is, for the purposes of the assets test, determined by the Commission.

 (3) The value of an income stream that is a defined benefit income stream is, for the purposes of the assets test, determined by the Commission.

 (4) In making a determination under subsection (2) or (3), the Commission must comply with any relevant decisionmaking principles in force under subsection (5).

 (5) The Commission may, by legislative instrument, formulate principles (decisionmaking principles) to be complied with by it in making decisions under:

 (a) subsection (2); or

 (b) subsection (3).

52BB  Value of partially assettest exempt income streams

 (1) This section applies to income streams covered by paragraph 52(1)(daa).

 (2) The value of such an income stream is, for the purposes of paragraph 52(1)(daa), worked out as follows:

 (a) if the income stream is a family law affected income stream—under section 52BA;

 (b) otherwise—under section 52A;

as if the income stream were an assettested income stream to which that section applied.

52BC  Value of superannuation reserves for superannuation funds of 4 members or less

 (1) This section applies in calculating the value of a person’s investment in a superannuation fund if:

 (a) the fund has 4 or fewer members; and

 (b) the fund has reserves (within the meaning of section 115 of the Superannuation Industry (Supervision) Act 1993).

Note: The value of a person’s investment in a superannuation fund is only included in the value of the person’s assets after the person reaches pension age or starts to receive a pension or annuity out of the fund (see paragraph 52(1)(f)).

 (2) Despite paragraph 52(1)(g), the value of the person’s investment in the superannuation fund includes the following amount:

Start formula start fraction Person's interest in the fund over Total interest in the fund end fraction times Value of the fund's reserves end formula

 (3) However, if it is not possible to work out the person’s interest in the superannuation fund, the value of the person’s investment in the fund includes the following amount:

Start formula start fraction Value of the fund's reserves over Number of members in the fund end fraction end formula

52C  Effect of charge or encumbrance on value of assets

 (1) Where there is a charge or encumbrance over particular assets of the person, the value of the assets, for the purposes of calculating the value of the person’s assets for the purposes of this Act (other than Division 3 and sections 52G, 52H, 52JA, 52JB, 52JC and 52JD), is to be reduced by the value of that charge or encumbrance.

Note: This section does not apply to an asset to which section 52CA (primary production assets) applies.

 (1A) Subsection (1) does not apply to a charge that arises under section 52ZF.

Note: See subsection (5) for a charge that arises under section 52ZF.

 (2) Subsection (1) does not apply to a charge or encumbrance over an asset of a person to the extent that:

 (a) the charge or encumbrance is a collateral security; or

 (b) the charge or encumbrance was given for the benefit of a person other than the person or the person’s partner.

 (3) Subsection (1) does not apply to a charge or encumbrance over assets that are to be disregarded under section 52.

Exception for an assettested income stream (longterm)

 (3A) Subsection (1) does not apply to an asset that is an assettested income stream (longterm).

 (3B) Subsection (1) does not apply to an asset that is a partially assettest exempt income stream (within the meaning of section 52).

 (3C) Subsection (1) does not apply to an asset that is an assettested income stream (lifetime).

 (4) Where:

 (a) there is a charge or encumbrance over assets; and

 (b) the charge does not arise under section 52ZF; and

 (c) the assets consist of assets whose value is to be disregarded under section 52 and other assets;

the amount to be deducted under subsection (1) is:

Start formula start fraction Value of the charge or encumbrance times Value of the other assets over Value of all the assets end fraction end formula

 (5) If:

 (a) a person is or was participating in the pension loans scheme; and

 (b) either:

 (i) the person’s real assets are subject to a charge under section 52ZF; or

 (ii) if the person is a member of a couple—the couple’s real assets are subject to a charge under section 52ZF;

then the value of those real assets, for the purposes of calculating the value of the person’s assets for the purposes of this Act (other than Division 3 and sections 52G, 52H, 52JA, 52JB, 52JC and 52JD), is to be reduced by the amount of the debt owed by the person under section 52ZC because of that participation.

Note: If there are other charges or encumbrances over any of those real assets, there may be a further reduction under subsection (1) in the value of those assets.

 (6) This section has effect subject to sections 52KA to 52X (special residences).

52CA  Effect of certain liabilities on value of assets used in primary production

 (1) For the purposes of working out the value of a person’s assets under this Act, if:

 (a) the person is:

 (i) a primary producer; or

 (ii) a family member of a primary producer; and

 (b) the person has assets (including real property) that are, in the Commission’s opinion, used for the purposes of carrying on that primary production; and

 (c) the person also has liabilities that are, in the Commission’s opinion, related to the carrying on of the primary production;

then:

 (d) section 52C does not apply in relation to the assets referred to in paragraph (b); and

 (e) those assets are taken to be a single asset (the primary production asset); and

 (f) the value of that single asset is worked out under subsection (2).

Note: For family member see subsection 5L(1).

 (2) The value of a person’s primary production asset is worked out in the following way:

Method statement

Step 1. Add together the value of the assets referred to in paragraph (1)(b): the result is called the unencumbered value.

Step 2. Add together the value of the liabilities referred to in paragraph (1)(c): the result is called the total liability.

Step 3. Take the total liability away from the unencumbered value: the result is the value of the person’s primary production asset.

 (3) If the result under Step 3 of the Method statement is less than nil, the value of the primary production asset is taken to be nil.

52CB  Value of life policy

 (1) This section applies in relation to a person and a day (the assessment day) if:

 (a) the person has reached:

 (i) pension age; or

 (ii) in relation to income support supplement—qualifying age; and

 (b) the person is the owner (within the meaning of subsection 10(2) of the Life Insurance Act 1995) of a life policy covered by paragraph 9(1)(a) or (b) of that Act; and

 (c) the person became the owner of the policy after the person reached that age; and

 (d) the sum of each amount paid for the policy (regardless of who paid the amount) in any period of 12 months exceeds 15% of the maximum death benefit that would be payable in the event of the death of the person whose life is insured on the assessment day.

Note: For pension age and qualifying age, see section 5Q.

 (2) The value of the life policy on the assessment day is, for the purposes of the assets test, the higher of the following:

 (a) the amount that would be payable to the person covered by paragraph (1)(b) if the policy were surrendered on that day;

 (b) the sum of each amount paid for the policy by the person covered by paragraph (1)(b), less any commuted amounts.

52D  Loans

  If a person lends an amount after 22 May 1986, the value of the assets of the person for the purposes of this Act includes so much of that amount as remains unpaid but does not include any amount payable by way of interest under the loan.

Subdivision BDispositions of assets (general provisions)

52E  Disposal of assets

  For the purposes of this Act, a person disposes of assets of the person if the person engages in a course of conduct that diminishes, directly or indirectly, the value of the person’s assets and:

 (a) the person receives no consideration in money or money’s worth for the diminution in the value of the person’s assets; or

 (b) the person receives inadequate consideration in money or money’s worth for the diminution in the value of the person’s assets; or

 (c) the Commission is satisfied that the purpose, or the dominant purpose, of the person in engaging in that course of conduct was:

 (i) to obtain or enable the person’s partner to obtain a service pension, income support supplement, a veteran payment or a social security pension or benefit; or

 (ii) to obtain or enable the person’s partner to obtain a service pension, income support supplement, a veteran payment or a social security pension or benefit at a higher rate than that which would otherwise have been payable; or

 (iii) to ensure that the person or the person’s partner would be eligible for benefits under Division 12 of this Part or fringe benefits under the Social Security Act.

Note: Under Subdivision B of Division 11A of Part IIIB, certain transfers of assets to special disability trusts can be taken not to be disposals of the assets (but this can be subject to a limit on the aggregate value of the transfers).

52F  Amount of disposition

  Where a person disposes of assets, the amount of the disposition is:

 (a) if the person receives no consideration for the diminution in the value of the assets—an amount equal to the amount of the diminution in the value of the assets; or

 (b) if the person receives consideration for the diminution in the value of the assets—an amount equal to the amount of the diminution in the value of the assets less the amount of the consideration received by the person in respect of the diminution.

Note: If subsection 52ZZZWM(2) applies in relation to the transfer of an asset to a special disability trust, that subsection has the effect of reducing the amount of the disposal or disposition.

52FAAA  Application of asset deprivation rules to cease in respect of certain assets

  If:

 (a) a person, or a person’s partner, has:

 (i) acquired an asset; or

 (ii) received consideration that is not inadequate consideration for an asset; and

 (b) the value of the asset is included in the value of the person’s assets by Subdivision BA or BB because of a previous disposition of the asset; and

 (c) the person has, by document lodged at an office of the Department in Australia in accordance with section 5T, notified the Department of the circumstances covered by paragraphs (a) and (b);

whichever of Subdivisions BA and BB is applicable ceases, from the start of the day on which the document is lodged, to apply in respect of that disposition of the asset.

Subdivision BADispositions of assets before 1 July 2002

52FAA  Application

  This Subdivision applies only to dispositions of assets that took place before 1 July 2002.

52FA  Disposal of assets in prepension years—not a member of a couple

 (1) If:

 (a) a person is not a member of a couple when the person claims a service pension, an income support supplement or a social security pension; and

 (b) the person disposes of an asset of the person during a prepension year of the person; and

 (c) the amount of that disposition, or the sum of that amount and of the amounts (if any) of other dispositions of assets previously made by the person during that prepension year, exceeds $10,000;

then, for the purposes of determining whether the pension is payable to the person, there is to be included in the value of the person’s assets for the period of 5 years that starts on the day on which the disposition took place:

 (d) the amount by which the sum of the amount of the firstmentioned disposition of assets and of the amounts (if any) of other dispositions of assets previously made by the person during that prepension year exceeds $10,000; or

 (e) the amount of the firstmentioned disposition;

whichever is the lesser amount.

Note 1: For disposes of assets see section 52E.

Note 2: For amount of disposition see section 52F.

Note 3: If a pension is payable to the person, section 52G operates to determine the rate of payment and section 52FA ceases to apply to the person.

52G  Disposal of assets in pension years—not a member of a couple

 (1) If, on or after 1 March 1986 and before 1 July 2002:

 (a) a person who is not a member of a couple has, during a pension year of the person, disposed of assets of the person; and

 (b) the amount of that disposition of assets, or the sum of that amount and of the amounts (if any) of other dispositions of assets previously made by the person during that pension year, exceeds $10,000;

then, for the purposes of this Act, there is to be included in the value of the person’s assets for the period of 5 years that starts on the day on which the disposition takes place:

 (c) the amount by which the sum of the amount of the firstmentioned disposition of assets, and of the amounts (if any) of other dispositions of assets previously made by the person during that pension year, exceeds $10,000; or

 (d) the amount of the firstmentioned disposition of assets;

whichever is the lesser amount.

52GA  Disposal of assets in prepension years—members of couples

 (1) Subject to subsections (3), (4) and (5), if:

 (a) a person disposes of an asset; and

 (b) the person is a member of a couple when the person or the person’s partner claims a service pension, an income support supplement or a social security pension; and

 (c) the person disposes of the asset:

 (i) during a prepension year of the person; or

 (ii) if the person does not claim a service pension, an income support supplement or a social security pension but the person’s partner claims such a pension—during a prepension year of the person’s partner; and

 (d) the amount of that disposition, or the sum of that amount and the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during that prepension year, exceeds $10,000;

then, for the purposes of determining whether the pension is payable to the person:

 (e) there is to be included in the value of the person’s assets for the period of 5 years that starts on the day on which the disposition took place:

 (i) 50% of the amount by which the sum of the amount of the firstmentioned disposition and of the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during that prepension year exceeds $10,000; or

 (ii) 50% of the amount of the firstmentioned disposition;

  whichever is the lesser amount; and

 (f) there is to be included in the value of the assets of the person’s partner for the period of 5 years that starts on the day on which the disposition took place:

 (i) 50% of the amount by which the sum of the amount of the firstmentioned disposition and of the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during that prepension year exceeds $10,000; or

 (ii) 50% of the amount of the firstmentioned disposition;

  whichever is the lesser amount.

Note 1: For disposes of assets see section 52E.

Note 2: For amount of disposition see section 52F.

Note 3: If a pension is payable to the person, section 52H operates to determine the rate of payment and section 52GA ceases to apply to the person.

 (3) If:

 (a) amounts are included under subsection (1) in the value of the assets of a person who is a member of a couple and in the value of the assets of the person’s partner because of a disposition of an asset by the person; and

 (b) the person and the person’s partner cease to be members of the same couple;

any amount that was included in the value of the person’s former partner’s assets because of that disposition is to be included in the value of the person’s assets.

 (4) If:

 (a) an amount is included under subsection (1) in the value of the assets of a person who is a member of a couple and in the value of the assets of the person’s partner because of a disposition of an asset by the person; and

 (b) the person dies;

an amount is not to be included in the value of the assets of the person’s partner because of that disposition.

 (5) If:

 (a) an amount is included under subsection (1) in the value of the assets of a person who is a member of a couple and in the value of the assets of the person’s partner because of a disposition of an asset by the person; and

 (b) the partner dies;

any amount that would, if the partner had not died, be included in the value of the partner’s assets because of the disposition is to be included in the value of the person’s assets.

52H  Disposal of assets in pension years—members of couples

 (1) Subject to subsections (3) and (4), where, on or after 1 March 1986 and before 1 July 2002:

 (a) a person who is a member of a couple has disposed of assets of the person:

 (i) during a pension year of the person; or

 (ii) if the person is not receiving a service pension, income support supplement or a social security pension but the person’s partner is receiving such a pension—during a pension year of the person’s partner; and

 (b) the amount of that disposition of assets, or the sum of that amount and the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during that pension year, exceeds $10,000;

then, for the purposes of this Act:

 (c) there is to be included in the value of the person’s assets for the period of 5 years that starts on the day on which the disposition takes effect:

 (i) 50% of the amount by which the sum of the amount of the firstmentioned disposition of the assets and of the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during the pension year exceeds $10,000; or

 (ii) 50% of the amount of the firstmentioned disposition of assets;

  whichever is the lesser amount; and

 (d) there is to be included in the value of the assets of the person’s partner for the period of 5 years that starts on the day on which the disposition takes place:

 (i) 50% of the amount by which the sum of the amount of the firstmentioned disposition of the assets and of the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during the pension year exceeds $10,000; or

 (ii) 50% of the amount of the firstmentioned disposition of assets;

  whichever is the lesser amount.

 (3) Where:

 (a) amounts are included under subsection (1) in the value of a person’s assets who is a member of a couple and in the assets of the person’s partner because of a disposition of assets by the person; and

 (b) the person and the person’s partner cease to be members of the same couple;

any amount that was included in the value of the person’s former partner’s assets because of that disposition is to be included in the value of the person’s assets.

 (4) Where:

 (a) an amount is included under subsection (1) in the value of the assets of a person who is a member of a couple and the value of the assets of the person’s partner because the person has disposed of an asset; and

 (b) the person dies;

no amount is to be included in the value of the assets of the person’s partner because of that disposition.

 (5) Where:

 (a) an amount is included under subsection (1) in the value of the assets of a person who is a member of a couple and in the value of the assets of the person’s partner because the person has disposed of an asset; and

 (b) the person’s partner dies;

any amount that would, if the person’s partner had not died, be included in the value of the assets of the person’s partner because of the disposition is to be included in the value of the person’s assets.

52J  Dispositions more than 5 years old to be disregarded

  This Subdivision does not apply to a disposition of assets that took place:

 (a) more than 5 years before the time when:

 (i) the person who disposed of those assets; or

 (ii) if that person was, at the time when that disposition took place, a member of a couple—that person’s partner;

  became eligible to receive a service pension or income support supplement; or

 (b) less than 5 years before the time referred to in paragraph (a) and before the time when the Commission is satisfied that the person who disposed of those assets could reasonably have expected that the person or the person’s partner would become eligible to receive a service pension or income support supplement.

Subdivision BBDispositions of assets on or after 1 July 2002

52JA  Disposition of assets in tax year—individuals

Dispositions to which section applies

 (1) This section applies to a disposition (the relevant disposition) on or after 1 July 2002 of an asset by a person who is not a member of a couple at the time of the relevant disposition.

Increase in value of assets

 (2) If the amount of the relevant disposition, or the sum of that amount and the amounts (if any) of other dispositions of assets previously made by the person during the tax year in which the relevant disposition took place, exceeds $10,000, then, for the purposes of this Act, the lesser of the following amounts is to be included in the value of the person’s assets for the period of 5 years starting on the day on which the relevant disposition took place:

 (a) the amount of the relevant disposition;

 (b) the amount by which the sum of the amount of the relevant disposition and the amounts (if any) of other dispositions of assets previously made by the person during the tax year in which the relevant disposition took place, exceeds $10,000.

Previous joint dispositions

 (3) If, during the tax year in which the relevant disposition took place but before the time of the relevant disposition, the person was a member of a couple who jointly disposed of an asset, a reference in subsection (2) to the amounts (if any) of other dispositions of assets previously made by the person during that tax year includes a reference to onehalf of the amount of the joint disposition.

52JB  Dispositions of assets in 5 year period—individuals

Disposition to which section applies

 (1) This section also applies to a disposition (the relevant disposition) on or after 1 July 2002 of an asset by a person who is not a member of a couple at the time of the relevant disposition.

Increase in value of assets

 (2) If:

 (a) the sum of the amount of the relevant disposition and the amounts of any previous dispositions of assets made during the rolling period by the person;

less

 (b) the sum of any amounts included in the value of the person’s assets during the rolling period under section 52JA, 52JC or 52JD or any previous application or applications of this section;

exceeds $30,000, then, for the purposes of this Act, the lesser of the following amounts is to be included in the value of the person’s assets for the period of 5 years starting on the day on which the relevant disposition took place:

 (c) an amount equal to the excess;

 (d) the amount of the relevant disposition.

Previous joint dispositions

 (3) If, during the rolling period but before the time of the relevant disposition, the person was a member of a couple who jointly disposed of an asset, the reference in paragraph (2)(a) to the amounts of any previous dispositions during the rolling period of assets by the person includes a reference to onehalf of the amount of the joint disposition.

Rolling period

 (4) For the purposes of this section, the rolling period is the period comprising the tax year in which the relevant disposition took place and such (if any) of the 4 previous tax years as occurred after 30 June 2002.

52JC  Disposition of assets in tax year—members of couples

Dispositions to which section applies

 (1) If there is a disposition (the relevant disposition) on or after 1 July 2002 of an asset by:

 (a) a person who, at the time of the relevant disposition, is a member of a couple; or

 (b) the person referred to in paragraph (a) and the person who is, at that time, the partner of the person referred to in that paragraph;

subsection (2) has effect.

Increase in value of assets

 (2) Subject to this section, if the amount of the relevant disposition, or the sum of that amount and the amounts (if any) of other dispositions of assets previously made by the person, the person’s partner, or the person and the person’s partner, during the tax year in which the relevant disposition took place (whether before or after they became members of the couple), exceeds $10,000, then, for the purposes of this Act, the lesser of the following amounts is to be included in the value of the assets of the person and in the value of the assets of the partner for the period of 5 years starting on the day on which the relevant disposition took place:

 (a) onehalf of the amount of the relevant disposition;

 (b) onehalf of the amount by which the sum of the amount of the relevant disposition, and the amounts (if any) of other dispositions of assets previously made by the person, the partner, or the person and the partner, during the tax year in which the relevant disposition took place, exceeds $10,000.

Effect of ceasing to be member of couple

 (3) If, after the disposition referred to in paragraph (1)(a), the person and the person’s partner cease to be members of the same couple:

 (a) no amount is to be included after the cessation in the value of the assets of the former partner because of that disposition; and

 (b) any amount that would, apart from this subsection, have been so included is to be included in the value of the assets of the person.

Effect of death of person

 (4) If, after the disposition referred to in paragraph (1)(a), the person dies, no amount is to be included in the value of the assets of the person’s partner because of that disposition.

Effect of death of partner

 (5) If, after the disposition referred to in paragraph (1)(a), the person’s partner dies, any amount that, if the partner had not died, would have been included in the value of the assets of the partner because of that disposition is to be included in the value of the assets of the person.

52JD  Disposition of assets in 5 year period—members of couples

Dispositions to which section applies

 (1) If there is a disposition (the relevant disposition) on or after 1 July 2002 of an asset by:

 (a) a person who, at the time of the relevant disposition, is a member of a couple; or

 (b) the person referred to in paragraph (a) and the person who is, at that time, the partner of the person referred to in that paragraph;

subsection (2) has effect.

Increase in value of assets

 (2) Subject to this section, if:

 (a) the sum of the amount of the relevant disposition and the amounts of any previous dispositions of assets made during the rolling period by the person, the person’s partner or the person and the person’s partner;

less

 (b) the sum of any amounts included in the value of the assets of the person or of the partner during the rolling period under section 52JA, 52JB or 52JC or any previous application or applications of this section;

exceeds $30,000, then, for the purposes of this Act, the lesser of the following amounts is to be included in the value of the assets of the person and in the value of the assets of the partner for the period of 5 years starting on the day on which the relevant disposition took place:

 (c) an amount equal to onehalf of the excess;

 (d) onehalf of the amount of the relevant disposition.

Effect of ceasing to be member of couple

 (3) If, after the disposition referred to in paragraph (1)(a), the person and the person’s partner cease to be members of the same couple:

 (a) no amount is to be included after the cessation in the value of the assets of the former partner because of that disposition; and

 (b) any amount that would, apart from this subsection, have been so included is to be included in the value of the assets of the person.

Effect of death of person

 (4) If, after the disposition referred to in paragraph (1)(a), the person dies, no amount is to be included in the value of the assets of the person’s partner because of that disposition.

Effect of death of partner

 (5) If, after the disposition referred to in paragraph (1)(a), the person’s partner dies, any amount that, if the partner had not died, would have been included in the value of the assets of the partner because of that disposition is to be included in the value of the assets of the person.

Rolling period

 (6) For the purposes of this section, the rolling period is the period comprising the tax year in which the relevant disposition took place and such (if any) of the 4 previous tax years as occurred after 30 June 2002.

52JE  Certain dispositions to be disregarded

  This Subdivision does not apply to a disposition of assets that took place:

 (a) more than 5 years before the time when:

 (i) the person who disposed of those assets; or

 (ii) if that person was, at the time when that disposition took place, a member of a couple—that person’s partner;

  became eligible to receive a service pension, income support supplement or a veteran payment; or

 (b) less than 5 years before the time referred to in paragraph (a) and before the time when the Commission is satisfied that the person who disposed of those assets could reasonably have expected that the person or the person’s partner would become eligible to receive a service pension, income support supplement or a veteran payment.

