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Veterans' Entitlements Act 1986

  • - C2013C00063
  • In force - Superseded Version
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Act No. 27 of 1986 as amended, taking into account amendments up to Personal Liability for Corporate Fault Reform Act 2012
An Act to provide for the payment of pensions and other benefits to, and to provide medical and other treatment for, veterans and certain other persons, and for other purposes
Administered by: Veterans' Affairs
Registered 29 Jan 2013
Start Date 01 Jan 2013
End Date 19 Mar 2013
Table of contents.

Veterans’ Entitlements Act 1986

Act No. 27 of 1986 as amended

This compilation was prepared on 21 January 2013
taking into account amendments up to Act No. 180 of 2012

Volume 2 includes:     Table of Contents
                                    Sections 46–93ZG

The text of any of those amendments not in force
on that date is appended in the Notes section

The operation of amendments that have been incorporated may be
affected by application provisions that are set out in the Notes section

  

  

  


Contents

Part IIIB—Provisions applicable to service pensions and income support supplement 1

Division 1—Ordinary income concept                                                                1

46.......... General meaning of ordinary income.................................................. 1

46A....... Certain amounts taken to be received over 12 months......................... 1

Division 1A—Work bonus                                                                                         2

46AA.... Income concession.............................................................................. 2

46AB.... Meaning of employment income......................................................... 5

46AC.... Unused concession balance................................................................. 6

46AD.... No double income reductions under sections 46AA and
115G................................................................................................... 7

Division 2—Business income                                                                                     9

46B....... Ordinary income from a business—treatment of trading stock........... 9

46C....... Permissible reductions of business income......................................... 9

Division 3—Deemed income from financial assets                                      11

46D....... Deemed income from financial assets—persons other than members of couples     11

46E........ Deemed income from financial assets—members of a couple........... 13

46H....... Deeming threshold............................................................................ 15

46J........ Below threshold rate, above threshold rate........................................ 15

46K....... Actual return on financial assets not treated as ordinary income....... 15

46L........ Certain money and financial investments not taken into account....... 16

46M...... Valuation and revaluation of certain financial investments................ 16

Division 4—Income from income streams                                                       18

Subdivision B—Income streams that are not family law affected income streams      18

46SA..... Scope of Subdivision........................................................................ 18

46T........ Income from asset‑test exempt income stream.................................. 18

46U....... Income—income stream not a defined benefit income stream........... 18

46V....... Income—income stream is a defined benefit income stream............. 19

46VA.... Income from market‑linked asset‑test exempt income stream............ 19

46W...... Income from asset‑tested income stream (long term)........................ 21

46X....... Income—income stream not a defined benefit income stream........... 22

46Y....... Income—income stream is a defined benefit income stream............. 22

46YA.... Income from certain low‑payment asset‑tested income
streams.............................................................................................. 23

Subdivision C—Family law affected income streams                                    24

46Z........ Scope of Subdivision........................................................................ 24

46ZA..... Income from asset‑test exempt income streams................................. 25

46ZB..... Income from asset‑tested income stream (long term)........................ 25

46ZC..... Decision‑making principles............................................................... 25

Division 6—Income tests—conversion of foreign currency amounts 26

47.......... Application of Division..................................................................... 26

47A....... Conversion of foreign currency amounts.......................................... 26

47B....... Base exchange rate............................................................................ 26

47C....... Re‑assessed exchange rate................................................................ 26

47D....... Applicability of re‑assessed exchange rate........................................ 27

47E........ Rounding off exchange rates............................................................. 27

Division 7—Income tests—disposal of ordinary income                         28

48.......... Disposal of ordinary income............................................................. 28

48A....... Amount of disposition...................................................................... 29

48B....... Disposal of ordinary income—not a member of a couple................. 29

48C....... Disposal of ordinary income—members of couples......................... 29

48E........ Dispositions more than 5 years old to be disregarded....................... 30

Division 8—Retirement assistance for farmers                                            32

Subdivision 1—General                                                                                          32

49.......... Purpose of Division.......................................................................... 32

49AA.... Applicable cut‑off date...................................................................... 32

49AB.... Pre‑assessment request..................................................................... 32

49A....... Division to apply to certain transfers of estates in farms etc.............. 34

49B....... How to assess the value of farms etc. subject to a transfer................ 37

Subdivision 2—Modification of provisions relating to assets test               38

49C....... Transfer of estate in farm etc. not disposal of an asset...................... 38

Subdivision 3—Claims for service pension or income support supplement 39

49D....... Provisional commencement day........................................................ 39

Subdivision 4—Requests for increase in rate of service pension or income support supplement              40

49E........ Application........................................................................................ 40

49F........ Request for increase.......................................................................... 40

49G....... Making a request............................................................................... 41

49H....... Determination of request................................................................... 41

Subdivision 5—Farmers’ income test                                                                 42

49J........ Does a person satisfy the farmers’ income test?................................ 42

Subdivision 6—Transitional: ex gratia payments                                           46

49K....... Ex gratia payments............................................................................ 46

Division 8A—Retirement assistance for sugarcane farmers                48

Subdivision A—General                                                                                         48

49L........ Purpose of Division.......................................................................... 48

49M...... RASF commencement and closing days........................................... 48

49N....... Applicable cut‑off date...................................................................... 48

49P........ Pre‑assessment request..................................................................... 49

49Q....... Division to apply to certain transfers of estates in sugarcane farms etc. 50

49R....... How to assess the total net value of sugarcane farms etc. subject to a transfer         53

Subdivision B—Modification of provisions relating to assets test              56

49S........ Transfer of estate in sugarcane farm etc. not disposal of an asset...... 56

Subdivision C—Claims for service pension or income support supplement 57

49T........ Provisional commencement day........................................................ 57

Subdivision D—Requests for increase in rate of service pension or income support supplement             58

49U....... Application........................................................................................ 58

49V....... Request for increase.......................................................................... 58

49W...... Making a request............................................................................... 58

49X....... Determination of request................................................................... 59

Subdivision E—Sugarcane farmers’ income test                                             59

49Y....... Does a person satisfy the sugarcane farmers’ income test?............... 59

Division 9—New Enterprise Incentive Scheme                                             64

50.......... General effect of Division................................................................. 64

50A....... Reduction in rate of payments under this Part if recipient or partner also receiving payments under NEIS              64

50B....... Rate reduction under this Division.................................................... 65

Division 10—General provisions relating to maintenance income    66

51.......... Apportionment of capitalised maintenance income............................ 66

51A....... In‑kind housing maintenance—value of substitute for family home. 68

Division 11—General provisions relating to the assets test                   69

Subdivision A—Value of person’s assets                                                            69

52.......... Certain assets to be disregarded in calculating the value of a person’s assets           69

52AA.... Value of superannuation investments determined by Minister to be disregarded     77

52A....... Value of asset‑tested income streams that are not defined benefit income streams   78

52B....... Value of asset‑tested income streams that are defined benefit income streams         79

52BA.... Value of asset‑tested FLA income streams....................................... 80

52BB..... Value of partially asset‑test exempt income streams.......................... 80

52BC..... Value of superannuation reserves for superannuation funds of 4 members or less  80

52C....... Effect of charge or encumbrance on value of assets.......................... 81

52CA.... Effect of certain liabilities on value of assets used in primary production 82

52D....... Loans................................................................................................ 83

Subdivision B—Dispositions of assets (general provisions)                          83

52E........ Disposal of assets............................................................................. 83

52F........ Amount of disposition...................................................................... 84

52FAAA  Application of asset deprivation rules to cease in respect of certain assets             85

Subdivision BA—Dispositions of assets before 1 July 2002                          85

52FAA.. Application........................................................................................ 85

52FA..... Disposal of assets in pre‑pension years—not a member of a couple. 85

52G....... Disposal of assets in pension years—not a member of a couple....... 86

52GA.... Disposal of assets in pre‑pension years—members of couples......... 86

52H....... Disposal of assets in pension years—members of couples............... 88

52J........ Dispositions more than 5 years old to be disregarded....................... 90

Subdivision BB—Dispositions of assets on or after 1 July 2002                  91

52JA..... Disposition of assets in tax year—individuals.................................. 91

52JB...... Dispositions of assets in 5 year period—individuals........................ 91

52JC...... Disposition of assets in tax year—members of couples.................... 92

52JD..... Disposition of assets in 5 year period—members of couples............ 94

52JE...... Certain dispositions to be disregarded............................................... 95

Subdivision C—Provisions relating to special residences and special residents            96

52KA.... Application of Subdivision to granny flat residents.......................... 96

52L........ Basis for different treatment.............................................................. 96

52M...... Entry contribution............................................................................. 96

52N....... Extra allowable amount..................................................................... 98

52P........ Renegotiation of retirement village agreement................................. 100

52Q....... Residents who are not members of a couple................................... 100

52R....... Members of couples........................................................................ 101