Subdivision CProvisions relating to special residences and special residents

52KA  Application of Subdivision to granny flat residents

  This Subdivision applies to a granny flat resident only if the resident acquired or retained the person’s granny flat interest in the person’s principal home on or after 22 August 1990.

52L  Basis for different treatment

  This Subdivision’s operation on a special resident depends on:

 (a) whether the resident is:

 (i) not a member of a couple; or

 (ii) a member of an ordinary couple; or

 (iii) a member of an illness separated couple; or

 (iv) a member of an ordinary couple with different principal homes; and

 (b) the resident’s entry contribution; and

 (c) the resident’s extra allowable amount.

52M  Entry contribution

 (1) A special resident’s entry contribution is:

 (a) if the resident is not a member of a couple—the resident’s individual residence contribution; or

 (b) if the resident is a member of a couple, shares the resident’s principal home with the resident’s partner and is not a member of an illness separated couple—an amount equal to 50% of the resident’s individual residence contribution and of the partner’s individual residence contribution; or

 (c) if the resident is a member of an illness separated couple—the resident’s individual residence contribution; or

 (d) if:

 (i) the resident is a member of an ordinary couple with different principal homes; and

 (ii) the principal home of the resident’s partner is not a special residence;

  the resident’s individual residence contribution; or

 (e) if:

 (i) the resident is a member of an ordinary couple with different principal homes; and

 (ii) the principal home of the resident’s partner is also a special residence;

  an amount equal to 50% of the resident’s individual residence contribution and of the partner’s individual residence contribution.

 (1A) A special resident’s entry contribution is the resident’s individual residence contribution plus the amount paid, or agreed to be paid, for the resident’s current right (if any) to share the resident’s principal home with a partner if:

 (a) the resident was a member of a couple at the time when the resident took up residence in the retirement village or granny flat; and

 (b) the resident has ceased to be a member of a couple.

 (1B) A special resident’s entry contribution is the resident’s individual residence contribution if:

 (a) the resident was a member of a couple at the time when the sale leaseback agreement was entered into; and

 (b) the resident has ceased to be a member of a couple.

 (1C) For the purposes of this Division, the individual residence contribution is:

 (a) for a retirement village resident—the total amount paid, or agreed to be paid, for the resident’s current right to live in the retirement village; and

 (b) for a granny flat resident—the total amount paid, or agreed to be paid, for the resident’s current right to live in the granny flat; and

 (c) for a sale leaseback resident—the deferred payment amount.

Note: For deferred payment amount see section 5MB.

 (1D) For the purposes of paragraph (1C)(b):

 (a) the total amount paid to obtain a person’s current right to live in a granny flat is the amount equal to the value of the person’s granny flat interest; and

 (b) the value of a person’s granny flat interest is:

 (i) unless subparagraph (ii) applies—the amount paid, or agreed to be paid, for the interest; or

 (ii) if the Commission considers that, for any special reason in any particular case, that value should be another amount—that other amount.

 (2) An amount that is rent or a residential care charge for the purposes of this Act is to be disregarded in applying subsections (1), (1A) and (1B).

Note: For residential care charge, see subsection 5N(1).

52N  Extra allowable amount

Retirement village residence taken up before 12 June 1989

 (1) If a retirement village resident became entitled to take up residence in the retirement village before 12 June 1989, the resident’s extra allowable amount is:

 (a) if the resident is not a member of a couple—$64,000; or

 (b) if the resident is a member of an illness separated couple—$64,000; or

 (c) in any other case—$32,000.

Retirement village residence taken up on or after 12 June 1989

 (2) If a retirement village resident became entitled to take up residence in the retirement village on or after 12 June 1989, the resident’s extra allowable amount is:

 (a) if the resident is not a member of a couple—the amount that, as at the time when the person becomes entitled to take up that residence, is the difference between the single property owner AVL and the single nonproperty owner AVL; or

 (b) if the resident is a member of an illness separated couple—the amount that, as at the time when the person becomes entitled to take up that residence, is the difference between the single AVL and the single nonproperty owner AVL; or

 (c) in any other case—the amount that, as at the time when the person becomes entitled to take up that residence, is the difference between the partnered property owner AVL and the partnered nonproperty owner AVL.

Granny flat residence

 (2A) A granny flat resident’s extra allowable amount is:

 (a) if the resident is not a member of a couple—the amount that, as at the time when the resident becomes entitled to the granny flat interest, is the difference between the pension single property owner AVL and the pension single nonproperty owner AVL; or

 (b) if the resident is a member of an illness separated couple—the amount that, as at the time when the resident becomes entitled to the granny flat interest, is the difference between the pension single property owner AVL and the pension single nonproperty owner AVL; or

 (c) in any other case—the amount that, as at the time when the resident becomes entitled to the granny flat interest, is the difference between the pension partnered property owner AVL and the pension partnered nonproperty owner AVL.

Sale leaseback home

 (2B) A sale leaseback resident’s extra allowable amount is:

 (a) if the resident is not a member of a couple—the amount that, as at the time when the sale leaseback agreement is entered into, is the difference between the pension (single) property owner AVL and the pension (single) nonproperty owner AVL; or

 (b) if the resident is a member of an illness separated couple—the amount that, as at the time when the sale leaseback agreement is entered into, is the difference between the pension (single) property owner AVL and the pension (single) nonproperty owner AVL; or

 (c) in any other case—the amount that, as at the time when the sale leaseback agreement is entered into, is the difference between the pension (partnered) property owner AVL and the pension (partnered) nonproperty owner AVL.

 (3) For the purposes of this section, a person becomes entitled to take up residence in a retirement village when the person becomes entitled to take up residence in a retirement village pursuant to the agreement under which the person’s current right to live in the retirement village arises.

 (4) In this section, pension “single” property owner AVL, pension “single” nonproperty owner AVL, pension “partnered” property owner AVL and pension “partnered” nonproperty owner AVL have the same meaning as in Division 18.

52P  Renegotiation of retirement village agreement

  If a person who has a right to live in a retirement village under an agreement enters into a new agreement under which the person obtains a right to live in the retirement village, then, for the purposes of this Division, the total amount paid, or agreed to be paid, for the person’s current right to live in the retirement village is the sum of the following amounts:

 (a) the total amount paid under the new agreement for that right;

 (b) so much (if any) of:

 (i) any amount paid under an earlier agreement to obtain a right for the person to live in the retirement village; and

 (ii) any amount that was, or would have been, payable to the person upon the termination of an earlier agreement;

  as ought, in the Commission’s opinion, to be attributed to the cost of the person’s current right to live in the retirement village.

52Q  Residents who are not members of a couple

 (1) This section applies to a special resident who is not a member of a couple.

Entry contribution more than extra allowable amount

 (2) Where:

 (a) this section applies to a special resident; and

 (b) the person’s entry contribution was more than the extra allowable amount;

the person is to be taken, for the purposes of this Act, to be a property owner.

Entry contribution equal to or below extra allowable amount

 (3) Where:

 (a) this section applies to a special resident; and

 (b) the person’s entry contribution was equal to or less than the extra allowable amount;

then, for the purposes of this Act:

 (c) the person is to be taken not to have a right or interest in relation to the person’s principal home; and

 (d) the person’s assets are to be taken to include an asset the value of which is equal to the amount of the person’s entry contribution; and

 (e) subsection 52(1) and sections 52G, 52JA and 52JB do not apply to an asset that the person is, because of paragraph (d) of this subsection, to be taken to have.

 (4) Subsection (3) applies:

 (a) whether or not the person actually has any right or interest in the person’s principal home; and

 (b) whatever the value of any right or interest that the person does have in the person’s principal home.

52R  Members of couples

 (1) This section applies to a special resident if:

 (a) the resident is a member of a couple; and

 (b) the resident shares the person’s principal home with the resident’s partner.

Entry contribution more than extra allowable amount

 (2) Where:

 (a) this section applies to a special resident; and

 (b) the person’s entry contribution was more than the extra allowable amount;

the person is to be taken, for the purposes of this Act, to be a property owner.

Entry contribution equal to or below extra allowable amount

 (3) Where:

 (a) this section applies to a special resident; and

 (b) the person’s entry contribution was equal to or less than the extra allowable amount;

then, for the purposes of this Act:

 (c) the person is to be taken not to have a right or interest in relation to the person’s principal home; and

 (d) the person’s assets are to be taken to include an asset the value of which is equal to the amount of the person’s entry contribution; and

 (e) subsection 52(1) and section 52H do not apply to an asset that the person is, because of paragraph (d) of this subsection, to be taken to have.

 (4) Subsection (3) applies:

 (a) whether or not the person actually has any right or interest in the person’s principal home; and

 (b) whatever the value of any right or interest that the person does have in the person’s principal home.

52S  Members of illness separated couple (both in special residences)

 (1) This section applies to a special resident if:

 (a) the resident is a member of an illness separated couple; and

 (b) the principal home of the resident’s partner is also a special residence.

Both entry contributions above extra allowable amount

 (2) Where:

 (a) this section applies to a special resident; and

 (b) the person’s entry contribution, and the entry contribution of the person’s partner, were each more than the extra allowable amount concerned;

then, for the purposes of this Act:

 (c) the person is to be taken to be a property owner; and

 (d) any right or interest of the person in the principal home of the person’s partner is to be disregarded in calculating the actual value of the person’s assets; and

 (e) any right or interest of the person’s partner in his or her principal home, or in the person’s principal home, is to be disregarded in calculating the actual value of the partner’s assets.

Both entry contributions equal to or below extra allowable amount

 (3) Where:

 (a) this section applies to a special resident; and

 (b) the person’s entry contribution, and the entry contribution of the person’s partner, were each equal to or less than the extra allowable amount concerned;

then, for the purposes of this Act:

 (c) the person is to be taken not to have a right or interest in relation to the person’s principal home; and

 (d) the person’s assets are to be taken to include an asset the value of which is equal to the amount of the person’s entry contribution; and

 (e) subsection 52(1) and section 52H do not apply to the asset that the person is, because of paragraph (d) of this subsection, taken to have.

 (4) Subsection (3) applies:

 (a) whether or not the person actually has any right or interest in the person’s principal home; and

 (b) whatever the value of any right or interest that the person does have in the person’s principal home.

Person’s entry contribution above extra allowable amount/partner’s entry contribution equal to or below extra allowable amount

 (5) Where:

 (a) this section applies to a special resident; and

 (b) the person’s entry contribution was more than the extra allowable amount; and

 (c) the person’s partner’s entry contribution was equal to or less than the extra allowable amount;

the following provisions apply for the purposes of the application of this Act to the person and to the person’s partner:

 (d) the person is to be taken to be a property owner;

 (e) both the person, and the person’s partner, are taken not to have a right or interest in relation to the partner’s principal home;

 (ea) the assets of the person’s partner are taken to include an asset whose value is equal to the amount of the partner’s entry contribution;

 (eb) subsection 52(1) and section 52H do not apply to the asset that the person’s partner is, because of paragraph (ea), taken to have;

 (f) any right or interest of the person’s partner in the person’s principal home is to be disregarded in calculating the actual value of the partner’s assets;

 (g) the assets value limit for the person and the person’s partner is to be taken to be $237,500.

Note: The amount in paragraph (g) is adjusted annually (see section 59J).

 (6) Subsection (5) applies:

 (a) whether or not the person’s partner actually has any right or interest in the partner’s principal home; and

 (b) whatever the value of any right or interest that the partner does have in the partner’s principal home.

52T  Members of illness separated couple (partner not in special residence and partner property owner)

 (1) This section applies to a special resident if:

 (a) the resident is a member of an illness separated couple; and

 (b) the principal home of the resident’s partner is not a special residence; and

 (c) the right or interest of the resident’s partner in the partner’s principal home is to be disregarded because of paragraph 52(1)(b).

Entry contribution more than extra allowable amount

 (2) Where:

 (a) this section applies to a special resident; and

 (b) the person’s entry contribution was more than the extra allowable amount;

then:

 (c) for the purposes of this Act, the person is to be taken to be a property owner; and

 (d) any right or interest of the person in the principal home of the person’s partner referred to in paragraph (1)(c) is to be disregarded in calculating the actual value of the person’s assets for the purposes of this Act; and

 (e) any right or interest of the person’s partner in the person’s principal home is also to be disregarded in calculating the actual value of the assets of the person’s partner for the purposes of this Act.

Entry contribution equal to or below extra allowable amount

 (3) Where:

 (a) this section applies to a special resident; and

 (b) the person’s entry contribution was equal to or less than the extra allowable amount;

the following provisions apply for the purposes of the application of this Act to the person and to the person’s partner:

 (c) both the person, and the person’s partner, are taken not to have a right or interest in relation to the person’s principal home;

 (ca) the person’s assets are taken to include an asset whose value is equal to the amount of the person’s entry contribution;

 (cb) subsection 52(1) and section 52H do not apply to the asset that the person is, because of paragraph (ca), taken to have;

 (d) any right or interest of the person in the principal home of the person’s partner referred to in paragraph (1)(c) is to be disregarded in calculating the actual value of the person’s assets;

 (e) the assets value limit of the person and the person’s partner is to be taken to be $237,500.

Note: The amount in paragraph (e) is adjusted annually (see section 59J).

 (4) Subsection (3) applies:

 (a) whether or not the person actually has any right or interest in the person’s principal home; and

 (b) whatever the value of any right to interest that the person does have in the person’s principal home.

52U  Members of illness separated couple (partner not in special residence and partner not property owner)

 (1) This section applies to a special resident if:

 (a) the resident is a member of an illness separated couple; and

 (b) the principal home of the resident’s partner is not a special residence; and

 (c) the resident’s partner does not have a right or interest in the partner’s principal home that is to be disregarded because of paragraph 52(1)(b).

Entry contribution more than extra allowable amount

 (2) Where:

 (a) this section applies to a special resident; and

 (b) the person’s entry contribution was more than the extra allowable amount;

the following provisions apply for the purposes of the application of this Act to the person and to the person’s partner:

 (c) the person is to be taken to be a property owner;

 (d) any right or interest of the person’s partner in the person’s principal home is to be disregarded in calculating the actual value of the partner’s assets;

 (e) the assets value limit of the person and the person’s partner is to be taken to be $237,500.

Note: The amount in paragraph (e) is adjusted annually (see section 59J).

 (3) Subsection (2) applies:

 (a) whether or not the person actually has any right or interest in the person’s principal home; and

 (b) whatever the value of any right or interest that the person does have in the person’s principal home.

Entry contribution equal to or below extra allowable amount

 (4) Where:

 (a) this section applies to a special resident; and

 (b) the person’s entry contribution was equal to or less than the extra allowable amount;

then, the following provisions apply for the purposes of the application of this Act to the person and to the person’s partner:

 (c) both the person, and the person’s partner, are to be taken not to have a right or interest in relation to the person’s principal home;

 (d) the person’s assets are to be taken to include an asset the value of which is equal to the amount of the person’s entry contribution;

 (e) subsection 52(1) and sections 52G, 52H, 52JA, 52JB, 52JC and 52JD do not apply to the asset that the person is, because of paragraph (d) of this subsection, taken to have.

52V  Members of ordinary couple with different principal homes (both in special residences)

 (1) This section applies to a special resident if:

 (a) the resident is a member of an ordinary couple with different principal homes; and

 (b) the principal home of the resident’s partner is also a special residence.

Both entry contributions above extra allowable amount

 (2) If:

 (a) this section applies to a special resident; and

 (b) the resident’s entry contribution, and the partner’s entry contribution, were each more than the extra allowable amount concerned;

then, for the purposes of this Act:

 (c) the resident and the partner are each to be taken to be property owners; and

 (d) the value of the resident’s principal home is taken to be the resident’s individual residence contribution; and

 (e) the value of the partner’s principal home is taken to be the partner’s individual residence contribution; and

 (f) any right or interest of the resident in:

 (i) the more valuable of the two principal homes; or

 (ii) where the value of the two principal homes is the same—the principal home of the younger person;

  (the more valuable principal home) is to be disregarded in calculating the actual value of the resident’s assets; and

 (g) any right or interest of the partner in the more valuable principal home is to be disregarded in calculating the actual value of the partner’s assets; and

 (h) the assets of the person whose principal home is not the more valuable principal home are to be taken to include an asset the value of which is equivalent to the amount of that person’s entry contribution.

Both entry contributions equal to or below extra allowable amount

 (3) If:

 (a) this section applies to a special resident; and

 (b) the resident’s entry contribution, and the partner’s entry contribution, were each less than or equal to the extra allowable amount concerned;

then, for the purposes of this Act:

 (c) the resident and the partner are each to be taken not to have a right or interest in relation to the resident’s principal home or the partner’s principal home; and

 (d) the resident’s assets are taken to include an amount equal to the resident’s individual residence contribution; and

 (e) the partner’s assets are taken to include an amount equal to the partner’s individual residence contribution.

 (4) Subsection (2) applies:

 (a) whether or not the resident actually has any right or interest in the resident’s principal home; and

 (b) whatever the value of any right or interest that the resident does have in the resident’s principal home; and

 (c) whether or not the partner actually has any right or interest in the partner’s principal home; and

 (d) whatever the value of any right or interest that the partner does have in the partner’s principal home.

52W  Members of ordinary couple with different principal homes (partner not in special residence and partner property owner)

 (1) This section applies to a special resident if:

 (a) the resident is a member of an ordinary couple with different principal homes; and

 (b) the principal home of the resident’s partner is not a special residence; and

 (c) the right or interest of the resident’s partner in the partner’s principal home would, but for this section, be disregarded because of paragraph 52(1)(b).

 (2) If this section applies to a special resident, then, for the purposes of this Act:

 (a) the resident and the resident’s partner are each to be taken to have a right or interest in a principal home to which paragraph 52(1)(b) applies; and

 (b) the value of the resident’s principal home is to be taken to be the amount of the resident’s entry contribution; and

 (c) any right or interest of the resident in:

 (i) the more valuable of the two principal homes; or

 (ii) where the value of the two principal homes is the same—the principal home that is not a special residence;

  (the more valuable principal home) is to be disregarded in calculating the actual value of the resident’s assets; and

 (d) any right or interest of the partner in the more valuable principal home is to be disregarded in calculating the actual value of the partner’s assets; and

 (e) the assets of the person whose principal home is not the more valuable principal home are to be taken to include an asset whose value is equivalent to the value of the less valuable principal home.

52X  Members of ordinary couple with different principal homes (partner not in special residence and partner not property owner)

 (1) This section applies to a special resident if:

 (a) the resident is a member of an ordinary couple with different principal homes; and

 (b) the principal home of the resident’s partner is not a special residence; and

 (c) the partner does not have a right or interest in the partner’s principal home that is to be disregarded because of paragraph 52(1)(b).

Entry contribution above extra allowable amount

 (2) If:

 (a) this section applies to a special resident; and

 (b) the resident’s entry contribution was more than the amount that would be the extra allowable amount if the resident were not a member of a couple;

then, for the purposes of this Act, the resident and the partner are each to be taken to have a right or interest in a principal home to which paragraph 52(1)(b) applies.

Entry contribution equal to or below extra allowable amount

 (3) If:

 (a) this section applies to a special resident; and

 (b) the resident’s entry contribution was equal to or less than the amount that would be the extra allowable amount if the resident were not a member of a couple;

then, the following provisions apply for the purposes of the application of this Act to the resident and to the resident’s partner:

 (c) both the resident, and the partner, are to be taken not to have a right or interest in relation to the resident’s principal home; and

 (d) the resident’s assets are to be taken to include an asset whose value is equal to the amount of the resident’s entry contribution.

 (4) Subsection (3) applies:

 (a) whether or not the resident actually has any right or interest in the resident’s principal home; and

 (b) whatever the value of any right or interest that the resident does have in the resident’s principal home; and

 (c) whether or not the partner actually has any right or interest in the resident’s principal home; and

 (d) whatever the value of any right or interest that the partner does have in the resident’s principal home.

Subdivision DFinancial hardship

52Y  Access to financial hardship rules

 (1) Where:

 (a) either:

 (i) a service pension, income support supplement or a veteran payment is not payable to a person because of the application of an assets test; or

 (ii) a person’s service pension rate, income support supplement rate or veteran payment rate is determined by the application of an assets test; and

 (b) either:

 (i) sections 48B and 48C (disposal of income) and 52G, 52H, 52JA, 52JB, 52JC and 52JD (disposal of assets) do not apply to the person; or

 (ii) the Commission determines in writing that the application of those sections to the person should, for the purposes of this section, be disregarded; and

 (c) the person, or the person’s partner, has an unrealisable asset; and

 (d) the person lodges, at an office of the Department in Australia in accordance with section 5T, a written request that this section apply to the person; and

 (e) the Commission is satisfied that the person would suffer severe financial hardship if this section did not apply to the person;

the Commission must determine in writing that this section applies to the person.

Note: For unrealisable asset see subsections 5L(11) and (12).

 (2) If a request is lodged under paragraph (1)(d), the Secretary:

 (a) must investigate the matters that the request relates to; and

 (b) must, when the investigation is complete, submit to the Commission for its consideration:

 (i) the request; and

 (ii) the evidence that the person who made the request provided in support of the request; and

 (iii) any documents that are relevant to the request and are under the Department’s control (including any evidence or documents relevant to the request that are obtained in the course of the investigation).

 (3) A determination under subsection (1) takes effect:

 (a) on the day on which the request under paragraph (1)(d) was lodged; or

 (b) if the Commission so determines in the special circumstances of the case—on a day not more than 6 months before the day referred to in paragraph (a).

52Z  Application of financial hardship rules

Value of unrealisable asset to be disregarded

 (1) If section 52Y applies to a person, the value of:

 (a) any unrealisable asset of the person; and

 (b) any unrealisable asset of the person’s partner;

is to be disregarded in working out the person’s service pension rate, income support supplement rate or veteran payment rate.

Deduction from maximum payment rate

 (2) If section 52Y applies to a person, there is to be deducted from the person’s service pension maximum payment rate, income support supplement maximum payment rate or veteran payment maximum payment rate an amount equal to the person’s adjusted annual rate of ordinary income.

Adjusted annual rate of ordinary income

 (3) A person’s adjusted annual rate of ordinary income is an amount per year equal to the sum of:

 (a) the person’s annual rate of ordinary income (other than income from assets); and

 (b) the person’s annual rate of ordinary income from assets that are not assets tested; and

 (c) either:

 (i) the person’s annual rate of ordinary income from unrealisable assets; or

 (ii) the person’s notional annual rate of ordinary income from unrealisable assets;

  whichever is the greater; and

 (d) an amount per year equal to $19.50 for each $250 of the value of the person’s assets (other than disregarded assets).

 (3A) In working out the ordinary income of a person for the purposes of subsection (3), the following payments and amounts are to be counted:

 (a) a payment of an instalment of pension under Part II or IV;

 (b) a payment of an instalment of a pension (other than a pension payable in respect of a child) payable because of subsection 4(6) or (8B) of the Veterans’ Entitlements (Transitional Provisions and Consequential Amendments) Act 1986;

 (d) a payment (other than a payment referred to in paragraph (a) or (b)) that is a payment in respect of incapacity or death resulting from employment in connection with a war or warlike operations in which the Crown has been engaged;

 (da) a payment of compensation (other than a payment covered by paragraph (d)) to the extent that the payment is taken into account:

 (i) under Division 5A of Part II; or

 (ii) under section 74;

  to reduce a pension payable to the person under Part II or IV, as the case requires;

 (e) a payment by way of allowance (other than loss of earnings allowance) under Part VI of this Act;

 (f) a payment, by a foreign country, of an allowance or annuity that is of a similar kind to decoration allowance payable under section 102 or to Victoria Cross allowance payable under section 103;

 (fa) a payment under Part VIB (prisoner of war recognition supplement);

 (g) a payment of a weekly amount under section 68, 71 or 75 of the MRCA (permanent impairment);

 (h) a payment of a Special Rate Disability Pension under Part 6 of Chapter 4 of the MRCA;

 (i) if subsection 204(5) of the MRCA applies to a person—an amount per fortnight worked out under section 5I of this Act;

 (j) a payment of a weekly amount mentioned in paragraph 234(1)(b) of the MRCA (including a reduced weekly amount because of a choice under section 236 of the MRCA) (wholly dependent partner payment).

Note 1: Subsection 204(5) of the MRCA reduces a Special Rate Disability Pension by reference to amounts of Commonwealth superannuation that the person has received or is receiving.

Note 2: The payments and amounts referred to in this subsection would not be considered ordinary income elsewhere in this Act (see subsections 5H(1) and (8)).

Assets tested asset

 (4) For the purposes of subsection (3), an asset is not assets tested if the asset’s value is disregarded under subsection 52(1).

Notional annual rate of ordinary income from unrealisable assets

 (5) A person’s notional annual rate of ordinary income from unrealisable assets is:

 (a) the amount per year equal to 2.5% of the value of the person’s and the person’s partner’s unrealisable assets; or

 (b) the amount per year that could reasonably be expected to be obtained from a purely commercial application of the person’s and the person’s partner’s unrealisable assets;

whichever is the less.

 (6) Subsection (2) applies:

 (a) subject to subsection (8); and

 (b) despite the Rate Calculator and section 45S (calculation of rate of income support supplement).

 (7) Where:

 (a) a person has disposed of assets and section 52G, 52H, 52JA, 52JB, 52JC or 52JD applies to the disposition; and

 (b) the Commission has made a determination under subparagraph 52Y(1)(b)(ii) in relation to the disposition;

this section applies to the person as if the person had not disposed of the assets.

 (8) Where the sum of the rate of service pension, income support supplement or veteran payment that would, apart from this subsection, be payable to a person and the annual rate of income of the person exceeds the maximum payment rate, the rate so payable is to be reduced by the amount per year of the excess.

Subdivision EPension loans scheme

52ZAAA  Pension loans scheme definitions

 (1) In this Subdivision, unless the contrary intention appears:

dispose of real assets has its ordinary meaning.

maximum payment rate, in relation to a service pension or an income support supplement, means the rate worked out in relation to that pension or supplement at Step 4 of Method statement 1, Step 4 of Method statement 2 or Step 4 of Method statement 5, as the case may be, in Module A of the Rate Calculator.

nominated amount means the amount (if any) specified to be the nominated amount under paragraph 52ZD(1A)(b) or subsection 52ZE(1) (as the case may be).

pension loans scheme advance payment: see section 52ZBA.

pension loans scheme advance payment period, for a person, means the period of 26 fortnights starting on the day in relation to which the person’s pension loans scheme advance payment was worked out under subsection 52ZBA(2).

real assets, in relation to a person or couple, means the real property (including the principal home) of the person or couple in Australia that is specified under paragraph 52ZD(1A)(a).

 (2) For the purposes of this Subdivision, a reference to a charge under section 52ZF includes a reference to a charge continued in force by subsection 52ZF(3) or paragraph 52ZG(2A)(b).

 (3) For the purposes of this Subdivision, a person is participating in the pension loans scheme if:

 (a) the person has made a request to participate in the scheme under section 52ZD; and

 (c) the person owes a debt to the Commonwealth under section 52ZC.

52ZA  Eligibility for participation in pension loans scheme

Person not member of a couple

 (1) A person who is not a member of a couple is eligible to participate in the pension loans scheme if:

 (a) the person is receiving or is eligible for a service pension or income support supplement; and

 (d) the person has reached:

 (i) if the person is receiving or is eligible for service pension—pension age; or

 (ii) if the person is receiving or is eligible for income support supplement—qualifying age; and

 (da) the person is not bankrupt; and

 (db) the person is not subject to a personal insolvency agreement under Part X of the Bankruptcy Act 1966; and

 (dc) the Commission is satisfied that there is adequate and appropriate insurance in relation to the person’s real assets; and

 (e) either:

 (i) the Commission is satisfied that the value of the person’s real assets (after deduction of any nominated amount) is sufficient to secure the payment of any debt that may become payable to the Commonwealth under this Subdivision; or

 (ii) subsection (3) applies to the person.

Note 2: For real assets see subsection 52ZAAA(1).

Note 3: For nominated amount, see subsection 52ZAAA(1).

Note 4: For pension age see section 5QA.

Note 5: For qualifying age see section 5Q.

Person member of a couple

 (2) A person who is a member of a couple is eligible to participate in the pension loans scheme if:

 (a) the person is receiving or is eligible for a service pension or income support supplement; and

 (d) the person:

 (i) is a veteran and has reached pension age; or

 (ii) is the partner of a veteran referred to in subparagraph (i); or

 (iii) is receiving or is eligible for an income support supplement and has reached qualifying age; and

 (da) the person is not bankrupt; and

 (db) the person is not subject to a personal insolvency agreement under Part X of the Bankruptcy Act 1966; and

 (dc) the Commission is satisfied that there is adequate and appropriate insurance in relation to the couple’s real assets; and

 (e) either:

 (i) the Commission is satisfied that the value of the couple’s real assets (after deduction of any nominated amount) is sufficient to secure the payment of any debt that may become payable to the Commonwealth under this Subdivision; or

 (ii) subsection (3) applies to both of the members of the couple.

Note 2: For real assets see subsection 52ZAAA(1).

Note 3: For nominated amount, see subsection 52ZAAA(1).

Note 4: For pension age see section 5QA.

Note 5: For qualifying age see section 5Q.

Attributable stakeholder of a company or trust

 (3) This subsection applies to a person if:

 (a) either:

 (i) the person is an attributable stakeholder of a company or trust (within the meaning of Division 11A); or

 (ii) the person is a member of a couple and the other member of the couple is an attributable stakeholder of a company or trust (within the meaning of Division 11A); and

 (b) the company or trustee has given the Commonwealth a guarantee that the company or trustee will pay any debt that may become payable to the Commonwealth by the person under this Subdivision; and

 (c) the company’s or trustee’s liability under the guarantee is secured by a charge against specified real property of the company or trust in Australia; and

 (d) the Commission is satisfied that the value of the specified real property is sufficient to secure the payment of any amount that may become payable by the company or trustee under the guarantee; and

 (e) the Commission has, by writing, approved the guarantee and the charge.

Value of real property

 (4) In working out the value of real property for the purposes of subparagraph (1)(e)(i) or (2)(e)(i) or paragraph (3)(d):

 (a) disregard section 52C; and

 (b) the Commission may take into account any charge or encumbrance over the property.

52ZB  Effect of participation in pension loans scheme—pension rate

 (1) This section applies if:

 (a) a person is eligible to participate in the pension loans scheme; and

 (b) the person makes a request to participate under section 52ZD; and

 (c) the Commission is satisfied that the amount of any debt that becomes payable by the person to the Commonwealth under this Subdivision is readily recoverable.

 (1A) The rate of the pension payable to the person by operation of the scheme is to be:

 (a) if the pension will not be received in relation to a pension loans scheme advance payment period for the person:

 (i) 1.5 multiplied by the maximum payment rate; or

 (ii) a lower rate nominated by the person; or

 (b) if the pension will be received in relation to a pension loans scheme advance period for the person:

 (i) the greater of the maximum payment rate and 1.5 multiplied by the maximum payment rate less any amounts of pension loans scheme advance payment received by the person in relation to the period; or

 (ii) a lower rate nominated by the person.

Note: For the meaning of maximum payment rate, see subsection 52ZAAA(1).

 (2) The pension at the rate payable by operation of the scheme is payable on and from the day on which the request is lodged.

 (3) For the purposes of section 53A (fringe benefits), if but for the operation of the scheme the person would not have received a service pension or income support supplement, the person is to be taken to be a person who is not receiving a service pension or income support supplement.

 (4) For the purposes of Subdivision C of Division 12 (treatment benefits), if but for the operation of the scheme the person would not have received a service pension or income support supplement, the person is to be taken to be a person who is not receiving an age or invalidity service pension.

52ZBA  Pension loans scheme advance payment

 (1) This section applies if a pension is payable to a person at a rate worked out under this Subdivision.

 (2) The person is eligible for an advance payment (a pension loans scheme advance payment) of the pension if:

 (a) the person makes a request for the advance payment under section 52ZEAA; and

 (b) the person has not received more than one pension loans scheme advance payment in relation to a pension loans scheme advance payment period commencing during the previous 26 fortnights.

 (3) The amount of the pension loans scheme advance payment is whichever is the least of the following amounts:

 (a) if the person has not received another pension loans scheme advance payment in relation to a pension loans scheme advance payment period that commenced during the previous 26 fortnights—0.5 multiplied by the maximum payment rate payable to the person on the day in relation to which the person’s rate of pension worked out under this Subdivision is to be paid as the pension loans scheme advance payment;

 (b) if the person has received another pension loans scheme advance payment (the previous amount) in relation to a pension loans scheme advance payment period that commenced during the previous 26 fortnights—0.5 multiplied by the maximum payment rate payable to the person on the day in relation to which the person’s rate of pension worked out under this Subdivision is to be paid as the pension loans scheme advance payment, less the previous amount;

 (c) the maximum loan available to the person under the pension loans scheme, less the amount of the debt owed by the person under section 52ZC;

 (d) the amount requested by the person.

 (4) A pension loans scheme advance payment is to be paid as soon as practicable after the request under section 52ZEAA is made.

 (5) This section applies despite section 79B.

Note: Section 79B sets out other circumstances in which a person is eligible for an advance payment of an amount of pension.

52ZC  Effect of participation in pension loans scheme—creation of debt

 (1) If the rate of the pension payable by operation of the pension loans scheme is more than the rate that would have been received by the person but for the operation of the scheme, the person owes a debt to the Commonwealth.

 (3) This is how to work out the amount of the debt owed by the person from time to time:

Method statement

Step 1. Work out the sum of the amount of pension received by the person from time to time under the pension loans scheme: the result is the primary loan amount.

Step 1A. Add to the primary loan amount the amount of any pension loans scheme advance payments received by the person: the result is the advance payment adjusted amount.

Step 2. Take away from the advance payment adjusted amount the sum of the amount of pension (if any) that would have been received by the person but for the operation of the scheme: the result is the basic amount of debt.

Step 3. Add to the basic amount of debt the amount of interest payable. The interest payable is compound interest at the rate fixed by the legislative instrument made under subsection 1135(4) of the Social Security Act 1991 and compounding fortnightly: the result is the amount of debt including interest.

Step 4. Add to the amount of debt including interest the amount of any registration costs payable by the person under subsection 52ZL(4): the result is the total amount of debt.

Step 5. From the total amount of debt take away any amount of the debt already paid to the Commonwealth: the result is the current amount of debt owed by the person.

52ZCA  Effect of participation in pension loans scheme—maximum loan available

 (1) The maximum loan available to a person under the pension loans scheme is the amount worked out using the formula:

Start formula Age component amount times start fraction Value of real assets over 10000 end fraction end formula

where:

age component amount means the amount that is specified in a determination under subsection 1135A(3) of the Social Security Act 1991 and that relates to:

 (a) if the person is not a member of a couple—the age the person turned on his or her last birthday; or

 (b) if the person is a member of a couple—the age the younger member of the couple turned on his or her last birthday.

value of real assets means:

 (a) if neither subparagraph 52ZA(1)(e)(ii) nor subparagraph 52ZA(2)(e)(ii) applied to the person when the person made his or her request to participate in the pension loans scheme—the value of the real assets (after deduction of any nominated amount); or

 (b) if subparagraph 52ZA(1)(e)(ii) or (2)(e)(ii) applied to the person when the person made his or her request to participate in the pension loans scheme—the value of the charge referred to in paragraph 52ZA(3)(c).

Note 1: For real assets see subsection 52ZAAA(1).

Note 2: For nominated amount see subsection 52ZAAA(1).

 (2) For the purposes of subsection (1), the following provisions have effect:

 (a) if, but for this paragraph, the value of real assets would be an amount that exceeds $10,000 but is not a multiple of $10,000, the value is to be taken to be the next lower amount that is a multiple of $10,000;

 (b) if, but for this paragraph, the value of real assets would be less than $10,000, the value is to be taken to be nil.

52ZD  Need for a request to participate

 (1) A person who wants to participate in the pension loans scheme must make a request to participate in accordance with this section.

 (1A) A request under subsection (1) must:

 (a) specify any real property that is to be included in working out the value of real assets for the purposes of sections 52ZA and 52ZCA, or that is to be subject to a charge under section 52ZF; and

 (b) specify an amount (if any) to be the nominated amount for the purposes of this Subdivision; and

 (c) specify the rate of the pension (if any) nominated by the person for the purposes of subparagraph 52ZB(1A)(a)(ii) or (b)(ii).

 (1B) Paragraphs (1A)(a) and (b) do not apply if subparagraph 52ZA(1)(e)(ii) or (2)(e)(ii) applied to the person when the person made his or her request to participate in the pension loans scheme.

 (2) The request must be signed:

 (a) if the person is not a member of a couple—by the person; or

 (b) if the person is a member of a couple—by both members of the couple.

 (3) The request must be:

 (a) in writing; and

 (b) in a form approved by the Commission; and

 (c) lodged at an office of the Department in Australia in accordance with section 5T.

52ZE  Need for a request to later nominate or change nominated amount or rate of pension

 (1) A person who is participating in the pension loans scheme and who wants to:

 (a) nominate an amount to be the nominated amount for the purposes of this Subdivision; or

 (b) nominate a rate of pension for the purposes of subparagraph 52ZB(1A)(a)(ii) or (b)(ii); or

 (c) change the nominated amount earlier specified; or

 (d) change the rate of the pension earlier specified;

must make a request that specifies the nomination or change (as the case may be).

 (1A) Paragraphs (1)(a) and (c) do not apply if subparagraph 52ZA(1)(e)(ii) or (2)(e)(ii) applied to the person when the person made his or her request to participate in the pension loans scheme.

 (2) A request under subsection (1) must be signed:

 (a) if the person is not a member of a couple—by the person; or

 (b) if the person is a member of a couple—by both members of the couple.

 (3) The request must:

 (a) be in writing; and

 (b) be lodged at an office of the Department in Australia in accordance with section 5T.

52ZEAA  Need for a request for a pension loans scheme advance payment

 (1) A person who wants to receive a pension loans scheme advance payment must make a request for the payment in accordance with this section.

 (2) A request under subsection (1) must specify the amount of pension loans scheme advance payment requested.

Note: There are limits to the amount that can be paid: see subsection 52ZBA(2).

 (3) The request must be signed:

 (a) if the person is not a member of a couple—by the person; or

 (b) if the person is a member of a couple—by both members of the couple; and

 (4) The request must be:

 (a) in writing; and

 (b) in a form approved by the Commission; and

 (c) be lodged at an office of the Department in Australia in accordance with section 5T.

52ZEA  Nonreceipt of service pension or income support supplement

 (1) This section applies for the purposes of a provision (the relevant provision) of this or another Act if:

 (a) the relevant provision provides a benefit (whether the benefit is a pension, benefit, payment, supplement, subsidy, seniors health card or any other sort of benefit) to a person; and

 (b) in relation to that benefit, it is necessary to work out whether:

 (i) the person or another person is receiving or is not receiving a service pension or income support supplement or a particular kind of service pension; or

 (ii) the person or another person is a recipient or is not a recipient of a service pension or income support supplement or a particular kind of service pension; or

 (iii) a service pension or income support supplement, or a particular kind of service pension, is payable to the person or another person.

 (2) For the purposes of the relevant provision:

 (a) a person is taken not to be receiving a service pension or income support supplement or the particular kind of service pension; and

 (b) a person is taken not to be a recipient of a service pension or income support supplement or the particular kind of service pension; and

 (c) a service pension or income support supplement, or the particular kind of service pension, is taken not to be payable to the person;

merely because:

 (d) the person receives a service pension or income support supplement, or the kind of service pension, at a rate worked out under this Subdivision; or

 (e) a service pension or income support supplement, or the kind of service pension, is payable to the person at a rate worked out under this Subdivision.

 (3) Subsection (2) does not apply in relation to a person and a day if on that day:

 (a) the person is receiving a service pension or income support supplement at a rate worked out under this Subdivision; and

 (b) but for the operation of this Subdivision, the person would have been receiving that service pension or income support supplement at a rate greater than nil.

52ZF  Existence of debt results in charge over real assets

Person not member of a couple

 (1) If a person who is not a member of a couple owes a debt to the Commonwealth under section 52ZC, the person’s real assets are subject to a charge in favour of the Commonwealth to secure the payment of the debt to the Commonwealth.

Person member of a couple

 (2) If:

 (a) a person who is a member of a couple owes a debt to the Commonwealth under section 52ZC; and

 (b) the person’s partner has signed the person’s request under subsection 52ZD(2);

the couple’s real assets are subject to a charge in favour of the Commonwealth to secure the payment of a debt to the Commonwealth.

 (3) If:

 (a) the pension loans scheme ceases to operate in relation to a person because of the effect of section 52ZJ, 52ZJA or 52ZK; and

 (b) at the time the scheme ceases to operate, the person owes a debt to the Commonwealth because of the person’s participation in the scheme;

any charge in favour of the Commonwealth under subsection (1) or (2) of this section continues in relation to the real assets until the debt is repaid or recovered.

Note 1: Section 52ZJ provides that a person ceases to participate in the scheme if the debt owed by the person exceeds the maximum loan available.

Note 1A: Section 52ZJA provides that the scheme ceases to operate in relation to a person if the Commission is satisfied that the person ceases to be eligible to participate in the scheme and the Commission determines that the scheme ceases to operate in relation to the person.

Note 2: Section 52ZK provides for a person to withdraw from the scheme.

 (4) This section does not apply if subparagraph 52ZA(1)(e)(ii) or (2)(e)(ii) applied to the person when the person made his or her request to participate in the pension loans scheme.

52ZG  Debt not to be recovered until after death

 (1) The Commonwealth is not entitled to recover a debt under section 52ZC from a person until after the person’s death.

 (2) In the following circumstances, the Commonwealth is not entitled to recover the debt until after the person’s death and after:

 (a) if:

 (i) the person was a member of a couple at the time of death; and

 (ii) the person’s partner survives the person; and

 (iii) an amount of bereavement payment is payable to the partner because of the person’s death;

  the end of the bereavement period; or

 (b) if:

 (i) the person was a member of a couple at the time of death; and

 (ii) the person’s partner survives the person; and

 (iii) the person’s partner has the use of the assets or part of the assets that are subject to a charge; and

 (iv) the partner has reached:

 (A) if the partner is a veteran—pension age; or

 (B) if the partner is not a veteran—the age that would be his or her pension age if he or she were a veteran;

  the death of the partner.

Note: For pension age see section 5QA.

 (2A) In relation to the period between the person’s death and the time of recovery of the debt by the Commonwealth:

 (a) compound interest continues to accrue, and forms part of the debt, in accordance with Step 3 of the Method statement in subsection 52ZC(3); and

 (b) the charge in favour of the Commonwealth under section 52ZF continues in relation to the real assets until the debt is recovered.

 (3) This section is subject to section 52ZH (enforcement of charge if assets change hands).

 (4) If the Commission determines in writing that the debt is to be recovered before the events referred to in subsection (1) or (2), the debt may be so recovered in spite of those subsections.

52ZH  Enforcement of charge

 (1) If:

 (a) real assets of a person are subject to a charge under section 52ZF; and

 (b) any of those real assets cease to be real assets of the person; and

 (c) the person receives proceeds from the sale or other disposal of the real assets;

the Commonwealth may recover from the person, out of those proceeds, the whole or part of the debt secured by the charge.

 (2) If:

 (a) real assets of a person are subject to a charge under section 52ZF; and

 (b) any of those real assets are disposed of to another person (in this section called the new owner);

the Commonwealth may, subject to subsection (3), enforce the charge against those real assets.

 (2A) For the purposes of paragraph (2)(b), it does not matter whether:

 (a) the disposal of the real assets is by way of sale, transfer, gift, will or otherwise; or

 (b) the disposal is by the person referred to in paragraph (2)(a) or any other person.

 (3) The Commonwealth may not enforce the charge against the real assets if the new owner is a genuine purchaser for value without notice of the charge.

52ZJ  Person ceases to participate in pension loans scheme if debt exceeds maximum loan available

  If:

 (a) a person is participating in the pension loans scheme; and

 (b) the debt owed by the person under section 52ZC exceeds the maximum loan available to the person under the scheme;

the scheme ceases to operate in relation to the person on the first day on which the debt exceeds the maximum loan available.

Note 1: The maximum loan available is worked out by using the formula set out in subsection 52ZCA(1).

Note 2: For repayment or recovery of the debt owed by the person see section 52ZKA and section 52ZG.