52S........ Members of illness separated couple (both in special residences)... 102

52T........ Members of illness separated couple (partner not in special residence and partner property owner)        104

52U....... Members of illness separated couple (partner not in special residence and partner not property owner)  106

52V....... Members of ordinary couple with different principal homes (both in special residences)        107

52W...... Members of ordinary couple with different principal homes (partner not in special residence and partner property owner)........................................................................................................ 108

52X....... Members of ordinary couple with different principal homes (partner not in special residence and partner not property owner)............................................................................................. 109

Subdivision D—Financial hardship                                                                   111

52Y....... Access to financial hardship rules................................................... 111

52Z........ Application of financial hardship rules............................................ 112

Subdivision E—Pension loans scheme                                                              115

52ZAAA  Pension loans scheme definitions................................................. 115

52ZA..... Eligibility for participation in pension loans scheme....................... 116

52ZB..... Effect of participation in pension loans scheme—pension rate........ 118

52ZC..... Effect of participation in pension loans scheme—creation of debt.. 119

52ZCA.. Effect of participation in pension loans scheme—maximum loan available              120

52ZD..... Need for a request to participate...................................................... 122

52ZE..... Need for a request to later nominate or change guaranteed amount or rate of pension              123

52ZF..... Existence of debt results in charge over real assets......................... 123

52ZG..... Debt not to be recovered until after death........................................ 124

52ZH..... Enforcement of charge.................................................................... 126

52ZJ...... Person ceases to participate in pension loans scheme if debt exceeds maximum loan available                126

52ZK..... Person withdraws from pension loans scheme............................... 127

52ZKA.. Repayment or recovery of debt after pension loans scheme ceases to operate because debt exceeds maximum loan available or person withdraws......................................................... 127

52ZL..... Registration of charge..................................................................... 128

52ZM.... Manner of enforcement of charge................................................... 128

Subdivision F—Commutation of asset‑test exempt income stream           128

52ZMA. Debt resulting from commutation of asset‑test exempt income stream contrary to subsection 5JA(2), 5JB(2) or 5JBA(2)........................................................................................................ 128

Division 11A—Means test treatment of private companies and private trusts 132

Subdivision A—Introduction                                                                               132

52ZN..... Simplified outline............................................................................ 132

52ZO..... Definitions...................................................................................... 133

52ZP..... Relatives.......................................................................................... 136

52ZQ..... Associates....................................................................................... 137

52ZR..... When a company is sufficiently influenced by an entity.................. 138

52ZS..... Majority voting interest in a company............................................. 139

52ZT..... Entitled to acquire............................................................................ 139

52ZU..... Transfer of property or services...................................................... 139

52ZV..... Constructive transfers of property or services to an entity.............. 140

52ZW.... Active involvement with a primary production enterprise............... 141

52ZX..... Power to veto decisions of a trustee................................................ 141

52ZY..... Extra‑territorial operation................................................................ 141

52ZZ..... Application to things happening before commencement................. 141

Subdivision B—Designated private companies                                              142

52ZZA.. Designated private companies......................................................... 142

Subdivision C—Designated private trusts                                                        143

52ZZB... Designated private trusts................................................................. 143

Subdivision D—Controlled private companies                                              144

52ZZC... Controlled private companies.......................................................... 144

52ZZD.. Direct voting interest in a company................................................. 146

52ZZE... Voting power.................................................................................. 146

52ZZF... Direct control interest in a company................................................ 147

52ZZG.. Interest in a share............................................................................ 148

Subdivision E—Controlled private trusts                                                        149

52ZZH.. Controlled private trusts.................................................................. 149

52ZZI.... Interest in a trust.............................................................................. 152

Subdivision F—Attributable stakeholders and attribution percentages  153

52ZZJ.... Attributable stakeholder, asset attribution percentage and income attribution percentage          153

Subdivision G—Attribution of income of controlled private companies and controlled private trusts  155

52ZZK... Attribution of income...................................................................... 155

52ZZL... No double counting of attributed income........................................ 156

52ZZM.. Ordinary income of a company or trust........................................... 157

52ZZN.. Ordinary income from a business—treatment of trading stock....... 158

52ZZO.. Permissible reductions of business and investment income............ 158

52ZZP... Derivation periods........................................................................... 159

52ZZQ.. Attribution periods.......................................................................... 160

Subdivision H—Attribution of assets of controlled private companies and controlled private trusts     161

52ZZR... Attribution of assets........................................................................ 161

52ZZS... When attributed asset is unrealisable............................................... 161

52ZZT... Effect of charge or encumbrance on value of assets........................ 162

52ZZU.. Effect of unsecured loan on value of assets..................................... 164

52ZZV.. Value of company’s or trust’s assets etc......................................... 164

Subdivision I—Modification of asset deprivation rules                               165

52ZZW.. Individual disposes of asset to company or trust............................. 165

52ZZX.. Disposal of asset by company or trust............................................ 165

52ZZY.. Individual ceases to be an attributable stakeholder of a company or trust 168

52ZZZ... Individual disposes of asset to company or trust before 1 January 2002—individual is attributable stakeholder     169

52ZZZA Individual disposes of asset to company or trust before 1 January 2002—individual’s spouse is attributable stakeholder........................................................................................................ 170

Subdivision J—Modification of income deprivation rules                         171

52ZZZB Individual disposes of ordinary income to company or trust........... 171

52ZZZC Disposal of income by company or trust......................................... 172

52ZZZD Individual disposes of income to company or trust before 1 January 2002—individual is attributable stakeholder 174

52ZZZE. Individual disposes of income to company or trust before 1 January 2002—individual’s spouse is attributable stakeholder...................................................................................... 175

Subdivision K—Concessional primary production trusts                           176

52ZZZF. Concessional primary production trusts.......................................... 176

52ZZZG Individual ceases to be an attributable stakeholder of a trust—receipt of remuneration or other benefits from trust during asset deprivation period................................................................... 180

52ZZZH Net value of asset............................................................................ 182

52ZZZI.. Value of entity’s assets................................................................... 182

52ZZZJ. When asset is controlled by an individual....................................... 182

52ZZZK Adjusted net value of asset.............................................................. 183

52ZZZL. Adjusted net primary production income........................................ 184

52ZZZM  Net income of a primary production enterprise.............................. 185

52ZZZN Net income from a primary production enterprise—treatment of trading stock        185

52ZZZO Permissible reductions of income from carrying on a primary production enterprise               186

Subdivision L—Anti‑avoidance                                                                          187

52ZZZP. Anti‑avoidance................................................................................ 187

Subdivision M—Decision‑making principles                                                  188

52ZZZQ Decision‑making principles............................................................. 188

Subdivision N—Information management                                                      188

52ZZZR Transitional period.......................................................................... 188

52ZZZS. Information‑gathering powers......................................................... 189

52ZZZT. Commission may obtain tax information......................................... 189

52ZZZU Disclosure of tax information.......................................................... 191

52ZZZV Disclosure of tax file number information....................................... 192

Division 11B—Private financial provision for certain people with disabilities  193

Subdivision A—Special disability trusts                                                           193

52ZZZW  What is a special disability trust?.................................................. 193

52ZZZWA  Beneficiary requirements............................................................ 193

52ZZZWB  Trust purpose requirements........................................................ 195

52ZZZWC  Trust deed requirements.............................................................. 196

52ZZZWD  Trustee requirements.................................................................. 197

52ZZZWE  Trust property requirements........................................................ 197

52ZZZWEA  Trust expenditure requirements................................................ 198

52ZZZWF  Reporting requirements............................................................... 199

52ZZZWG  Audit requirements..................................................................... 199

52ZZZWH  Waiver of contravention of this Division.................................... 201

Subdivision B—Income of special disability trusts                                       202

52ZZZWI  Attribution of income................................................................... 202

52ZZZWJ  Income amounts from special disability trusts............................. 202

Subdivision C—Assets of special disability trusts                                          202

52ZZZWK  Attribution of assets.................................................................... 202

Subdivision D—Transfers to special disability trusts                                   203

52ZZZWL  Effect of certain transfers to special disability trusts.................... 203

52ZZZWM  The effect of exceeding the $500,000 limit................................ 204

52ZZZWN  Transfers by the immediate family members prior to reaching pension age etc.   205

52ZZZWO  Transfers by principal beneficiaries or partners.......................... 206

52ZZZWP  Cessation of special disability trusts............................................ 206

52ZZZWQ  Effect of this Subdivision........................................................... 208

Division 12—Service pensioner and income support supplement recipient benefits       209

Subdivision A—Introduction                                                                               209

53.......... Fringe benefits and treatment at Departmental expense for certain service pensioners             209

Subdivision B—Fringe benefits                                                                          209

53A....... Fringe benefits................................................................................ 209

53B....... Commission must determine continued fringe benefits eligibility circumstances      210