52ZJA  Commission may cease person’s participation in pension loans scheme

 (1) If:

 (a) a person is participating in the pension loans scheme; and

 (b) the Commission is satisfied that the person ceases to be eligible to participate in the scheme;

the Commission may, in writing, determine that the scheme ceases to operate in relation to the person. The scheme ceases to operate in relation to the person at the beginning of the first pension period for the service pension or income support supplement being paid to the person that begins after the determination is made.

Note: For repayment or recovery of the debt owed by the person, see sections 52ZG and 52ZKA.

 (2) The Commission must give the person notice of the determination.

 (3) A determination under subsection (1) is not a legislative instrument.

52ZK  Person withdraws from pension loans scheme

 (1) If a person who is participating in the pension loans scheme makes a request to withdraw from the scheme, the scheme ceases to operate in relation to the person on the day on which the request is lodged.

Note: For repayment or recovery of the debt owed by the person, see sections 52ZG and 52ZKA.

 (2) A request under subsection (1) must be signed:

 (a) if the person is not a member of a couple—by the person; or

 (b) if the person is a member of a couple—by both members of the couple.

 (3) The request must:

 (a) be in writing; and

 (b) be lodged at an office of the Department in Australia in accordance with section 5T.

 (4) A request lodged in accordance with section 5T is taken to have been made on a day determined under that section.

52ZKA  Repayment or recovery of debt after pension loans scheme ceases to operate

 (1) The debt owed by a person under section 52ZC, at the time the pension loans scheme ceases to operate in relation to the person by operation of section 52ZJ, 52ZJA or 52ZK, may be repaid by the person at any time.

Note 1: Section 52ZJ provides that a person ceases to participate in the scheme if the debt owed by the person exceeds the maximum loan available.

Note 1A: Section 52ZJA provides that the scheme ceases to operate in relation to a person if the Commission is satisfied that the person ceases to be eligible to participate in the scheme and the Commission determines that the scheme ceases to operate in relation to the person.

Note 2: Section 52ZK provides for a person to withdraw from the scheme.

 (2) If the debt owed by the person is not repaid by the person at the time the scheme ceases to operate in relation to the person, compound interest continues to accrue, and forms part of the debt, in accordance with Step 3 of the Method statement in subsection 52ZC(3), until the debt is repaid or recovered.

 (3) If the debt is not repaid under subsection (1) of this section, subject to section 52ZG the Commonwealth is entitled to recover the debt.

Note: Section 52ZG provides that a debt cannot be recovered from a person until after the person’s death.

52ZL  Registration of charge

 (1) If real assets are subject to a charge under section 52ZF, the Commission may lodge a notice in writing of the charge with the appropriate officer of the State or Territory in which the real assets are situated.

 (2) The appropriate officer may register the charge as if the Commission’s notice were an instrument of charge or encumbrance duly executed under the laws in force in the State or Territory.

 (3) The Secretary may require the person whose real assets are subject to the charge to execute an instrument relating to the registration of the charge.

 (4) If the Commonwealth incurs costs associated with:

 (a) the registration of the charge; or

 (b) the registration of the discharge of the charge;

those costs are payable by the person whose real assets are subject to the charge.

52ZM  Manner of enforcement of charge

  If a charge against real assets is enforceable under this Subdivision, the Commission may enforce the charge against those real assets or against part of those real assets in any manner that the Commission determines in writing.

52ZMAA  No negative equity guarantee

When adjusted value of assets is exceeded

 (1) If:

 (a) a person owes a debt to the Commonwealth under section 52ZC; and

 (b) neither subparagraph 52ZA(1)(e)(ii) nor subparagraph 52ZA(2)(e)(ii) applied to the person when the person made the request to participate in the pension loans scheme; and

 (c) either of the following events occur:

 (i) a person seeks to repay the debt;

 (ii) the Commonwealth seeks to recover the debt; and

 (d) at the time the event occurs, the amount of the debt exceeds the adjusted value of the person’s real assets; and

 (e) subsection (3) of this section does not apply;

then:

 (f) the Commonwealth is not entitled to recover an amount (the excess amount) that exceeds the adjusted value of the person’s real assets; and

 (g) the debt to the Commonwealth, and the charge securing the debt, is discharged to the extent of the excess amount by force of this paragraph.

Note: For the meaning of real assets, see subsection 52ZAAA(1).

When adjusted value of charge is exceeded

 (2) If:

 (a) a person owes a debt to the Commonwealth under section 52ZC; and

 (b) subparagraph 52ZA(1)(e)(ii) or (2)(e)(ii) applied to the person when the person made the request to participate in the pension loans scheme; and

 (c) either of the following events occur:

 (i) a person seeks to repay the debt;

 (ii) the Commonwealth seeks to recover the debt; and

 (d) at the time the event occurs, the amount of the debt exceeds the adjusted value of the real property specified for the purposes of paragraph 52ZA(3)(c); and

 (e) subsection (3) of this section does not apply;

then:

 (f) the Commonwealth is not entitled to recover an amount (the excess amount) that exceeds the adjusted value of the specified real property; and

 (g) the debt to the Commonwealth, and the charge securing the debt, is discharged to the extent of the excess amount by force of this paragraph.

Circumstances in which excess amount may be recovered and debt is not discharged

 (3) This subsection applies if the Commission is satisfied that:

 (a) a charge or encumbrance over the person’s real assets or the specified real property is created or increased by, or with the express consent of, the person after the person begins to participate in the pension loans scheme which affects, or will affect, the ability of the Commonwealth to recover the debt owed under section 52ZC; or

 (b) the person engaged in fraud, or made a misrepresentation, in relation to the person’s participation in the pension loans scheme, including in relation to the person’s real assets or the specified real property.

 (4) The Commission may, by legislative instrument, make guidelines to be complied with in making a decision for the purposes of subsection (3).

Meaning of adjusted value

 (5) The adjusted value:

 (a) for real assets—means the amount worked out by:

 (i) working out the market value of the assets in accordance with an instrument made under subsection (6); and

 (ii) adjusting that value in accordance with the instrument; and

 (b) for real property—means the amount worked out by:

 (i) working out the market value of the property in accordance with an instrument made under subsection (6); and

 (ii) adjusting that value in accordance with the instrument.

 (6) The Commission must, by legislative instrument, determine:

 (a) one or more methods for working out the market value of real assets for the purposes of subparagraph (5)(a)(i); and

 (b) adjustments to be made to the market value of real assets for the purposes of subparagraph (5)(a)(ii); and

 (c) one or more methods for working out the market value of real property for the purposes of subparagraph (5)(b)(i); and

 (d) adjustments to be made to the market value of real property for the purposes of subparagraph (5)(b)(ii).

 (7) Without limiting subsection (6), the determination may:

 (a) specify that adjustments are to be made in relation to specified kinds of charges or encumbrances over real assets or real property; and

 (b) determine different methods to be used and adjustments to be made in different circumstances.

Subdivision FCommutation of assettest exempt income stream

52ZMA  Debt resulting from commutation of assettest exempt income stream contrary to subsection 5JA(2), 5JB(2) or 5JBA(2)

 (1) If:

 (a) a person is provided with an assettest exempt income stream for a period beginning on the first day in respect of which an income stream payment was made to the person and ending on the last day in respect of which an income stream payment was made to the person; and

 (b) during the whole or any part of that period an amount of service pension, income support supplement or veteran payment has been paid to the person; and

 (c) the whole or any part of the income stream is commuted contrary to the contract or governing rules under which the income stream was provided on the commencement day of the income stream; and

 (d) the amount of service pension, income support supplement or veteran payment that has been paid to the person for that period is more than the amount that would have been payable to the person for that period had the income stream not been an assettest exempt income stream for the purposes of this Act for that period;

an amount worked out under subsection (2) is a debt due to the Commonwealth.

 (2) That amount is an amount equal to the difference between the amount of service pension, income support supplement or veteran payment that has been paid to the person during the period worked out under subsection (3) and the amount that would have been so paid to the person had the income stream not been an assettest exempt income stream for the purposes of this Act for that period.

 (3) The period for the purposes of subsection (2) is the period that:

 (a) began on:

 (i) the day 5 years before the day the income stream was commuted; or

 (ii) the commencement day of the income stream; or

 (iii) 20 September 2001;

  whichever is the latest; and

 (b) ended when the income stream was commuted.

 (4) In working out the asset value of the income stream had the income stream not been an assettest exempt income stream for the period referred to in subsection (2), assume that the income stream was asset tested from the commencement day and that the asset value of the income stream is depleted in accordance with the formula in subsection 52A(4).

 (5) Subject to subsection (6), if:

 (a) an assettest exempt income stream (the old income stream) is commuted, in whole or in part; and

 (b) part, but not the whole, of the payment resulting from the commutation of the old income stream (the commutation payment) is transferred directly to the purchase of another assettest exempt income stream (the new income stream);

the following paragraphs have effect for the purposes of this section:

 (c) the new income stream is taken to have the same commencement day as:

 (i) the old income stream; or

 (ii) if the old income stream was one of a succession of assettest exempt income streams—the first income stream in that succession;

 (d) if the old income stream was not one of a succession of assettest exempt income streams—income stream payments made under the old income stream are taken to have been made under the new income stream;

 (e) if the old income stream was one of a succession of assettest exempt income streams—income stream payments made under any of the income streams in that succession are taken to have been made under the new income stream.

 (6) Subsection (5) does not apply if the amount used in the purchase of the new income stream represents the whole of the commutation payment remaining after the use of part of the commutation payment in the payment of:

 (a) a hardship amount; or

 (b) superannuation contributions surcharge that the person is liable to pay in his or her capacity as purchaser of the old income stream.

 (7) Subject to subsection (8), if:

 (a) the whole of an assettest exempt income stream is commuted; and

 (b) no part of the payment resulting from the commutation of the income stream is transferred directly to the purchase of another assettest exempt income stream; and

 (c) the commuted income stream was one of a succession of assettest exempt income streams;

the following paragraphs have effect for the purposes of this section:

 (d) the commuted income stream is taken to have had the same commencement day as the first income stream in that succession;

 (e) income stream payments made under any of the income streams in that succession (other than the commuted income stream) are taken to have been, at the time when they were made, payments under the commuted income stream.

 (8) Subsection (7) does not apply if the whole of the payment resulting from the commutation of the old income stream is used in the payment of:

 (a) a hardship amount; or

 (b) superannuation contributions surcharge that the person is liable to pay in his or her capacity as purchaser of the old income stream.

 (9) For the purposes of this section:

 (a) 2 or more assettest exempt income streams constitute a succession of assettest exempt income streams if each income stream (other than the first of those income streams to be provided) has been funded by means of the payment, or part of the payment, resulting from the commutation of another of those income streams; and

 (b) an income stream is the first income stream in a succession of income streams if it is the first of those income streams to be provided.

 (10) In this section:

hardship amount has the same meaning as in subsection 5JA(7).

 (11) This section does not apply to an income stream in relation to which a determination under subsection 5JA(5), 5JB(4) or 5JBA(11) is in force.

Division 11AMeans test treatment of private companies and private trusts

Subdivision AIntroduction

52ZN  Simplified outline

  The following is a simplified outline of this Division:

 This Division sets up a system for the attribution to individuals of the assets and income of private companies and private trusts (sections 52ZZK and 52ZZR).

 Attribution starts on 1 January 2002.

 For an asset or income to be attributed to an individual:

 (a) the company must be a designated private company or the trust must be a designated private trust (sections 52ZZA and 52ZZB); and

 (b) the company must be a controlled private company in relation to the individual or the trust must be a controlled private trust in relation to the individual (sections 52ZZC and 52ZZH); and

 (c) the individual must be an attributable stakeholder of the company or trust (section 52ZZJ).

 A company or trust will be a controlled private trust or a controlled private company if the individual passes a control test or a source test.

 An individual will not be an attributable stakeholder of a trust if the trust is a concessional primary production trust in relation to the individual.

 The asset deprivation rules and the income deprivation rules are modified if attribution happens.

52ZO  Definitions

  In this Division, unless the contrary intention appears:

actively involved with a primary production enterprise has the meaning given by section 52ZW.

actual transfer, in relation to property or services, means a transfer of the property or services other than a transfer that is taken to have been made because of subsection 52ZV(1), (3) or (4).

adjusted net primary production income (in Subdivision K) has the meaning given by section 52ZZZL.

adjusted net value (in Subdivision K) has the meaning given by section 52ZZZK.

arm’s length amount, in relation to an actual transfer of property or services to a company or a trust, means the amount that the company or trust could reasonably be expected to have been required to pay to obtain the property or the services concerned from the transferor under a transaction where the parties to the transaction are dealing with each other at arm’s length in relation to the transaction.

asset attribution percentage has the meaning given by section 52ZZJ.

associate has the meaning given by section 52ZQ.

attributable stakeholder has the meaning given by section 52ZZJ.

attribution period has the meaning given by section 52ZZQ.

business partnership means a partnership within the meaning of the Income Tax Assessment Act 1997.

child: without limiting who is a child of a person for the purposes of this Division, each of the following is the child of a person:

 (a) an adopted child, stepchild or fosterchild of the person;

 (b) someone who is a child of the person within the meaning of the Family Law Act 1975.

company has the same meaning as in the Income Tax Assessment Act 1997.

concessional primary production trust has the meaning given by section 52ZZZF.

constituent document, in relation to a company, means:

 (a) the memorandum and articles of association of the company; or

 (b) any rules or other documents constituting the company or governing its activities.

control includes control as a result of, or by means of, trusts, agreements, arrangements, understandings and practices, whether or not having legal or equitable force and whether or not based on legal or equitable rights.

controlled private company has the meaning given by section 52ZZC.

controlled private trust has the meaning given by section 52ZZH.

decisionmaking principles means decisionmaking principles under section 52ZZZQ.

derivation period has the meaning given by section 52ZZP.

designated private company has the meaning given by section 52ZZA.

designated private trust has the meaning given by section 52ZZB.

director includes any person (by whatever name called) occupying the position of a director of a company.

entity means any of the following:

 (a) an individual;

 (b) a company;

 (c) a trust;

 (d) a business partnership;

 (e) a corporation sole;

 (f) a body politic.

group includes:

 (a) one entity alone; or

 (b) a number of entities, even if they are not in any way associated with each other or acting together.

income attribution percentage has the meaning given by section 52ZZJ.

interest in a share has the meaning given by section 52ZZG.

majority voting interest, in relation to a company, has the meaning given by section 52ZS.

primary production enterprise means a business in Australia that consists of primary production.

property includes money.

relative, in relation to a person, has the meaning given by section 52ZP.

scheme means:

 (a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings; or

 (b) any scheme, plan, proposal, action, course of action or course of conduct, whether there are 2 or more parties or only one party involved.

services includes any benefit, right (including a right in relation to, and an interest in, real or personal property), privilege or facility and, without limiting the generality of the foregoing, includes a benefit, right, privilege, service or facility that is, or is to be, provided under:

 (a) an arrangement for or in relation to:

 (i) the performance of work (including work of a professional nature), whether with or without the provision of property; or

 (ii) the provision of, or of the use of facilities for, entertainment, recreation or instruction; or

 (iii) the conferring of benefits, rights or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction; or

 (b) a contract of insurance; or

 (c) an arrangement for or in relation to the lending of money.

share includes stock.

spouse includes, in relation to a person who is a member of a couple (as defined by section 5E), the other member of the couple.

subsidiary has the same meaning as in the Corporations Act 2001.

sufficiently influenced, in relation to a company, has the meaning given by section 52ZR.

transfer:

 (a) in relation to property—includes dispose of (whether by assignment, declaration of trust or otherwise) or provide; and

 (b) in relation to services—includes allow, confer, give, grant, perform or provide.

trust means a person in the capacity of trustee or, as the case requires, a trust estate.

trustee has the same meaning as in the Income Tax Assessment Act 1997.

underlying transfer, in relation to a transfer of property or services to an entity, means:

 (a) if that transfer was an actual transfer—the actual transfer; or

 (b) if that transfer was taken to have been made because of subsection 52ZV(1)—the actual transfer referred to in that subsection; or

 (c) if that transfer was taken to have been made because of subsection 52ZV(3)—the actual transfer referred to in paragraph 52ZV(3)(b); or

 (d) if that transfer was taken to have been made because of subsection 52ZV(4)—the actual transfer referred to in paragraph 52ZV(4)(c).

voting power has the meaning given by section 52ZZE.

52ZP  Relatives

 (1) For the purposes of this Division, a relative, in relation to a person (the first person), means any of the following:

 (a) the spouse of the first person;

 (b) a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, first cousin, second cousin or lineal descendant of the first person;

 (c) the spouse of a person covered by paragraph (b);

 (d) a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, first cousin, second cousin or lineal descendant of the spouse of the first person;

 (e) the spouse of a person covered by paragraph (d);

 (f) a child of a person covered by any of the preceding paragraphs.

 (2) For the purposes of this section, if one person is the child of another person because of the definition of child in section 52ZO, relationships traced to or through the person are to be determined on the basis that the person is the child of the other person.

52ZQ  Associates

 (1) For the purposes of this Division, in determining:

 (a) whether a trust is a designated private trust; or

 (b) whether a company is a controlled private company in relation to an individual; or

 (c) whether a trust is a controlled private trust in relation to an individual; or

 (d) whether a trust is a concessional primary production trust in relation to an individual;

the following are associates of an individual:

 (e) a relative of the individual;

 (f) an entity who, in matters relating to the trust or company:

 (i) acts, or is accustomed to act; or

 (ii) under a contract or an arrangement or understanding (whether formal or informal), is intended or expected to act;

  in accordance with the directions, instructions or wishes of:

 (iii) the individual; or

 (iv) the individual and another entity who is an associate of the individual because of another paragraph of this subsection;

 (g) an entity that is a declared associate of the individual (see subsection (2));

 (h) a business partner of the individual or a business partnership in which the individual is a business partner;

 (i) if a business partner of the individual is an individual—the spouse or a child of that business partner;

 (j) a trustee of a trust, where:

 (i) the individual; or

 (ii) another entity that is an associate of the individual because of another paragraph of this subsection;

  benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies, business partnerships or trusts;

 (k) a company, where the company is sufficiently influenced by:

 (i) the individual; or

 (ii) another entity that is an associate of the individual because of another paragraph of this subsection; or

 (iii) another company that is an associate of the individual because of another application of this paragraph; or

 (iv) 2 or more entities covered by the preceding subparagraphs;

 (l) a company, where a majority voting interest in the company is held by:

 (i) the individual; or

 (ii) the entities that are associates of the individual because of any of the preceding paragraphs of this subsection; or

 (iii) the individual and the entities that are associates of the individual because of any of the preceding paragraphs of this subsection.

Declared associate

 (2) The Commission may, by legislative instrument, determine that each entity included in a specified class of entities is taken to be a declared associate of an individual for the purposes of this section.

 (3) A determination under subsection (2) has effect accordingly.

52ZR  When a company is sufficiently influenced by an entity

  For the purposes of this Division, a company is sufficiently influenced by an entity or entities if the company, or its directors:

 (a) are accustomed or under an obligation (whether formal or informal); or

 (b) might reasonably be expected;

to act in accordance with the directions, instructions or wishes of the entity or entities.

52ZS  Majority voting interest in a company

  For the purposes of this Division, an entity or entities hold a majority voting interest in a company if the entity or entities are in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the company.

52ZT  Entitled to acquire

  For the purposes of this Division, an entity is entitled to acquire anything that the entity is absolutely or contingently entitled to acquire, whether because of any constituent document of a company, the exercise of any right or option or for any other reason.

52ZU  Transfer of property or services

 (1) A reference in this Division to the transfer of property or services to a trust includes a reference to the transfer of such property or services by way of the creation of the trust.

 (2) For the purposes of this Division, if an entity acquires property that did not previously exist, the property is taken to have existed immediately before the acquisition and to have been transferred by the entity who created the property.

 (3) For the purposes of this Division, property or services are taken to have been transferred to an entity if the property or services have been applied for the benefit of, or in accordance with the directions of, the entity.

 (4) Without limiting the generality of subsection (3), a reference in that subsection to the application of property or services for the benefit of an entity includes a reference to the application of property or services in the discharge, in whole or in part, of a debt due by the entity.

52ZV  Constructive transfers of property or services to an entity

 (1) For the purposes of this Division, if an entity (the prime entity) causes another entity to actually transfer property or services to a third entity, the prime entity is taken to have transferred the property or services (instead of the other entity).

 (2) Subsection (1) does not limit the operation of subsection (3).

 (3) If, under a scheme:

 (a) an entity (the scheme entity) actually transfers property or services to another entity; and

 (b) property or services are actually transferred to a third entity at a particular time otherwise than by the scheme entity;

the Commission may, for the purposes of this Division, treat the property or services mentioned in paragraph (b) as having been transferred by the scheme entity to the third entity (instead of by any other entity) at that time to such extent as the Commission considers reasonable.

 (4) If:

 (a) an individual transfers property or services to an entity (the interposed entity), being a company, a business partnership or a trust; and

 (b) a windingup event occurs in relation to the interposed entity; and

 (c) an actual transfer of property or services is made to another entity (the ultimate transferee) at a particular time as a consequence of the interposed entity being woundup or ceasing to exist;

the Commission may, for the purposes of this Division, treat the property or services mentioned in paragraph (c) as having been transferred by the individual to the ultimate transferee (instead of by any other entity) at that time to such extent as the Commission considers reasonable.

 (5) For the purposes of this section, each of the following events is a windingup event in relation to a company:

 (a) the company passes a resolution for its windingup;

 (b) an order is made for the windingup of the company;

 (c) any similar event.

 (6) For the purposes of this section, a windingup event occurs in relation to a business partnership if the business partnership ceases to exist for the purposes of the Income Tax Assessment Act 1997.

 (7) For the purposes of this section, a windingup event occurs in relation to a trust if:

 (a) the trust commences to be woundup; or

 (b) the trust ceases to exist for the purposes of the Income Tax Assessment Act 1997.

52ZW  Active involvement with a primary production enterprise

  For the purposes of this Division, an individual is taken to have been actively involved with a primary production enterprise if, and only if, the individual:

 (a) has contributed a significant part of his or her labour to the development of the enterprise; or

 (b) has undertaken educational studies or training in a field that, in the opinion of the Commission, is relevant to the development or management of the enterprise.

52ZX  Power to veto decisions of a trustee

  For the purposes of this Division, if the decisions of a trustee are subject to the consent of an entity, the entity is taken to be able to veto the decisions of the trustee.

52ZY  Extraterritorial operation

 (1) This Division extends to acts, omissions, matters and things outside Australia.

 (2) Disregard subsection (1) in determining whether a provision of this Act (other than this Division) extends to acts, omissions, matters and things outside Australia.

52ZZ  Application to things happening before commencement

  The use of the present tense in a provision of this Division does not imply that the provision does not apply to things happening before the commencement of this Division.

Subdivision BDesignated private companies

52ZZA  Designated private companies

 (1) For the purposes of this Division, a company is a designated private company at a particular time if:

 (a) the company satisfies at least 2 of the following conditions in relation to the last financial year that ended before that time:

 (i) the consolidated revenue for the financial year of the company and its subsidiaries is less than $25 million, or any other amount prescribed by regulations made for the purposes of paragraph 45A(2)(a) of the Corporations Act 2001;

 (ii) the value of the consolidated gross assets at the end of the financial year of the company and its subsidiaries is less than $12.5 million, or any other amount prescribed by regulations made for the purposes of paragraph 45A(2)(b) of the Corporations Act 2001;

 (iii) the company and its subsidiaries have fewer than 50, or any other number prescribed by regulations made for the purposes of paragraph 45A(2)(c) of the Corporations Act 2001, employees at the end of the financial year; or

 (b) the company came into existence after the end of the last financial year that ended before that time; or

 (c) the company is a declared private company (see subsection (2));

and the company is not an excluded company (see subsection (5)).

Declared private company

 (2) The Commission may, by legislative instrument, declare that each company included in a specified class of companies is a declared private company for the purposes of this section.

 (3) A declaration under subsection (2) has effect accordingly.

Excluded companies

 (5) The Commission may, by legislative instrument, declare that each company included in a specified class of companies is an excluded company for the purposes of this section.

 (6) A declaration under subsection (5) has effect accordingly.

Definitions

 (8) In this section:

consolidated revenue has the same meaning as in section 45A of the Corporations Act 2001.

financial year, in relation to a company, means:

 (a) a period of 12 months beginning on 1 July; or

 (b) if some other period is the company’s tax year—that other period.

value of consolidated gross assets has the same meaning as in section 45A of the Corporations Act 2001.

Subdivision CDesignated private trusts

52ZZB  Designated private trusts

 (1) For the purposes of this Division, a trust is a designated private trust unless:

 (a) all of the following conditions are satisfied:

 (i) the trust is a fixed trust;

 (ii) the units in the trust are held by 50 or more persons;

 (iii) the trust was not created, continued in existence or operated under a scheme that was entered into or carried out for the sole or dominant purpose of enabling any individual or individuals to avoid the application of this Division and/or Part 3.18 of the Social Security Act; or

 (b) the trust is a complying superannuation fund (see subsection (3)); or

 (c) the trust is an excluded trust (see subsection (4)).

 (2) For the purposes of subparagraph (1)(a)(ii), an individual and his or her associates are taken to be one person.

Complying superannuation funds

 (3) For the purposes of this section, a fund is a complying superannuation fund at a particular time if:

 (a) that time occurs during a particular tax year of the fund; and

 (b) under section 45 of the Superannuation Industry (Supervision) Act 1993, the fund is a complying superannuation fund for the purposes of the Income Tax Assessment Act 1997 in relation to that tax year.

Excluded trusts

 (4) The Commission may, by legislative instrument, declare that each trust included in a specified class of trusts is an excluded trust for the purposes of this section.

 (5) The declaration has effect accordingly.

Definitions

 (7) In this section:

fixed trust means a trust where persons have fixed entitlements to all of the income and corpus of the trust.

income means income within the ordinary meaning of that expression.

unit, in relation to a trust, includes a beneficial interest, however described, in the property or income of the trust.

Subdivision DControlled private companies

52ZZC  Controlled private companies

 (1) For the purposes of this Division, a company is a controlled private company in relation to an individual if the company is a designated private company and:

 (a) the individual passes the control test set out in subsection (2); or

 (b) the individual passes the source test set out in subsection (3).

Control test

 (2) For the purposes of this section, an individual passes the control test in relation to a company if:

 (a) the aggregate of:

 (i) the direct voting interests in the company that the individual holds; and

 (ii) the direct voting interests in the company held by associates of the individual;

  is 50% or more; or

 (b) the aggregate of:

 (i) the direct control interests in the company that the individual holds; and

 (ii) the direct control interests in the company held by associates of the individual;

  is 15% or more; or

 (c) the company is sufficiently influenced by:

 (i) the individual; or

 (ii) an associate of the individual; or

 (iii) 2 or more entities covered by the preceding subparagraphs; or

 (d) the individual (either alone or together with associates) is in a position to exercise control over the company.

Source test

 (3) For the purposes of this section, an individual passes the source test in relation to a company if:

 (a) the individual has transferred property or services to the company after 7.30 pm, by standard time in the Australian Capital Territory, on 9 May 2000; and

 (b) the underlying transfer was made for no consideration or for a consideration less than the arm’s length amount in relation to the underlying transfer.

No double counting

 (4) In calculating the aggregate referred to in paragraph (2)(a), a direct voting interest held because of subsection 52ZZD(2) is not to be counted under subparagraph (2)(a)(i) to the extent to which it is calculated by reference to a direct voting interest in the company that is taken into account under subparagraph (2)(a)(ii).

 (5) In calculating the aggregate referred to in paragraph (2)(b), a direct control interest held because of subsection 52ZZF(4) is not to be counted under subparagraph (2)(b)(i) to the extent to which it is calculated by reference to a direct control interest in the company that is taken into account under subparagraph (2)(b)(ii).

52ZZD  Direct voting interest in a company

 (1) An entity holds a direct voting interest in a company at a particular time equal to the percentage of the voting power in the company that the entity is in a position to control at that time.

 (2) If:

 (a) an entity holds a direct voting interest (including a direct voting interest that is taken to be held because of one or more previous applications of this subsection) in a company (the first level company); and

 (b) the first level company holds a direct voting interest in another company (the second level company);

the entity is taken to hold a direct voting interest in the second level company equal to the percentage worked out using the formula:

Start formula First level percentage times Second level percentage end formula

where:

first level percentage means the percentage of the direct voting interest held by the entity in the first level company.

second level percentage means the percentage of the direct voting interest held by the first level company in the second level company.

52ZZE  Voting power

 (1) A reference in this Subdivision to the voting power in a company is a reference to the total rights of shareholders to vote, or participate in any decisionmaking, concerning any of the following:

 (a) the making of distributions of capital or profits of the company to its shareholders;

 (b) the constituent document of the company;

 (c) any variation of the share capital of the company;

 (d) any appointment of a director of the company.

 (2) A reference in this Subdivision to control of the voting power in a company is a reference to control that is direct or indirect, including control that is exercisable as a result of or by means of arrangements or practices:

 (a) whether or not having legal or equitable force; and

 (b) whether or not based on legal or equitable rights.

 (3) If the percentage of total rights to vote or participate in decisionmaking differs as between different types of voting or decisionmaking, the highest of those percentages applies for the purposes of this section.

 (4) If a company:

 (a) is limited both by shares and by guarantee; or

 (b) does not have a share capital;

this section has effect as if the members or policy holders of the company were shareholders in the company.

52ZZF  Direct control interest in a company

 (1) An entity holds a direct control interest in a company at a particular time equal to the percentage of the total paidup share capital of the company in which the entity holds an interest at that time.

 (2) An entity also holds a direct control interest in a company at a particular time equal to the percentage that the entity holds, or is entitled to acquire, at that time of the total rights to distributions of capital or profits of the company to its shareholders on windingup.

 (3) An entity also holds a direct control interest in a company at a particular time equal to the percentage that the entity holds, or is entitled to acquire, at that time of the total rights to distributions of capital or profits of the company to its shareholders, otherwise than on windingup.

 (4) If:

 (a) an entity holds a particular type of direct control interest (including a direct control interest that is taken to be held because of one or more previous applications of this subsection) in a company (the first level company); and

 (b) the first level company holds the same type of direct control interest in another company (the second level company);

the entity is taken to hold that type of direct control interest in the second level company equal to the percentage worked out using the formula:

Start formula First level percentage times Second level percentage end formula

where:

first level percentage means the percentage of the direct control interest held by the entity in the first level company.

second level percentage means the percentage of the direct control interest held by the first level company in the second level company.

52ZZG  Interest in a share

 (1) This section applies for the purpose of working out the percentage of a company’s total paidup share capital in which an entity holds an interest.

 (2) Subject to this section, for the purposes of this Subdivision, an entity holds an interest in a share if the entity has any legal or equitable interest in the share.

 (3) For the purposes of this Subdivision, an entity is taken to hold an interest in a share if:

 (a) the entity has entered into a contract to purchase the share; or

 (b) the entity has a right (otherwise than because of having an interest under a trust) to have the share transferred to the entity or to the entity’s order (whether the right is exercisable presently or in the future and whether or not on the fulfilment of a condition); or

 (c) the entity has a right to acquire the share, or an interest in the share, under an option (whether the right is exercisable presently or in the future and whether or not on the fulfilment of a condition); or

 (d) the entity is otherwise entitled to acquire the share or an interest in the share; or

 (e) the entity is entitled (otherwise than because of having been appointed as a proxy or representative to vote at a meeting of members of the company or of a class of its members) to exercise or control the exercise of a right attached to the share.

 (4) Subsection (3) does not, by implication, limit subsection (2).

 (5) An entity is taken to hold an interest in a share even if the entity holds the interest in the share jointly with another entity.

 (6) For the purpose of determining whether an entity holds an interest in a share, it is immaterial that the interest cannot be related to a particular share.

 (7) An interest in a share is not to be disregarded only because of:

 (a) its remoteness; or

 (b) the manner in which it arose; or

 (c) the fact that the exercise of a right conferred by the interest is, or is capable of being made, subject to restraint or restriction.

Subdivision EControlled private trusts

52ZZH  Controlled private trusts

 (1) For the purposes of this Division, a trust is a controlled private trust in relation to an individual if the trust is a designated private trust and:

 (a) the individual passes the control test set out in subsection (2); or

 (b) the individual passes the source test set out in subsection (3).

Control test

 (2) For the purposes of this section, the individual passes the control test in relation to a trust if:

 (a) the individual, or an associate of the individual (other than an associate covered by paragraph 52ZQ(1)(j)), is the trustee, or any of the trustees, of the trust; or

 (b) a group in relation to the individual was able to remove or appoint the trustee, or any of the trustees, of the trust; or

 (c) a group in relation to the individual was able to vary the trust deed or to veto the decisions of the trustee; or

 (ca) it could reasonably be expected that the trustee of the trust would make an application of the corpus or income of the trust to the individual if the individual could not meet his or her reasonable costs of living; or

 (d) the aggregate of:

 (i) the beneficial interests in the corpus or income of the trust held by the individual (whether directly or indirectly); and

 (ii) the beneficial interests in the corpus or income of the trust held by associates of the individual (whether directly or indirectly);

  is 50% or more; or

 (da) either or both of the following apply:

 (i) the individual is eligible to receive an application of the corpus or income of the trust;

 (ii) one or more of the individual’s associates are eligible to receive an application of the corpus or income of the trust;

  and the aggregate number of entities covered by subparagraphs (i) and (ii) is 50% or more of the total number of entities eligible to receive an application of the corpus or income of the trust; or

 (e) a group in relation to the individual had the power (by means of the exercise by the group of any power of appointment or revocation or otherwise) to obtain, with or without the consent of any other entity, the beneficial enjoyment of the corpus or income of the trust; or

 (f) a group in relation to the individual was able in any manner whatsoever, whether directly or indirectly, to control the application of the corpus or income of the trust; or

 (g) a group in relation to the individual was capable under a scheme of gaining the enjoyment or the control referred to in paragraph (e) or (f); or

 (h) a trustee of the trust was accustomed or under an obligation (whether formally or informally) or might reasonably be expected to act in accordance with the directions, instructions or wishes of a group in relation to the individual.

 (2A) For the purposes of paragraph (2)(da), an entity is eligible to receive an application of the corpus or income of the trust if the trustee of the trust has a discretion to make an application of the corpus or income of the trust to the entity.

 (2B) For the purposes of applying paragraph (2)(da) at a particular time, subparagraph (2)(da)(i) is taken to apply at that particular time to the individual if the individual was eligible to receive an application of the corpus or income of the trust at any time during:

 (a) the period beginning at the start of the tax year in which that particular time occurs and ending at that particular time; or

 (b) the preceding tax year.

 (2C) For the purposes of applying paragraph (2)(da) at a particular time, subparagraph (2)(da)(ii) is taken to apply at that particular time to an entity that is an associate of the individual at that particular time if:

 (a) the entity was eligible to receive an application of the corpus or income of the trust at any time during:

 (i) the period beginning at the start of the tax year in which that particular time occurs and ending at that particular time; or

 (ii) the preceding tax year; and

 (b) the entity was an associate of the individual at the time the entity was so eligible.

 (2D) For the purposes of applying paragraph (2)(da) at a particular time, in working out the total number of entities eligible to receive an application of the corpus or income of the trust, take into account an entity that was eligible to receive an application of the corpus or income of the trust at any time during:

 (a) the period beginning at the start of the tax year in which that particular time occurs and ending at that particular time; or

 (b) the preceding tax year.

 (2E) No paragraph of subsection (2) limits any other paragraph of that subsection.

Source test

 (3) For the purposes of this section, an individual passes the source test in relation to a trust if:

 (a) the individual has transferred property or services to the trust after 7.30 pm, by standard time in the Australian Capital Territory, on 9 May 2000; and

 (b) the underlying transfer was made for no consideration or for a consideration less than the arm’s length amount in relation to the underlying transfer.

Group

 (4) A reference in this section to a group in relation to an individual is a reference to:

 (a) the individual acting alone; or

 (b) an associate of the individual acting alone; or

 (c) the individual and one or more associates of the individual acting together; or

 (d) 2 or more associates of the individual acting together.

Income

 (5) In this section:

income means income within the ordinary meaning of that expression.

52ZZI  Interest in a trust

 (1) For the purposes of this Subdivision, if an entity:

 (a) has entered into a contract to purchase a beneficial interest in the corpus or income of a trust; or

 (b) has a right, otherwise than by reason of holding an interest in a trust, to have such an interest transferred to the entity or to the entity’s order (whether the right is exercisable presently or in the future) and whether on the fulfilment of a condition or not; or

 (c) has the right to acquire such an interest under an option (whether the right is exercisable presently or in the future) and whether on the fulfilment of a condition or not; or

 (d) is otherwise entitled to acquire such an interest;

the entity is taken to hold that interest in the trust.

 (2) An entity is taken to hold an interest in the corpus or income of a trust even if the entity holds the interest jointly with another entity.

 (3) An interest in the corpus or income of a trust is not to be disregarded only because of:

 (a) its remoteness; or

 (b) the manner in which it arose; or

 (c) the fact that the exercise of a right conferred by the interest is, or is capable of being made, subject to restraint or restriction.

 (4) In this section:

income means income within the ordinary meaning of that expression.

Subdivision FAttributable stakeholders and attribution percentages

52ZZJ  Attributable stakeholder, asset attribution percentage and income attribution percentage

Company

 (1) For the purposes of this Division, if a company is a controlled private company in relation to an individual:

 (a) the individual is an attributable stakeholder of the company unless the Commission otherwise determines; and

 (b) if the individual is an attributable stakeholder of the company—the individual’s asset attribution percentage in relation to the company is:

 (i) 100%; or

 (ii) if the Commission determines a lower percentage in relation to the individual and the company—that lower percentage; and

 (c) if the individual is an attributable stakeholder of the company—the individual’s income attribution percentage in relation to the company is:

 (i) 100%; or

 (ii) if the Commission determines a lower percentage in relation to the individual and the company—that lower percentage.

Trust

 (2) For the purposes of this Division, if:

 (a) a trust is a controlled private trust in relation to an individual; and

 (b) the trust is not a concessional primary production trust in relation to the individual (see section 52ZZZF);

then:

 (c) the individual is an attributable stakeholder of the trust unless the Commission otherwise determines; and

 (d) if the individual is an attributable stakeholder of the trust—the individual’s asset attribution percentage in relation to the trust is:

 (i) 100%; or

 (ii) if the Commission determines a lower percentage in relation to the individual and the trust—that lower percentage; and

 (e) if the individual is an attributable stakeholder of the trust—the individual’s income attribution percentage in relation to the trust is:

 (i) 100%; or

 (ii) if the Commission determines a lower percentage in relation to the individual and the trust—that lower percentage.

 (2A) The only attributable stakeholder of a special disability trust is the principal beneficiary of the trust.

Note 1: For special disability trust, see section 52ZZZW.

Note 2: For principal beneficiary of a special disability trust, see subsection 52ZZZWA(1).

Determinations

 (3) A determination under this section is to be in writing.

 (4) A determination under this section has effect accordingly.

 (5) In making a determination under this section, the Commission must comply with any relevant decisionmaking principles.

Subdivision GAttribution of income of controlled private companies and controlled private trusts

52ZZK  Attribution of income

 (1) For the purposes of this Act, if:

 (a) during a particular derivation period of a company or trust, the company or trust derives an amount that is ordinary income; and

 (b) an individual is an attributable stakeholder of the company or a trust throughout the attribution period that relates to the derivation period of the company or trust; and

 (c) the attribution period begins on or after 1 January 2002; and

 (d) if that amount:

 (i) had been derived by the individual instead of by the company or trust; and

 (ii) in the case of income accounted for on an accrual basis as mentioned in subsection (5)—had been so derived by the individual on a cash basis;

  that amount would have been ordinary income of the individual; and

 (e) that amount is not excluded income (see subsection (2));

then, in addition to any other ordinary income of the individual, the individual is taken to receive, during that attribution period, ordinary income at an annual rate equal to the individual’s income attribution percentage of the amount worked out using the formula:

Start formula start fraction Amount referred to in paragraph (a) over Number of days in the derivation period end fraction times 365 end formula

Note: For attribution of the income of a special disability trust, see section 52ZZZWI.

Excluded income

 (2) The Commission may, by writing, determine that, for the purposes of the application of subsection (1) to a specified individual and a specified company or trust, a specified amount is excluded income.

 (3) A determination under subsection (2) has effect accordingly.

 (4) In making a determination under subsection (2), the Commission must comply with any relevant decisionmaking principles.

Accrual v. cash accounting

 (5) If the income of a company or trust is accounted for on an accrual basis for the purposes of section 65 of the Income Tax Assessment Act 1997, the ordinary income of the company or trust is accounted for on an accrual basis for the purposes of this section.

 (6) If the income of a company or trust is accounted for on a cash basis for the purposes of section 65 of the Income Tax Assessment Act 1997, the ordinary income of the company or trust is accounted for on a cash basis for the purposes of this section.

52ZZL  No double counting of attributed income

 (1) If:

 (a) a company makes a distribution of capital or profits of the company to a particular shareholder of the company; and

 (b) the shareholder is an individual; and

 (c) the individual is an attributable stakeholder of the company;

the Commission may, by writing:

 (d) determine that, for the purposes of this Act, the ordinary income of the individual does not include the amount or value distributed to the individual; or

 (e) determine that, for the purposes of this Act, the ordinary income of the individual does not include so much of the amount or value distributed to the individual as is specified in the determination.

 (2) If:

 (a) a trust:

 (i) makes a distribution (whether in money or in other property) to a particular beneficiary of the trust; or

 (ii) credits an amount to a particular beneficiary of the trust; and

 (b) the beneficiary is an individual; and

 (c) the individual is an attributable stakeholder of the trust;

the Commission may, by writing:

 (d) determine that, for the purposes of this Act, the ordinary income of the individual does not include the amount distributed or credited to the individual; or

 (e) determine that, for the purposes of this Act, the ordinary income of the individual does not include so much of the amount distributed or credited to the individual as is specified in the determination.

 (3) In making a determination under this section, the Commission must comply with any relevant decisionmaking principles.

 (4) This section is to be disregarded for the purposes of paragraph 52ZZK(1)(d).

52ZZM  Ordinary income of a company or trust

 (1) For the purposes of this Subdivision, the ordinary income of a company or trust is to be worked out as if:

 (a) exempt lump sums were not excluded from the definition of ordinary income in subsection 5H(1); and

 (b) each reference in section 5H to a person included a reference to a company or trust; and

 (c) the following provisions had not been enacted:

 (i) section 46Q;

 (ii) subsection 5H(8);

 (iii) subsections 5H(12) and (12A);

 (iv) Divisions 1, 2, 3, 4, 6 and 7.

 (2) Paragraphs (1)(a) and (c) have effect subject to paragraph 52ZZK(1)(d).

 (3) A reference in this Subdivision to the ordinary income of a company or trust is a reference to the company’s or trust’s gross ordinary income from all sources calculated without any reduction, other than a reduction under section 52ZZN or 52ZZO.

52ZZN  Ordinary income from a business—treatment of trading stock

 (1) For the purposes of this Subdivision, if:

 (a) a company or trust carries on a business; and

 (b) the value of all the trading stock on hand at the end of a derivation period is greater than the value of all the trading stock on hand at the beginning of that derivation period;

the company’s or trust’s ordinary income for that derivation period in the form of profits from the business is to include the amount of the difference in values.

 (2) For the purposes of this Subdivision, if:

 (a) a company or trust carries on a business; and

 (b) the value of all the trading stock on hand at the end of a derivation period is less than the value of all the trading stock on hand at the beginning of that derivation period;

the company’s or trust’s ordinary income for that derivation period in the form of profits from the business is to be reduced by the amount of the difference in values.

52ZZO  Permissible reductions of business and investment income

 (1) For the purposes of this Subdivision, if a company or trust carries on a business or holds an investment, the company’s or trust’s ordinary income from the business or investment is to be reduced by:

 (a) losses and outgoings that relate to the business or investment and are allowable deductions for the purposes of section 81 of the Income Tax Assessment Act 1997; and

 (ba) amounts that relate to the business or investment and can be deducted for the decline in value of depreciating assets under Subdivision 40B of the Income Tax Assessment Act 1997; and

 (c) amounts that relate to the business or investment and are allowable deductions under any other provision of the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997.

 (2) However, the rule in subsection (1) does not apply to:

 (a) an ineligible deduction (see subsection (3)); or

 (b) an ineligible amount (see subsection (4)); or

 (c) an ineligible part of a deduction (see subsection (5)).

 (3) The Commission may, by legislative instrument, determine that a specified deduction is an ineligible deduction for the purposes of this section.

 (4) The Commission may, by legislative instrument, determine that a specified amount is an ineligible amount for the purposes of this section.

 (5) The Commission may, by legislative instrument, determine that a specified part of a specified deduction is an ineligible part of the deduction for the purposes of this section.

 (6) A determination under subsection (3), (4) or (5) has effect accordingly.

52ZZP  Derivation periods

 (1) For the purposes of this Division:

 (a) if a company or trust was in existence throughout a tax year of the company or trust—the tax year is a derivation period of the company or trust; and

 (b) if a company or trust was in existence during a part of a tax year of the company or trust—that part of the tax year is a derivation period of the company or trust.

 (2) Subsection (1) has effect subject to subsection (3).

 (3) The Commission may, by writing, determine that, for the purposes of the application of this Subdivision to a specified individual and a specified company or trust, a specified period is a derivation period of the company or trust.

 (4) A determination under subsection (3) has effect accordingly.

 (5) In making a determination under subsection (3), the Commission must comply with any relevant decisionmaking principles.

 (6) To avoid doubt, for the purposes of the application of this Subdivision to a particular individual and a particular company or trust, it is not necessary that the individual be an attributable stakeholder of the company or trust throughout a derivation period of the company or trust.

 (7) A derivation period may begin or end before the commencement of this Division.

52ZZQ  Attribution periods

 (1) The Commission may, by writing, determine that, in the event that a specified individual is an attributable stakeholder of a specified company or trust at a specified time (the start time):

 (a) a period beginning at the start time and ending at whichever is the earlier of the following times:

 (i) the later time specified in the determination;

 (ii) the time when the individual ceases to be an attributable stakeholder of the company or trust;

  is an attribution period for the purposes of the application of this Division to the individual and the company or trust; and

 (b) that attribution period relates to a specified derivation period of the company or trust.

 (2) A determination under subsection (1) has effect accordingly.

 (3) The Commission must ensure that, if an individual is an attributable stakeholder of a company or of a trust at a particular time on or after 1 January 2002, that time is included in an attribution period.

 (4) An attribution period may, but is not required to, overlap (in whole or in part) the derivation period to which it relates.

 (5) An attribution period does not have to be of the same length as the derivation period to which it relates.

 (6) Attribution periods do not have to be of the same length.

 (7) In making a determination under this section, the Commission must comply with any relevant decisionmaking principles.

Subdivision HAttribution of assets of controlled private companies and controlled private trusts

52ZZR  Attribution of assets

 (1) For the purposes of this Act, if:

 (a) an individual is an attributable stakeholder of a company or trust at a particular time on or after 1 January 2002; and

 (b) at that time, the company or trust owns a particular asset (whether alone or jointly or in common with another entity or entities); and

 (c) if, at that time, that asset had been owned by the individual instead of by the company or trust, the value of the asset would not be required to be disregarded by any express provision of this Act; and

 (d) at that time, the asset is not an excluded asset (see subsection (2));

there is to be included in the value of the individual’s assets an amount equal to the individual’s asset attribution percentage of the value of the asset referred to in paragraph (b).

Note: For attribution of the assets of a special disability trust, see section 52ZZZWK.

Excluded assets

 (2) The Commission may, by writing, determine that, for the purposes of the application of subsection (1) to a specified individual and a particular company or trust, a specified asset is an excluded asset.

 (3) A determination under subsection (2) has effect accordingly.

 (4) In making a determination under subsection (2), the Commission must comply with any relevant decisionmaking principles.

52ZZS  When attributed asset is unrealisable

 (1) For the purposes of this Act, if:

 (a) an individual is an attributable stakeholder of a company or trust at a particular time on or after 1 January 2002; and

 (b) at that time, the company or trust owns a particular asset (whether alone or jointly or in common with another entity or entities); and

 (c) under section 52ZZR, there is included in the value of the individual’s assets an amount equal to the individual’s asset attribution percentage of the value of the asset held by the company or trust;

the amount referred to in paragraph (c) is taken not to be an unrealisable asset of the individual unless the asset referred to in paragraph (b) is an unrealisable asset of the company or trust.

 (2) For the purposes of this section, in determining whether an asset is an unrealisable asset of a company or trust, ignore any limitation or restriction:

 (a) in the constituent document of the company or the trust deed of the trust, as the case requires; or

 (b) under a scheme that was entered into or carried out for the sole or dominant purpose of enabling any individual or individuals to avoid the application of this section and/or section 1208F of the Social Security Act.

 (3) For the purposes of this section, in determining whether an asset is an unrealisable asset of a company or trust, subsections 5L(11) and (12) have effect as if each reference in those subsections to a person included a reference to a company or trust.

52ZZT  Effect of charge or encumbrance on value of assets

Charge or encumbrance relating to a single asset

 (1) For the purposes of the application of this Subdivision (other than this section) to a particular individual and a particular company or trust, if:

 (a) there is a charge or encumbrance over a particular asset of the company or trust; and

 (b) the charge or encumbrance relates exclusively to that asset;

the value of the asset is to be reduced by the value of the charge or encumbrance.

 (2) Subsection (1) does not apply to a charge or encumbrance over an asset of a company or trust to the extent that:

 (a) the charge or encumbrance is a collateral security; or

 (b) the charge or encumbrance was given for the benefit of an entity other than the company or trust; or

 (c) the value of the charge or encumbrance is excluded under subsection (6).

Charge or encumbrance relating to 2 or more assets

 (3) For the purposes of the application of this Subdivision (other than this section) to a particular individual and a particular company or trust, if:

 (a) there is a charge or encumbrance over a particular asset (the first asset) of the company or trust; and

 (b) the charge or encumbrance relates to the first asset and one or more other assets of the company or trust;

the value of the first asset is to be reduced by the amount worked out using the formula:

Start formula Value of the charge or encumbrance times start fraction Value of the first asset over Total value of the first asset and the other assets end fraction times start fraction Total value of attributable assets subject to the charge or encumbrance over Total value of assets subject to the charge or encumbrance end fraction end formula

 (4) Subsection (3) does not apply to a charge or encumbrance over an asset of the company or trust to the extent that:

 (a) the charge or encumbrance was given for the benefit of an entity other than the company or trust; or

 (b) the value of the charge or encumbrance is excluded under subsection (6).

 (5) If (apart from this section), under section 52ZZR, there is included in the value of the individual’s assets an amount equal to the individual’s asset attribution percentage of the value of an asset held by the company or trust, the asset held by the company or trust is an attributable asset for the purposes of subsection (3).

Exclusion

 (6) The Commission may, by writing, determine that, for the purposes of the application of this section to a specified individual and a specified company or trust, the whole or a specified part of a specified charge or encumbrance over one or more of the assets of the company or trust is excluded for the purposes of paragraphs (2)(c) and (4)(b).

 (7) A determination under subsection (6) has effect accordingly.

 (8) In making a determination under subsection (6), the Commission must comply with any relevant decisionmaking principles.

52ZZU  Effect of unsecured loan on value of assets

 (1) For the purposes of the application of this Subdivision to a particular individual and a particular company or trust, if:

 (a) the company or trust is the borrower under a loan; and

 (b) the loan is not secured by a charge or encumbrance over one or more of the assets of the company or trust;

the Commission may, by writing, determine that the value of a specified asset of the company or trust is to be reduced by the whole, or a specified part, of the amount of the loan.

 (2) A determination under subsection (1) has effect accordingly.

 (3) In making a determination under subsection (1), the Commission must comply with any relevant decisionmaking principles.

52ZZV  Value of company’s or trust’s assets etc.

 (1) For the purposes of this Subdivision, the value of a company’s or trust’s assets, or of a charge or encumbrance on such assets, is to be worked out as if:

 (a) each reference in sections 5L and 5LA to a person included a reference to a company or trust; and

 (b) Subdivision A of Division 11 (other than section 52D) had not been enacted.

 (2) Paragraph (1)(b) has effect subject to paragraph 52ZZR(1)(c).

Subdivision IModification of asset deprivation rules

52ZZW  Individual disposes of asset to company or trust

 (1) If:

 (a) an individual transfers property to a company or trust on or after 1 January 2002; and

 (b) either:

 (i) as a result of the transfer, the individual became an attributable stakeholder of the company or trust; or

 (ii) at the time of the transfer, the individual was an attributable stakeholder of the company or trust; and

 (c) the transfer amounts to a disposal by the individual of an asset of the individual;

the Commission may, by writing, determine that Subdivisions BA and BB of Division 11 and sections 45UT and 45UTA apply to that disposal as if:

 (d) the amount of the disposition were nil; or

 (e) the amount of the disposition were reduced by the amount specified in the determination.

 (2) In making a decision under this section, the Commission must comply with any relevant decisionmaking principles.

52ZZX  Disposal of asset by company or trust

 (1) If:

 (a) an individual is an attributable stakeholder of a company or trust; and

 (b) the company or trust disposes of an asset of the company or trust;

Subdivisions BA and BB of Division 11 and sections 45UT and 45UTA apply, and are taken to have applied, as if:

 (c) the individual had disposed of an asset of the individual; and

 (d) the amount of the disposition referred to in paragraph (c) were equal to the individual’s asset attribution percentage of the amount of the disposition referred to in paragraph (b).

 (2) Subsection (1) has effect subject to subsection (3).

Commission determinations

 (3) The Commission may, by writing:

 (a) determine that the disposal of a specified asset is exempt from subsection (1); or

 (b) determine that subsection (1) has effect, in relation to the disposal of a specified asset, as if the reference in paragraph (1)(d) to the individual’s asset attribution percentage were a reference to such lower percentage as is specified in the determination.

 (4) A determination under subsection (3) has effect accordingly.

 (5) In making a determination under subsection (3), the Commission must comply with any relevant decisionmaking principles.

General disposal

 (6) For the purposes of subsection (1), a company or trust disposes of assets of the company or trust if:

 (a) on or after 1 January 2002, the company or trust, or an attributable stakeholder of the company or trust, engages in a course of conduct that directly or indirectly:

 (i) destroys all or some of the company’s or trust’s assets; or

 (ii) disposes of all or some of the company’s or trust’s assets; or

 (iii) diminishes the value of all or some of the company’s or trust’s assets; and

 (b) one of the following subparagraphs is satisfied:

 (i) the company or trust receives no consideration in money or money’s worth for the destruction, disposal or diminution;

 (ii) the company or trust receives inadequate consideration in money or money’s worth for the destruction, disposal or diminution;

 (iii) the Commission is satisfied that the purpose, or the dominant purpose, of the company, trust or stakeholder in engaging in that course of conduct was to obtain an income support advantage for an attributable stakeholder of the company or trust (who may be the firstmentioned stakeholder) or for a relative of an attributable stakeholder of the company or trust; and

 (c) in the case of a company—the disposal is not by way of making a distribution of capital or profits of the company to a shareholder of the company; and

 (d) in the case of a trust—the disposal is not by way of:

 (i) making a distribution (whether in money or in other property) to a beneficiary of the trust; or

 (ii) crediting an amount to a beneficiary of the trust.

 (7) If a company or trust disposes of assets as mentioned in subsection (6), the amount of the disposition is:

 (a) if the company or trust receives no consideration for the destruction, disposal or diminution—an amount equal to:

 (i) the value of the assets that are destroyed; or

 (ii) the value of the assets that are disposed of; or

 (iii) the amount of the diminution in the value of the assets whose value is diminished; or

 (b) if the company or trust receives consideration for the destruction, disposal or diminution—an amount equal to:

 (i) the value of the assets that are destroyed; or

 (ii) the value of the assets that are disposed of; or

 (iii) the amount of the diminution in the value of the assets whose value is diminished;

  less the amount of the consideration received by the company or trust in respect of the destruction, disposal or diminution.

Disposal by way of distribution

 (8) For the purposes of subsection (1), if a company makes a distribution of capital or profits of the company to a shareholder of the company on or after 1 July 2000:

 (a) the company is taken to have disposed of an asset of the company; and

 (b) the amount of the disposition is equal to the amount or value distributed to the shareholder.

 (9) For the purposes of subsection (1), if a trust:

 (a) makes a distribution (whether in money or in other property) to a beneficiary of the trust on or after 1 July 2000; or

 (b) credits an amount to a beneficiary of the trust on or after 1 July 2000;

then:

 (c) the trust is taken to have disposed of an asset of the trust; and

 (d) the amount of the disposition is equal to the amount or value distributed or credited to the beneficiary.

Obtaining an income support advantage

 (10) For the purposes of this section, an entity has a purpose of obtaining an income support advantage for an individual (who may be the entity) if the entity has a purpose of:

 (a) enabling the individual to obtain any of the following:

 (i) a service pension;

 (ii) income support supplement;

 (iia) a veteran payment;

 (iii) a social security pension;

 (iv) a social security benefit; or

 (b) enabling the individual to obtain any of the following at a higher rate than would otherwise have been payable:

 (i) a service pension;

 (ii) income support supplement;

 (iia) a veteran payment;

 (iii) a social security pension;

 (iv) a social security benefit; or

 (c) ensuring that the individual would be eligible for benefits under Division 12 of this Part or fringe benefits under the Social Security Act.

52ZZY  Individual ceases to be an attributable stakeholder of a company or trust

  If:

 (a) an individual ceases to be an attributable stakeholder of a company or trust on or after 1 January 2002; and

 (b) immediately before the cessation, the company or trust owned a particular asset (whether alone or jointly or in common with another entity or entities);

Subdivisions BA and BB of Division 11 and sections 45UT and 45UTA have effect as if:

 (c) the individual had disposed of an asset of the individual; and

 (d) the amount of the disposition referred to in paragraph (c) were equal to the individual’s asset attribution percentage of the value of the asset referred to in paragraph (b), worked out immediately before the cessation.

52ZZZ  Individual disposes of asset to company or trust before 1 January 2002—individual is attributable stakeholder

 (1) If:

 (a) an individual has transferred property to a company or trust before 1 January 2002; and

 (b) the transfer amounts to a disposal by the individual of an asset of the individual; and

 (c) apart from this section:

 (i) under Subdivision BA or BB of Division 11, as a result of the disposition, a particular amount is included in the value of the individual’s assets for the period of 5 years that starts on the day on which the disposition took place; and

 (ii) that 5year period ends after 1 January 2002; and

 (d) the individual is an attributable stakeholder of the company or trust on 1 January 2002;

the Commission may, by writing, determine that:

 (e) in a case where the individual’s asset attribution percentage is 100%—Subdivisions BA and BB of Division 11 and sections 45UT and 45UTA have effect, in relation to the disposal of the asset referred to in paragraph (b), as if references in those Subdivisions and sections to the period of 5 years starting on the day on which the disposition took place were references to the period:

 (i) beginning on the day on which the disposition took place; and

 (ii) ending immediately before 1 January 2002; or

 (f) in a case where the individual’s asset attribution percentage is less than 100%—Subdivisions BA and BB of Division 11 and sections 45UT and 45UTA have effect on and after 1 January 2002, in relation to the disposal of the asset referred to in paragraph (b), as if the amount of the disposition were reduced by:

 (i) the individual’s asset attribution percentage as at 1 January 2002; or

 (ii) if a higher percentage is specified in the determination—that higher percentage.

 (2) A determination under subsection (1) has effect accordingly.

 (3) In making a determination under subsection (1), the Commission must comply with any relevant decisionmaking principles.

52ZZZA  Individual disposes of asset to company or trust before 1 January 2002—individual’s spouse is attributable stakeholder

 (1) If:

 (a) an individual has transferred property to a company or trust before 1 January 2002; and

 (b) the transfer amounts to a disposal by the individual of an asset of the individual; and

 (c) apart from this section:

 (i) under Subdivision BA or BB of Division 11, as a result of the disposition, a particular amount is included in the value of the individual’s assets for the period of 5 years that starts on the day on which the disposition took place; and

 (ii) that 5year period ends after 1 January 2002; and

 (d) the individual’s spouse is an attributable stakeholder of the company or trust on 1 January 2002;

the Commission may, by writing, determine that:

 (e) in a case where the spouse’s asset attribution percentage is 100%—Subdivisions BA and BB of Division 11 and sections 45UT and 45UTA have effect, in relation to the disposal of the asset referred to in paragraph (b), as if references in those Subdivisions and sections to the period of 5 years starting on the day on which the disposition took place were references to the period:

 (i) beginning on the day on which the disposition took place; and

 (ii) ending immediately before 1 January 2002; or

 (f) in a case where the spouse’s asset attribution percentage is less than 100%—Subdivisions BA and BB of Division 11 and sections 45UT and 45UTA have effect on and after 1 January 2002, in relation to the disposal of the asset referred to in paragraph (b), as if the amount of the disposition were reduced by the spouse’s asset attribution percentage as at 1 January 2002.

 (2) A determination under subsection (1) has effect accordingly.

 (3) In making a determination under subsection (1), the Commission must comply with any relevant decisionmaking principles.

Subdivision JModification of income deprivation rules

52ZZZB  Individual disposes of ordinary income to company or trust

 (1) If:

 (a) an individual transfers property to a company or trust on or after 1 January 2002; and

 (b) either:

 (i) as a result of the transfer, the individual became an attributable stakeholder of the company or trust; or

 (ii) at the time of the transfer, the individual was an attributable stakeholder of the company or trust; and

 (c) the transfer amounts to a disposal by the individual of ordinary income of the individual; and

 (d) if the ordinary income is income from an asset—the course of conduct that constituted the disposition of the income did not also constitute a disposition of the asset;

the Commission may, by writing, determine that Division 7 applies, and is taken to have applied, to the disposal referred to in paragraph (c) as if:

 (e) the amount of the disposition were nil; or

 (f) the amount of the disposition were reduced by the amount specified in the determination.

 (2) In making a decision under this section, the Commission must comply with any relevant decisionmaking principles.

52ZZZC  Disposal of income by company or trust

 (1) If:

 (a) an individual is an attributable stakeholder of a company or trust; and

 (b) the company or trust disposes of ordinary income of the company or trust; and

 (c) if that income had been income of the individual instead of the company or trust, the income would have been ordinary income of the individual; and

 (d) if the ordinary income is income from an asset—the course of conduct that constituted the disposition of the income did not also constitute a disposition of the asset;

Division 7 applies, and is taken to have applied, as if:

 (e) the individual had disposed of ordinary income of the individual; and

 (f) the amount of the disposition referred to in paragraph (e) were equal to the individual’s income attribution percentage of the amount of the disposition referred to in paragraph (b).

 (2) Subsection (1) has effect subject to subsection (3).

Commission determinations

 (3) The Commission may, by writing:

 (a) determine that the disposal of specified ordinary income is exempt from subsection (1); or

 (b) determine that subsection (1) has effect, in relation to the disposal of specified ordinary income, as if the reference in paragraph (1)(f) to the individual’s income attribution percentage were a reference to such lower percentage as is specified in the determination.

 (4) A determination under subsection (3) has effect accordingly.

 (5) In making a determination under subsection (3), the Commission must comply with any relevant decisionmaking principles.

General disposal

 (6) For the purposes of subsection (1), a company or trust disposes of ordinary income of the company or trust if:

 (a) on or after 1 January 2002, the company or trust, or an attributable stakeholder of the company or trust, engages in a course of conduct that directly or indirectly:

 (i) destroys the source of the income; or

 (ii) disposes of the income or the source of the income; or

 (iii) diminishes the income; and

 (b) one of the following subparagraphs is satisfied:

 (i) the company or trust receives no consideration in money or money’s worth for the destruction, disposal or diminution;

 (ii) the company or trust receives inadequate consideration in money or money’s worth for the destruction, disposal or diminution;

 (iii) the Commission is satisfied that the purpose, or the dominant purpose, of the company, trust or stakeholder in engaging in that course of conduct was to obtain an income support advantage for an attributable stakeholder of the company or trust (who may be the firstmentioned stakeholder) or for a relative of an attributable stakeholder of the company or trust; and

 (c) in the case of a company—the disposal is not by way of making a distribution of capital or profits of the company to a shareholder of the company; and

 (d) in the case of a trust—the disposal is not by way of:

 (i) making a distribution (whether in money or in other property) to a beneficiary of the trust; or

 (ii) crediting an amount to a beneficiary of the trust.

 (7) If a company or trust disposes of ordinary income as mentioned in subsection (6), the amount of the disposition is:

 (a) if the company or trust receives no consideration for the destruction, disposal or diminution—the annual rate of the diminution of the income because of the destruction, disposal or diminution; or

 (b) if the company or trust receives consideration for the destruction, disposal or diminution—the annual rate of the diminution of the income because of the destruction, disposal or diminution less the part (if any) of the consideration that the Commission considers to be fair and reasonable in all the circumstances of the case.

Obtaining an income support advantage

 (8) For the purposes of this section, an entity has a purpose of obtaining an income support advantage for an individual (who may be the entity) if the entity has a purpose of:

 (a) enabling the individual to obtain any of the following:

 (i) a service pension;

 (ii) income support supplement;

 (iia) a veteran payment;

 (iii) a social security pension;

 (iv) a social security benefit; or

 (b) enabling the individual to obtain any of the following at a higher rate than would otherwise have been payable:

 (i) a service pension;

 (ii) income support supplement;

 (iia) a veteran payment;

 (iii) a social security pension;

 (iv) a social security benefit; or

 (c) ensuring that the individual would be eligible for benefits under Division 12 of this Part or fringe benefits under the Social Security Act.

Ordinary income

 (9) In this section:

ordinary income, in relation to a company or trust, has the same meaning as in Subdivision G.

52ZZZD  Individual disposes of income to company or trust before 1 January 2002—individual is attributable stakeholder

 (1) If:

 (a) an individual has transferred property to a company or trust before 1 January 2002; and

 (b) the transfer amounts to a disposal by the individual of ordinary income of the individual; and

 (c) apart from this section, under Division 7, as a result of the disposition referred to in paragraph (b), a particular amount is included in the individual’s ordinary income; and

 (d) the individual is an attributable stakeholder of the company or trust on 1 January 2002;

the Commission may, by writing, determine that:

 (e) in a case where the individual’s income attribution percentage is 100%—Division 7 has effect on or after 1 January 2002, in relation to the disposal of the income referred to in paragraph (b), as if the amount of the disposition were nil; or

 (f) in a case where the individual’s income attribution percentage is less than 100%—Division 7 has effect on and after 1 January 2002, in relation to the disposal of the income referred to in paragraph (b), as if the amount of the disposition were reduced by:

 (i) the individual’s income attribution percentage as at 1 January 2002; or

 (ii) if a higher percentage is specified in the determination—that higher percentage.

 (2) A determination under subsection (1) has effect accordingly.

 (3) In making a determination under subsection (1), the Commission must comply with any relevant decisionmaking principles.

52ZZZE  Individual disposes of income to company or trust before 1 January 2002—individual’s spouse is attributable stakeholder

 (1) If:

 (a) an individual has transferred property to a company or trust before 1 January 2002; and

 (b) the transfer amounts to a disposal by the individual of ordinary income of the individual; and

 (c) apart from this section, under Division 7, as a result of the disposition referred to in paragraph (b), a particular amount is included in the individual’s ordinary income; and

 (d) the individual’s spouse is an attributable stakeholder of the company or trust on 1 January 2002;

the Commission may, by writing, determine that:

 (e) in a case where the spouse’s income attribution percentage is 100%—Division 7 has effect on or after 1 January 2002, in relation to the disposal of the income referred to in paragraph (b), as if the amount of the disposition were nil; or

 (f) in a case where the spouse’s income attribution percentage is less than 100%—Division 7 has effect on and after 1 January 2002, in relation to the disposal of the income referred to in paragraph (b), as if the amount of the disposition were reduced by the spouse’s income attribution percentage as at 1 January 2002.

 (2) A determination under subsection (1) has effect accordingly.

 (3) In making a determination under subsection (1), the Commission must comply with any relevant decisionmaking principles.

Subdivision KConcessional primary production trusts

52ZZZF  Concessional primary production trusts

 (1) For the purposes of this Division, a trust is a concessional primary production trust in relation to an individual at a particular time (the test time), if:

 (a) at the test time, the trust is a controlled private trust in relation to the individual; and

 (b) at the test time, either:

 (i) the trust carries on a primary production enterprise (the first primary production enterprise); or

 (ii) the trust makes an asset available to another entity, the other entity carries on a primary production enterprise (the first primary production enterprise), and the asset is used by the other entity wholly or principally for the purposes of carrying on the first primary production enterprise; and

 (c) at the test time, more than 70% of the net value of the assets of the trust (excluding the net value of the principal home of the individual if that principal home is owned by the trust) relates to assets used wholly or principally for the purposes of carrying on a primary production enterprise; and

 (d) at the test time, the sum of:

 (i) the total adjusted net value of assets that are owned or controlled by the individual and used wholly or principally for the purposes of carrying on a primary production enterprise; and

 (ii) the total adjusted net value of assets that are owned or controlled by the individual’s spouse and used wholly or principally for the purposes of carrying on a primary production enterprise;

  is less than the primary production attribution threshold (as defined by subsection (6)); and

 (e) if:

 (i) the individual or the individual’s spouse had adjusted net primary production income for the last tax year that ended before the test time; and

 (ii) the individual or the individual’s spouse had adjusted net primary production income for the tax year that preceded the tax year first referred to in subparagraph (i); and

 (iii) the individual or the individual’s spouse had adjusted net primary production income for the tax year that preceded the tax year first referred to in subparagraph (ii);

  the average of the following amounts is less than the amount specified in clause 38N of Schedule 1 to the A New Tax System (Family Assistance) Act 1999 (subject to any indexation under Schedule 4 to that Act):

 (iv) the total adjusted net primary production income of the individual and the individual’s spouse for the tax year referred to in subparagraph (i);

 (v) the total adjusted net primary production income of the individual and the individual’s spouse for the tax year first referred to in subparagraph (ii);

 (vi) the total adjusted net primary production income of the individual and the individual’s spouse for the tax year first referred to in subparagraph (iii); and

 (f) if:

 (i) neither the individual nor the individual’s spouse had adjusted net primary production income for the last tax year that ended before the test time; or

 (ii) neither the individual nor the individual’s spouse had adjusted net primary production income for the tax year that preceded the tax year referred to in subparagraph (i); or

 (iii) neither the individual nor the individual’s spouse had adjusted net primary production income for the tax year that preceded the tax year referred to in subparagraph (ii);

  the Commission, by writing, determines that this paragraph applies to the individual and the trust; and

 (g) at the test time, the individual is not actively involved with the first primary production enterprise; and

 (h) at the test time, an eligible descendant of the individual is actively involved with the first primary production enterprise; and

 (i) if, at the test time, the individual is able to appoint the trustee, or any of the trustees, of the trust—there is a provision of the trust deed to the effect that that ability may only be exercised:

 (i) if the trustee concerned dies, resigns or becomes subject to a legal disability; or

 (ii) in accordance with a statutory law relating to the appointment of trustees; and

 (j) if, at the test time, the individual is able to veto or direct the decisions of the trustee—there is a provision of the trust deed to the effect that that ability may only be exercised:

 (i) in relation to the sale of land used for the purposes of carrying on the first primary production enterprise; or

 (ii) in relation to the sale of fishing rights or timber rights used for the purposes of carrying on the first primary production enterprise; or

 (iii) in accordance with a statutory law relating to the appointment of trustees; and

 (k) at the test time, there is a provision of the trust deed to the effect that neither the individual, nor the individual’s spouse, is, or is capable of becoming, the trustee, or any of the trustees, of the trust; and

 (l) at the test time, a group in relation to the individual is not able to vary a provision covered by paragraph (i), (j) or (k); and

 (m) at the test time, neither the individual, nor the individual’s spouse, is able to vary the trust deed; and

 (n) at the test time, neither the individual, nor the individual’s spouse:

 (i) benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies, business partnerships or trusts; or

 (ii) receives any remuneration or other benefits from the trust otherwise than in the capacity of beneficiary of the trust.

 (2) For the purposes of the application of paragraphs (1)(e) and (f) to a particular tax year, a person is the individual’s spouse if, and only if:

 (a) the person was the spouse of the individual at any time during the tax year; and

 (b) the person is the spouse of the individual at the test time.

 (3) In making a determination under paragraph (1)(f), the Commission must comply with any relevant decisionmaking principles.

 (3A) For the purposes of paragraph (1)(h), an eligible descendant, in relation to a person, is:

 (a) a child, stepchild or adopted child of the person or of a partner of the person; or

 (b) a descendant in direct line of a child described in paragraph (a); or

 (c) any other person who, in the opinion of the Commission, should be treated for the purposes of this definition as a person described in paragraph (a) or (b).

 (4) Paragraph (1)(n) does not apply to any of the following benefits:

 (a) food that:

 (i) is derived from the first primary production enterprise; and

 (ii) is for the personal consumption of the individual or the individual’s spouse;

 (b) residential accommodation for the individual or the individual’s spouse, where that accommodation is the principal home of the individual;

 (c) if paragraph (b) applies—water, fuel, gas or electricity for use in that residential accommodation;

 (d) any other noncash benefit that is minor and provided on a basis that is infrequent and irregular.

 (5) Subparagraph (1)(n)(ii) has effect subject to section 52ZZZG.

 (6) For the purposes of this section, the primary production attribution threshold is $750,000.

 (7) A reference in this section to a group in relation to an individual is a reference to:

 (a) the individual acting alone; or

 (b) an associate of the individual acting alone; or

 (c) the individual and one or more associates of the individual acting together; or

 (d) 2 or more associates of the individual acting together.

52ZZZG  Individual ceases to be an attributable stakeholder of a trust—receipt of remuneration or other benefits from trust during asset deprivation period

 (1) For the purposes of this section, if:

 (a) an individual ceases to be an attributable stakeholder of a trust on or after 1 January 2002; and

 (b) immediately after the cessation, the trust was a concessional primary production trust in relation to the individual; and

 (c) under section 52ZZY, as a result of the cessation, Subdivision BA or BB of Division 11 has effect as if the individual had disposed of an asset of the individual; and

 (d) under Subdivision BA or BB of Division 11, as a result of the disposition, a particular amount is included in the value of the individual’s assets for the period of 5 years that starts on the day on which the disposition took place;

then:

 (e) the period referred to in paragraph (d) is the asset deprivation period in relation to the individual and the trust; and

 (f) throughout the asset deprivation period, the trust is a special primary production trust of the individual; and

 (g) each one of the 5 years that constitutes the asset deprivation period is an asset deprivation year in relation to the individual and the trust.

 (2) If:

 (a) a trust (the first trust) is a special primary production trust in relation to an individual; and

 (b) the individual and/or the individual’s spouse received one or more benefits (the first benefits) from the trust during a period that is an asset deprivation year (the first asset deprivation year) in relation to the individual and the trust;

subparagraph 52ZZZF(1)(n)(ii) does not apply to the first benefits, so long as the sum of the following amounts is less than the amount specified in clause 38N of Schedule 1 to the A New Tax System (Family Assistance) Act 1999 (subject to any indexation under Schedule 4 to that Act):

 (c) the total of the amount or value of the first benefits;

 (d) if:

 (i) another trust is a special primary production trust in relation to the individual; and

 (ii) the asset deprivation period in relation to the individual and that other trust overlaps, in whole or in part, the first asset deprivation year; and

 (iii) the individual and/or the individual’s spouse received one or more benefits (the second benefits) from that other trust during the period of the overlap;

  the total of the amount or value of the second benefits;

 (e) if:

 (i) another trust is a special primary production trust in relation to the individual’s spouse; and

 (ii) the asset deprivation period in relation to the individual’s spouse and that other trust overlaps, in whole or in part, the first asset deprivation year; and

 (iii) the individual’s spouse and/or the individual received one or more benefits (the third benefits) from that other trust during the period of the overlap;

  the total of the amount or value of the third benefits.

 (3) Subsection (2) does not apply to any of the following benefits:

 (a) food that:

 (i) is derived from the first primary production enterprise referred to in section 52ZZZF; and

 (ii) is for the personal consumption of the individual or the individual’s spouse;

 (b) residential accommodation for the individual or the individual’s spouse, where that accommodation is the principal home of the individual;

 (c) if paragraph (b) applies—water, fuel, gas or electricity for use in that residential accommodation;

 (d) any other noncash benefit that is minor and provided on a basis that is infrequent and irregular.

 (4) In this section:

benefit, in relation to a trust, means any remuneration or other benefit received from the trust otherwise than in the capacity of beneficiary of the trust.

52ZZZH  Net value of asset

 (1) For the purposes of this Subdivision, the net value of an asset is the value of the asset, without any reduction other than a reduction under subsection (2).

 (2) The Commission may, by writing, determine that the value of a specified asset is to be reduced by the whole or a specified part of a specified liability.

 (3) A determination under this section has effect accordingly.

 (4) In making a determination under this section, the Commission must comply with any relevant decisionmaking principles.

52ZZZI  Value of entity’s assets

  For the purposes of this Subdivision, the value of an entity’s assets is to be worked out as if:

 (a) each reference in sections 5L and 5LA to a person included a reference to an entity; and

 (b) Subdivision A of Division 11 (other than section 52D) had not been enacted.

52ZZZJ  When asset is controlled by an individual

 (1) For the purposes of this Subdivision, an asset is controlled by an individual if, and only if:

 (a) all of the following conditions are satisfied:

 (i) the asset is owned by a company;

 (ii) the company is a controlled private company in relation to the individual;

 (iii) no determination is in force under subsection (2) in relation to the asset and the individual; or

 (b) all of the following conditions are satisfied:

 (i) the asset is owned by a trust;

 (ii) the trust is a controlled private trust in relation to the individual;

 (iii) no determination is in force under subsection (2) in relation to the asset and the individual; or

 (c) both:

 (i) the asset is owned by a business partnership; and

 (ii) the individual is a partner in the partnership.

 (2) If the asset is owned by a company or trust, the Commission may, by writing, determine that, for the purposes of this Subdivision, the asset is taken not to be controlled by the individual.

 (3) In making a determination under subsection (2), the Commission must comply with any relevant decisionmaking principles.

52ZZZK  Adjusted net value of asset

 (1) For the purposes of this Subdivision, the adjusted net value of an asset owned by an individual is 100% of the net value of the asset.

 (2) For the purposes of this Subdivision, the adjusted net value of an asset controlled by an individual is:

 (a) if the entity that owns the asset is a company and the company is a controlled private company in relation to the individual:

 (i) 100% of the net value of the asset; or

 (ii) if the Commission, by writing, determines a lower percentage in relation to the individual and the asset—that lower percentage of the net value of the asset; or

 (b) if the entity that owns the asset is a trust and the trust is a controlled private trust in relation to the individual:

 (i) 100% of the net value of the asset; or

 (ii) if the Commission, by writing, determines a lower percentage in relation to the individual and the asset—that lower percentage of the net value of the asset; or

 (c) if the entity that owns the asset is a business partnership—the individual’s share of the net value of the asset.

 (3) In making a determination under this section, the Commission must comply with any relevant decisionmaking principles.

52ZZZL  Adjusted net primary production income

 (1) For the purposes of this Subdivision, the adjusted net primary production income of an individual for a particular tax year is the sum of:

 (a) if the individual carried on a primary production enterprise throughout that tax year—100% of the net income of that primary production enterprise for that tax year; and

 (b) if a company carried on a primary production enterprise throughout that tax year and the company was a controlled private company in relation to the individual throughout that tax year:

 (i) 100% of the net income of that primary production enterprise for that tax year; or

 (ii) if the Commission, by writing, determines a lower percentage in relation to the individual and the enterprise—that lower percentage of the net income of that primary production enterprise for that tax year; and

 (c) if a trust carried on a primary production enterprise throughout that tax year and the trust was a controlled private trust in relation to the individual throughout that tax year:

 (i) 100% of the net income of that primary production enterprise for that tax year; or

 (ii) if the Commission, by writing, determines a lower percentage in relation to the individual and the enterprise—that lower percentage of the net income of that primary production enterprise for that tax year; and

 (d) if:

 (i) a business partnership carried on a primary production enterprise throughout that tax year; and

 (ii) the individual was a partner in the partnership throughout that tax year;

  the individual’s share of the net income of that primary production enterprise for that tax year.

 (2) In making a determination under this section, the Commission must comply with any relevant decisionmaking principles.

52ZZZM  Net income of a primary production enterprise

 (1) For the purposes of this Subdivision, if an entity carries on a primary production enterprise during a tax year of the entity, the net income of that primary production enterprise for that tax year is the entity’s gross ordinary income from the carrying on of that enterprise calculated without any reduction, other than a reduction under section 52ZZZN or 52ZZZO.

 (2) For the purposes of this Subdivision, the net income of a primary production enterprise is to be worked out as if:

 (a) exempt lump sums were not excluded from the definition of ordinary income in subsection 5H(1); and

 (b) each reference in section 5H to a person included a reference to an entity; and

 (c) the following provisions had not been enacted:

 (i) section 46Q;

 (ii) subsection 5H(8);

 (iii) subsections 5H(12) and (12A);

 (iv) Divisions 1, 2, 3, 4, 6 and 7.

52ZZZN  Net income from a primary production enterprise—treatment of trading stock

 (1) For the purposes of this Subdivision, if:

 (a) an entity carries on a primary production enterprise; and

 (b) the value of all the trading stock on hand at the end of a tax year is greater than the value of all the trading stock on hand at the beginning of that tax year;

the entity’s income for that tax year in the form of profits from the enterprise is to include the amount of the difference in values.

 (2) For the purposes of this Subdivision, if:

 (a) an entity carries on a primary production enterprise; and

 (b) the value of all the trading stock on hand at the end of a tax year is less than the value of all the trading stock on hand at the beginning of that tax year;

the entity’s income for that tax year in the form of profits from the enterprise is to be reduced by the amount of the difference in values.

52ZZZO  Permissible reductions of income from carrying on a primary production enterprise

 (1) For the purposes of this Subdivision, if an entity carries on a primary production enterprise, the entity’s income from the primary production enterprise is to be reduced by:

 (a) losses and outgoings that relate to the primary production enterprise and are allowable deductions for the purposes of section 81 of the Income Tax Assessment Act 1997; and

 (ba) amounts that relate to the primary production enterprise and can be deducted for the decline in value of depreciating assets under Subdivision 40B of the Income Tax Assessment Act 1997; and

 (c) amounts that relate to the primary production enterprise and are allowable deductions under any other provision of the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997.

 (2) However, the rule in subsection (1) does not apply to:

 (a) an ineligible deduction (see subsection (3)); or

 (b) an ineligible amount (see subsection (4)); or

 (c) an ineligible part of a deduction (see subsection (5)).

 (3) The Commission may, by legislative instrument, determine a specified deduction is an ineligible deduction for the purposes of this section.

 (4) The Commission may, by legislative instrument, determine that a specified amount is an ineligible amount for the purposes of this section.

 (5) The Commission may, by legislative instrument, determine that a specified part of a specified deduction is an ineligible part of the deduction for the purposes of this section.

 (6) A determination under subsection (3), (4) or (5) has effect accordingly.

Subdivision LAntiavoidance

52ZZZP  Antiavoidance

 (1) If:

 (a) one or more entities enter into, commence to carry out, or carry out, a scheme; and

 (b) it would be concluded that the entity, or any of the entities, who entered into, commenced to carry out, or carried out, the scheme did so for the sole or dominant purpose of obtaining an income support advantage for an individual (who may be the entity or one of the entities);

the Commission may, by writing, make any or all of the following determinations:

 (c) a determination that this Division has, and is taken to have had, effect as if the individual were an attributable stakeholder of a specified company or trust at a specified time or during a specified period;

 (d) a determination that this Division has, and is taken to have had, effect as if a specified asset were owned by a specified company or trust at a specified time or during a specified period;

 (e) a determination that this Division has, and is taken to have had, effect as if specified income had been derived by a specified company or trust at a specified time or during a specified period.

 (2) A determination under subsection (1) has effect accordingly.

Obtaining an income support advantage

 (3) For the purposes of this section, an entity has a purpose of obtaining an income support advantage for an individual (who may be the entity) if the entity has a purpose of:

 (a) enabling the individual to obtain any of the following:

 (i) a service pension;

 (ii) income support supplement;

 (iia) a veteran payment;

 (iii) a social security pension;

 (iv) a social security benefit; or

 (b) enabling the individual to obtain any of the following at a higher rate than would otherwise have been payable:

 (i) a service pension;

 (ii) income support supplement;

 (iia) a veteran payment;

 (iii) a social security pension;

 (iv) a social security benefit; or

 (c) ensuring that the individual would be eligible for benefits under Division 12 of this Part or fringe benefits under the Social Security Act.

Subdivision MDecisionmaking principles

52ZZZQ  Decisionmaking principles

  The Commission may, by legislative instrument, formulate principles (decisionmaking principles) to be complied with by it in making decisions under:

 (a) section 52ZZJ; or

 (b) subsection 52ZZK(2); or

 (c) section 52ZZL, 52ZZP or 52ZZQ; or

 (d) subsection 52ZZR(2); or

 (e) subsection 52ZZT(6) or 52ZZU(1); or

 (f) section 52ZZW; or

 (g) subsection 52ZZX(3), 52ZZZ(1) or 52ZZZA(1); or

 (h) section 52ZZZB; or

 (i) subsection 52ZZZC(3), 52ZZZD(1) or 52ZZZE(1); or

 (j) paragraph 52ZZZF(1)(f); or

 (k) section 52ZZZH; or

 (l) subsection 52ZZZJ(2); or

 (m) section 52ZZZK or 52ZZZL.

Subdivision NInformation management

52ZZZR  Transitional period

  For the purposes of this Subdivision, the transitional period is the period:

 (a) beginning on the commencement of this Division; and

 (b) ending immediately before 1 January 2002.

52ZZZS  Informationgathering powers

  In determining the scope of the power conferred on the Secretary during the transitional period by section 128 to require the provision of information, or the production of a document, it is to be assumed that:

 (a) section 52ZN (simplified outline) had effect as if the reference in that section to 1 January 2002 were a reference to the first day of the transitional period; and

 (b) section 52ZZK (attribution of income) had effect, in relation to a particular individual and a particular company or trust, as if:

 (i) a tax year of the company or trust, being a tax year specified in the notice imposing the requirement, were a derivation period of the company or trust; and

 (ii) a period specified in the notice imposing the requirement were an attribution period of the company or trust, and that attribution period related to a specified derivation period of the company or trust; and

 (iii) the reference in paragraph 52ZZK(1)(c) to 1 January 2002 were a reference to the first day of the transitional period; and

 (iv) sections 52ZZP and 52ZZQ had not been enacted; and

 (c) section 52ZZR (attribution of assets) had effect as if the reference in paragraph 52ZZR(1)(a) to 1 January 2002 were a reference to the first day of the transitional period.

52ZZZT  Commission may obtain tax information

 (1) If the Commission has reason to believe that the Commissioner of Taxation has information (other than a tax file number) that may be relevant to the operation of this Division, the Commission may, by written notice given to the Commissioner of Taxation, require the Commissioner of Taxation to give to the Commission any such information.

 (2) If the Commission has reason to believe that the relationship (whether direct or indirect) between:

 (a) a particular trust; and

 (b) a particular individual or an associate of a particular individual;

may be relevant to the operation of this Division, the Commission may, by written notice given to the Commissioner of Taxation, require the Commissioner of Taxation to give to the Commission the tax file number of the trust.

 (3) The Commissioner of Taxation must comply with a requirement under subsection (1) or (2).

 (4) Subsections (1) and (2) do not, by implication, limit a power conferred by:

 (a) paragraph 16(4)(d) of the Income Tax Assessment Act 1936; or

 (b) section 128 of this Act.

 (5) A tax file number provided to the Commission under subsection (2) may only be used for the following purposes:

 (a) to detect cases in which amounts of service pension, income support supplement or veteran payment have been paid when they should not have been paid;

 (b) to verify, in respect of persons who have made claims for service pension or income support supplement, the qualification of those persons for those payments or to verify the eligibility of persons for veteran payment;

 (c) to establish whether the rates at which service pension, income support supplement or veteran payment are being, or have been, paid are, or were, correct.

 (6) In determining the scope of a power conferred during the transitional period by subsection (1), (2) or (5), it is to be assumed that:

 (a) section 52ZN (simplified outline) had effect as if the reference in that section to 1 January 2002 were a reference to the first day of the transitional period; and

 (b) section 52ZZK (attribution of income) had effect, in relation to a particular individual and a particular company or trust, as if:

 (i) a tax year of the company or trust, being a tax year specified in a written notice given to the Commissioner of Taxation by the Commission, were a derivation period of the company or trust; and

 (ii) a period specified in a written notice given to the Commissioner of Taxation by the Commission were an attribution period of the company or trust, and that attribution period related to a specified derivation period of the company or trust; and

 (iii) the reference in paragraph 52ZZK(1)(c) to 1 January 2002 were a reference to the first day of the transitional period; and

 (iv) sections 52ZZP and 52ZZQ had not been enacted; and

 (c) section 52ZZR (attribution of assets) had effect as if the reference in paragraph 52ZZR(1)(a) to 1 January 2002 were a reference to the first day of the transitional period.

52ZZZU  Disclosure of tax information

  In determining the scope of the power conferred on a person (the tax official) during the transitional period by paragraph 16(4)(d) of the Income Tax Assessment Act 1936 to communicate information for the purpose of the administration of any law of the Commonwealth relating to pensions, it is to be assumed that:

 (a) section 52ZN (simplified outline) had effect as if the reference in that section to 1 January 2002 were a reference to the first day of the transitional period; and

 (b) section 52ZZK (attribution of income) had effect, in relation to a particular individual and a particular company or trust, as if:

 (i) a tax year of the company or trust, being a tax year specified in a written notice given to the tax official by the Commission, were a derivation period of the company or trust; and

 (ii) a period specified in a written notice given to the tax official by the Commission were an attribution period of the company or trust, and that attribution period related to a specified derivation period of the company or trust; and

 (iii) the reference in paragraph 52ZZK(1)(c) to 1 January 2002 were a reference to the first day of the transitional period; and

 (iv) sections 52ZZP and 52ZZQ had not been enacted; and

 (c) section 52ZZR (attribution of assets) had effect as if the reference in paragraph 52ZZR(1)(a) to 1 January 2002 were a reference to the first day of the transitional period.

52ZZZV  Disclosure of tax file number information

  In determining the scope of paragraph 202(hc) of the Income Tax Assessment Act 1936, and sections 8WA and 8WB of the Taxation Administration Act 1953, during the transitional period, it is to be assumed that:

 (a) section 52ZN (simplified outline) had effect as if the reference in that section to 1 January 2002 were a reference to the first day of the transitional period; and

 (b) section 52ZZK (attribution of income) had effect, in relation to a particular individual and a particular company or trust, as if:

 (i) a tax year of the company or trust, being a tax year specified in a written notice given to the Commissioner of Taxation by the Commission, were a derivation period of the company or trust; and

 (ii) a period specified in a written notice given to the Commissioner of Taxation by the Commission were an attribution period of the company or trust, and that attribution period related to a specified derivation period of the company or trust; and

 (iii) the reference in paragraph 52ZZK(1)(c) to 1 January 2002 were a reference to the first day of the transitional period; and

 (iv) sections 52ZZP and 52ZZQ had not been enacted; and

 (c) section 52ZZR (attribution of assets) had effect as if the reference in paragraph 52ZZR(1)(a) to 1 January 2002 were a reference to the first day of the transitional period.

Division 11BPrivate financial provision for certain people with disabilities

Subdivision ASpecial disability trusts

52ZZZW  What is a special disability trust?

  A trust is a special disability trust if the following requirements of this Subdivision are complied with:

 (a) the beneficiary requirements (see section 52ZZZWA);

 (b) the trust purpose requirements (see section 52ZZZWB);

 (c) the trust deed requirements (see section 52ZZZWC);

 (d) the trustee requirements (see section 52ZZZWD);

 (e) the trust property requirements (see section 52ZZZWE);

 (ea) the trust expenditure requirements, if any (see section 52ZZZWEA);

 (f) the reporting requirements (see section 52ZZZWF);

 (g) the audit requirements (see section 52ZZZWG).

Note: The Commission may waive one or more requirements in certain circumstances (see section 52ZZZWH).

52ZZZWA  Beneficiary requirements

Single beneficiary rule

 (1) The trust must have no more than one beneficiary (the principal beneficiary), not including any residuary beneficiary.

Impairment or disability conditions

 (2) If the principal beneficiary has reached 16 years of age:

 (a) the beneficiary must:

 (i) be eligible for invalidity service pension; or

 (ii) be eligible for income support supplement and be permanently incapacitated for work in the circumstances set out in a determination under section 45QA; or

 (iii) have an impairment that would qualify the person for disability support pension under the Social Security Act; and

 (b) the beneficiary must:

 (i) have a disability that would, if the person had a sole carer, qualify the carer for carer payment, or carer allowance, under the Social Security Act; or

 (ii) be living in an institution, hostel or group home in which care is provided for people with disabilities, and for which funding is provided (wholly or partly) under an agreement, between the Commonwealth, the States and the Territories, nominated by the Commission under subsection (3); and

 (c) the beneficiary must have a disability as a result of which either:

 (i) he or she is not working, and has no likelihood of working, for more than 7 hours a week for a wage that is at or above the relevant minimum wage within the meaning of subsection 23(1) of the Social Security Act; or

 (ii) he or she is working for wages set in accordance with the program administered by the Commonwealth known as the supported wage system.

 (3) The Commission may, by legislative instrument, nominate an agreement for the purpose of subparagraph (2)(b)(ii).

 (4) If the principal beneficiary is under 16 years of age, subsection (4A) must apply to him or her.

 (4A) This subsection applies if:

 (a) the principal beneficiary is a person with a severe disability or a severe medical condition; and

 (b) another person (the carer) has been given a qualifying rating of intense under the Disability Care Load Assessment (Child) Determination (within the meaning of the Social Security Act) for caring for the principal beneficiary; and

 (c) a treating health professional (within the meaning of that Act) has certified in writing that, because of that disability or condition:

 (i) the principal beneficiary will need personal care for 6 months or more; and

 (ii) the personal care is required to be provided by a specified number of persons; and

 (d) the carer has certified in writing that the principal beneficiary will require the same care, or an increased level of care, to be provided to him or her in the future.

Living beneficiary rule

 (5) A trust stops being a special disability trust when the principal beneficiary dies.

Single trust rule

 (6) A trust is not a special disability trust for a particular principal beneficiary if, at the time of its creation, there is already another trust in existence for that person that is:

 (a) a special disability trust; or

 (b) a special disability trust within the meaning of the Social Security Act.

52ZZZWB  Trust purpose requirements

Primary purpose—care and accommodation for principal beneficiary

 (1) Subject to this section, the primary purpose of the trust during the lifetime of the principal beneficiary, as provided by the trust deed for the trust, must be to meet reasonable care and accommodation needs of the beneficiary.

Note: The provision of care and accommodation for the principal beneficiary is also dealt with at section 52ZZZWE.

Other purposes

 (2) The trust may have other purposes that are:

 (a) both ancillary to the primary purpose and necessary or desirable to facilitate the achievement of that purpose; or

 (b) primarily for the benefit of the principal beneficiary.

Note 1: A particular purpose may be covered by both of paragraphs (2)(a) and (b).

Note 2: The application of the income and assets of the trust for purposes (other than the primary purpose) that are primarily for the benefit of the principal beneficiary is dealt with by section 52ZZZWEA.

Guidelines relating to purposes

 (3) If guidelines are made under subsection (4) then, for the purposes of this section:

 (a) the reasonable care and accommodation needs of a principal beneficiary of a special disability trust must be decided in accordance with the guidelines if they deal with those needs; and

 (b) purposes, other than the primary purpose of a special disability trust, that are primarily for the benefit of the principal beneficiary of a trust must be decided in accordance with the guidelines if they deal with those other purposes.

 (4) The Commission may, by legislative instrument, make guidelines for deciding either or both of the following for the purposes of this section:

 (a) what are, and what are not, reasonable care and accommodation needs for beneficiaries of trusts;

 (b) what are, and what are not, trusts’ purposes, other than the primary purpose described in subsection (1), that are primarily for the benefit of beneficiaries of the trusts.

52ZZZWC  Trust deed requirements

Compliance with determination

 (1) If a determination is made under subsection (2), the trust deed for the trust must comply with the determination.

 (2) The Commission may, by legislative instrument, determine one or more of the following:

 (a) the form of the trust deed required for a special disability trust;

 (b) provisions which must be included in the trust deed;

 (c) the form of those provisions;

 (d) provisions which cannot be included in the trust deed.

Contravention of trust deed

 (3) A person must not contravene a provision of the trust deed that is required by this section to be included in the deed (whether or not the provision is required to be included in any particular form).

52ZZZWD  Trustee requirements

 (1) A trustee of the trust who is an individual must:

 (a) be an Australian resident; and

 (b) not have been convicted at any time (including a time before the commencement of this section) of any of the following offences:

 (i) an offence of dishonest conduct against, or arising out of, a law of the Commonwealth, a State, a Territory or a foreign country;

 (ii) an offence against, or arising out of, this Act, the Social Security Act or the Social Security (Administration) Act 1999; and

 (c) not have been disqualified at any time (including a time before the commencement of this section) from managing corporations under the Corporations Act 2001.

 (2) In addition, if a trustee of the trust is a corporation, subsection (1) applies to each director of the trustee.

52ZZZWE  Trust property requirements

 (1) The assets of the trust must not include any asset transferred to the trust by the principal beneficiary of the trust, or the principal beneficiary’s partner, unless:

 (a) the transferred asset is all or part of a bequest, or of a superannuation death benefit; and

 (b) the transferor received the bequest or superannuation death benefit not more than 3 years before transferring the transferred asset.

 (2) The assets of the trust must not include any compensation received by or on behalf of the principal beneficiary.

 (3) The trust must not be used to pay an immediate family member, or a child, of the principal beneficiary for the provision to the beneficiary of:

 (a) care services; or

 (b) services for the repair or maintenance of the beneficiary’s accommodation.

Note: For immediate family member, see subsection 5Q(1).

 (4) The trust must not be used to purchase or lease property from an immediate family member, or a child, of the principal beneficiary, even if the property is to be used for the beneficiary’s accommodation.

Note: For immediate family member, see subsection 5Q(1).

 (5) In this section:

child, of a principal beneficiary, means the following (no matter how old the child is):

 (a) a natural child, adopted child or stepchild of the beneficiary;

 (b) someone who is a child of the person within the meaning of the Family Law Act 1975.

property includes:

 (a) a right to accommodation for life in a residence; and

 (b) a life interest in a residence.

52ZZZWEA  Trust expenditure requirements

Limit on expenditure for purposes other than primary purpose

 (1) If:

 (a) a determination has been made under subsection (3); and

 (b) the trust has one or more purposes, other than its primary purpose described in subsection 52ZZZWB(1), that are primarily for the benefit of the principal beneficiary;

the total value of the income and assets of the trust applied for those other purposes in a tax year must not exceed the value specified in the determination for that year.

Note: For tax year see subsection 5Q(1).

Instruments fixing limits and purposes to be taken into account

 (2) If guidelines are made under paragraph 52ZZZWB(4)(b), the question whether a purpose for which income and assets of a trust have been applied is one of the other purposes described in subsection (1) must be decided in accordance with the guidelines.

Note: Paragraph 52ZZZWB(4)(b) provides for guidelines for deciding what are, and what are not, trusts’ purposes, other than the primary purpose described in subsection 52ZZZWB(1), that are primarily for the benefit of beneficiaries of the trusts.

 (3) The Commission may, by legislative instrument, determine the total value of income and assets of a special disability trust that may be applied in a specified tax year for purposes, other than the primary purpose described in subsection 52ZZZWB(1), that are primarily for the benefit of the principal beneficiary of the trust.

52ZZZWF  Reporting requirements

 (1) The trustees of the trust must, on or before 31 March each year, give the Commission written financial statements about the trust in relation to the financial year ending on 30 June in the previous year.

 (2) The financial statements must be prepared by:

 (a) if a determination is made under subsection (4) that requires such financial statements to be prepared by a person with stated qualifications—such a person; or

 (b) whether or not such a determination is made—a person approved by the Commission for the purpose.

 (3) If a determination is made under subsection (4) that requires financial statements to include information of a stated kind, the financial statements must include information of that kind.

 (4) The Commission may, by legislative instrument, make determinations for the purposes of this section.

52ZZZWG  Audit requirements

Trustee duties

 (1) The trustees of the trust must, within a reasonable time after receiving a request under subsection (3):

 (a) cause an audit of the trust to be carried out in relation to the period mentioned in subsection (2); or

 (b) if, at the time of the request for the audit, an audit (the earlier requested audit) of the trust had already been carried out, or was being carried out, for the purpose of this section in relation to that period—give a copy of the report of the earlier requested audit to the person making the request.

Audit period

 (2) The audit must relate to:

 (a) the financial year ending on the 30 June last preceding the request; or

 (b) if a determination is made under subsection (7) that provides for a different period—that period.

Who may request audit

 (3) The following persons may request an audit of the trust for the purposes of this section:

 (a) the principal beneficiary;

 (b) an immediate family member of the principal beneficiary;

 (c) a person who is, under the law of the Commonwealth, a State or a Territory, the legal guardian or financial administrator of the principal beneficiary;

 (d) a person who is otherwise acting as the principal beneficiary’s guardian on a longterm basis;

 (e) the Commission.

Note: For immediate family member, see subsection 5Q(1).

Copies of audit report

 (4) If an audit report for a trust is given to the trustees for the purpose of subsection (1), the trustees must, within a reasonable time, give a copy of the report to:

 (a) the person requesting the audit; and

 (b) if the guardian or administrator mentioned in paragraph (3)(c) did not request the audit—the guardian or administrator; and

 (c) if the Commission did not request the audit—the Commission.

Auditor qualifications and required information

 (5) The audit must be prepared by:

 (a) if a determination is made under subsection (7) that requires such audits to be prepared by a person with stated qualifications—such a person; or

 (b) whether or not such a determination is made—a person approved by the Commission for the purpose.

 (6) If a determination is made under subsection (7) that requires audits requested under this section to include information of a stated kind, the audit must include information of that kind.

 (7) The Commission may, by legislative instrument, make determinations for the purposes of this section.

52ZZZWH  Waiver of contravention of this Division

 (1) A contravention of a requirement of this Division concerning a particular matter, in relation to a trust that would be a special disability trust if it were not for the contravention, does not prevent the trust being a special disability trust if:

 (a) the Commission, by written notice (a waiver notice) to the trustees, waives the requirement as it concerns that matter; and

 (b) in a case where the waiver notice requires the trustees to comply with any conditions relating to the matter—the trustees comply with those conditions within the time or times (if any) stated in the waiver notice.

 (2) A waiver notice has effect, subject to any conditions mentioned in paragraph (1)(b):

 (a) from:

 (i) the time of the contravention; or

 (ii) if the waiver notice states a time for the start of its period of effect that is after the time of the contravention—the stated time; and

 (b) if the waiver notice states a time for the end of its period of effect—until the stated time.

 (3) If guidelines are made under subsection (4), a decision in relation to giving a waiver notice to the trustees of the trust must be made in accordance with the guidelines.

 (4) The Commission may, by legislative instrument, make guidelines for deciding any or all of the following:

 (a) whether or not to give waiver notices to trustees of trusts;

 (b) what conditions to include in waiver notices;

 (c) the periods during which waiver notices are to have effect.

Subdivision BIncome of special disability trusts

52ZZZWI  Attribution of income

 (1) For the purposes of this Act, an amount of income that a special disability trust derives is taken not to be income received by any individual.

Note: For special disability trust, see section 52ZZZW.

 (2) This section has effect despite Subdivision G of Division 11A of Part IIIB and any other provisions of this Act.

52ZZZWJ  Income amounts from special disability trusts

  An income amount that the principal beneficiary of a special disability trust receives is not income of the beneficiary for the purposes of this Act to the extent that consideration for the income amount was provided by a distribution from the trust.

Note 1: For income amount, see section 5H.

Note 2: For special disability trust, see section 52ZZZW.

Subdivision CAssets of special disability trusts

52ZZZWK  Attribution of assets

 (1) For the purposes of this Act, the assets of a special disability trust are not to be included in the assets of the principal beneficiary of the trust.

Note: For special disability trust, see section 52ZZZW.

 (2) However, this section does not apply to the extent that the value of the assets owned by the trust exceeds the trust’s asset value limit.

 (3) The asset value limit of a special disability trust is $500,000.

Note: This amount is indexed annually on 1 July (see sections 59B to 59E).

 (4) For the purposes of subsection (2), disregard the value of any right or interest of the trust in the principal home of the principal beneficiary of the trust.

Note: For principal home, see subsections 5L(5) to (7).

 (5) This section has effect despite Subdivision H of Division 11A of Part IIIB and any other provisions of this Act.

Subdivision DTransfers to special disability trusts

52ZZZWL  Effect of certain transfers to special disability trusts

 (1) If a person transfers an asset (the transferred asset) to a special disability trust, the transfer is taken not to be a disposal of the asset (within the meaning of section 52E) if:

 (a) the person is an immediate family member of the principal beneficiary of the trust; and

 (b) the person, or the person’s partner:

 (i) is receiving a service pension and has reached pension age; or

 (ii) is receiving income support supplement and has reached qualifying age; or

 (iia) is receiving a veteran payment and has reached pension age (within the meaning of subsections 5QB(2), (3), (4) and (5)); or

 (iii) is receiving a social security pension and has reached pension age within the meaning of the Social Security Act; and

 (c) the person receives no consideration, and is not entitled to any consideration, for the transfer; and

 (d) the transfer is unconditional; and

 (e) the value of the transferred asset does not exceed $500,000; and

 (f) in a case where there has already been a transfer to which this section has applied (an exempt transfer), by that person or any other person, to the trust or any other special disability trust that had the same principal beneficiary—the sum of:

 (i) the values of all of the assets transferred, by exempt transfers that have already been made, to the trust or any other special disability trust that had the same principal beneficiary; and

 (ii) the value of the transferred asset;

  does not exceed $500,000.

Note 1: For special disability trust, see section 52ZZZW.

Note 2: For immediate family member, see subsection 5Q(1).

Note 3: For pension age (except for the purposes of subparagraph (1)(b)(iia) or (iii) of this section), see subsection 5Q(1).

Note 3A: For qualifying age see section 5Q.

Note 4: For service pension, social security pension and veteran payment, see subsection 5Q(1).

Note 5: Part IIIA deals with income support supplement.

 (2) This section has effect subject to sections 52ZZZWM and 52ZZZWP.

 (3) In this section:

other special disability trust includes a special disability trust within the meaning of the Social Security Act.

value, of an asset transferred to a special disability trust, means the market value of the asset at the time of the transfer.

52ZZZWM  The effect of exceeding the $500,000 limit

 (1) If section 52ZZZWL would apply to a transfer of an asset except for the fact that the value of the transferred asset exceeds $500,000, that section does not prevent the transfer from being a disposal of the asset, but the amount of the disposal or disposition is taken to be the amount of the excess.

 (2) If:

 (a) section 52ZZZWL would apply to a transfer of an asset but for the fact that the sum of:

 (i) the values of all of the exempt transfers that have already been made to the trust or any other special disability trust that had the same principal beneficiary; and

 (ii) the value of the transferred asset;

  exceeds $500,000; and

 (b) that sum would not exceed $500,000 if the value of the transferred asset were disregarded;

that section does not prevent the transfer from being a disposal or disposition of the asset, but the amount of the disposal or disposition is taken to be the amount of the excess referred to in paragraph (a).

 (3) This section has effect subject to section 52ZZZWP.

 (4) In this section:

other special disability trust includes a special disability trust within the meaning of the Social Security Act.

value, of an asset transferred to a special disability trust, means the market value of the asset at the time of the transfer.

52ZZZWN  Transfers by the immediate family members prior to reaching pension age etc.

 (1) If:

 (a) an immediate family member of the principal beneficiary of a special disability trust transfers an asset to the trust; and

 (b) at the time of the transfer, neither the immediate family member nor the partner of the immediate family member is a person who:

 (i) is receiving a service pension and has reached pension age; or

 (ii) is receiving income support supplement and has reached qualifying age; or

 (iia) is receiving a veteran payment and has reached pension age (within the meaning of subsections 5QB(2), (3), (4) and (5)); or

 (iii) is receiving a social security pension and has reached pension age within the meaning of the Social Security Act;

the immediate family member is taken for the purposes of this Division only to transfer the asset to the trust at the earliest time at which subparagraph (b)(i), (ii), (iia) or (iii) applies to the immediate family member or partner.

Note 1: For special disability trust, see section 52ZZZW.

Note 2: For immediate family member, see subsection 5Q(1).

Note 3: For pension age (except for the purposes of subparagraph (1)(b)(iia) or (iii) of this section), see subsection 5Q(1).

Note 3A: For qualifying age see section 5Q.

Note 4: For service pension, social security pension and veteran payment, see subsection 5Q(1).

Note 5: Part IIIA deals with income support supplement.

 (2) However, if under subsection (1) transfers of assets to the trust by different immediate family members are taken to have been made on the same day, the transfers are taken to have been made on that day in the order in which they would have been taken to be made but for this Division.

Note: For immediate family member, see subsection 5Q(1).

 (3) This section does not affect the operation of Division 11 of Part IIIB or any other provision of this Act outside of this Division.

52ZZZWO  Transfers by principal beneficiaries or partners

 (1) If a person transfers an asset to a special disability trust, the transfer is taken not to be a disposal of the asset (within the meaning of section 52E) if:

 (a) the person is the principal beneficiary of the trust, or the principal beneficiary’s partner; and

 (b) the person receives no consideration, and is not entitled to any consideration, for the transfer; and

 (c) the transfer is unconditional.

Note 1: For special disability trust, see section 52ZZZW.

Note 2: Section 52ZZZWE limits the circumstances in which the principal beneficiary or the principal beneficiary’s partner can transfer assets to the trust.

 (2) This section has effect subject to section 52ZZZWP.

52ZZZWP  Cessation of special disability trusts

 (1) If:

 (a) a special disability trust ceases to exist or ceases to be a special disability trust; and

 (b) a person had transferred an asset to the trust during the period of 5 years immediately preceding the cessation; and

 (c) section 52ZZZWL, 52ZZZWM or 52ZZZWO applied to the transfer;

then the transfer is taken, after the cessation, to be a disposal or disposition of the asset that occurred at the time of the transfer.

 (2) The amount of the disposal or disposition is taken to be the amount worked out using the formula:

Start formula open bracket Asset value times start fraction Final value of trust assets over Initial value of trust assets end fraction close bracket plus Subsection 52ZZZWM(2) amount end formula

where:

asset value means:

 (a) if section 52ZZZWL or 52ZZZWO applied to the transfer—the value of the asset at the time of the transfer; or

 (b) if subsection 52ZZZWM(1) applied to the transfer—$500,000; or

 (c) if subsection 52ZZZWM(2) applied to the transfer—the difference between the value of the asset at the time of the transfer and the amount that was taken under that subsection to be the amount of the disposal or disposition of the asset.

final value of trust assets means the value of all of the assets of the trust at the time of the ce