Subdivision C—Treatment at Departmental expense                                   210

53D....... Eligibility for treatment at Departmental expense............................ 210

53E........ Veterans to satisfy certain conditions.............................................. 211

Division 12A—Payments after bereavement                                               213

Subdivision A—Bereavement period                                                                213

53H....... Definition........................................................................................ 213

Subdivision B—Death of pensioner’s partner (where partner was receiving a pension or a social security pension)                                                                                                       213

53J........ Application...................................................................................... 213

53K....... What happens if pensioner’s reassessed rate equals or exceeds combined pensioner couple rate             213

53L........ What happens if pensioner’s reassessed rate is less than combined pensioner couple rate       214

53M...... Determination of amount of pension and social security pension.... 215

53N....... Transfer to another pension............................................................. 216

53NA.... No liability of financial institution for certain payments to pensioner 217

Subdivision C—Death of pensioner                                                                   217

53P........ Application...................................................................................... 217

53Q....... Payment of one instalment.............................................................. 217

Subdivision D—Death of dependent child                                                        218

53R....... Application...................................................................................... 218

53S........ When reassessed pension rate in respect of pensioner comes into effect  218

53T........ Bereavement payment..................................................................... 218

Division 13—Recipient obligations                                                                    219

54.......... Secretary may require notification of an event or change of circumstances              219

54A....... Secretary may require recipient to give particular information relevant to the payment of pension           221

54AA.... Secretary may require recipient to give information, produce documents or appear before an officer      222

54B....... Document served with a section 54 notice...................................... 224

54BA.... Secretary may require a person to whom a service pension or income support supplement is being paid or the person’s partner to take action to obtain a comparable foreign pension......... 224

54C....... Interpretation................................................................................... 225

Division 14—Pensioners in certain institutions                                           226

55.......... Pension may be suspended or forfeited when pensioner in gaol or in psychiatric confinement following criminal charge........................................................................................................ 226

55A....... Instalments may be redirected to partner or child............................ 227

Division 15—Variation and termination                                                        228

56.......... Automatic termination or rate reduction—recipient complying with section 54 notification obligations   228

56A....... Automatic termination—recipient not complying with section 54 notification obligations       229

56B....... Automatic rate reduction—recipient not complying with section 54 notification obligations    230

56C....... Rate increase determination............................................................. 230

56D....... Rate reduction determination........................................................... 231

56DA.... No rate increase or reduction for small amounts............................. 232

56E........ Cancellation or suspension determination—general........................ 232

56EA..... Cancellation or suspension determination for failure to comply with section 54A notice         233

56EB..... Cancellation or suspension for failure to take action to obtain a comparable foreign pension   233

56EC..... Cancellation determination where pension not payable................... 234

56F........ Resumption of a payment after suspension..................................... 234

56G....... Date of effect of favourable determination...................................... 234

56GA.... Date of effect of determination under section 56C—dependent child 235

56H....... Date of effect of adverse determination........................................... 235

56J........ Pension may be cancelled at pensioner’s request............................ 238

56K....... Pension may be suspended if instalments not drawn...................... 238

56L........ Commission may end suspension................................................... 239

56M...... Effect of cancellation or suspension................................................ 239

56N....... Changes to payments by computer.................................................. 240

Division 16—Review of decisions                                                                       241

57.......... Claimants and service pensioners may seek review of certain decisions  241

57A....... Application for review.................................................................... 242

57B....... Commission’s powers where request for review............................ 242

57C....... Date of effect of certain review decisions........................................ 243

57D....... Commission must make written record of review decision and reasons.. 243

57E........ Person who requested review to be notified of decision................. 243

57F........ Powers of Commission to gather evidence..................................... 244

57G....... Withdrawal of request for review.................................................... 245

57H....... Commission may reimburse certain expenses................................. 246

Division 17—Administration of pension payments                                   247

Subdivision A—General administration of pension payments                   247

58.......... Application of Subdivision............................................................. 247

58A....... Payment by instalments................................................................... 247

58C....... Manner of payment......................................................................... 249

58D....... Agents............................................................................................. 250

58E........ Pension payday falling on public holiday etc.................................. 250

58F........ Payment into bank account etc........................................................ 250

58J........ Payments to Commissioner of Taxation or Child Support Registrar 251

Subdivision B—Payment of pension outside Australia                                252

58K....... Age, invalidity and partner service pensions and income support supplement generally portable            252

58L........ Payment of pension outside Australia............................................. 252

58M...... No portability if claim based on short‑term residence..................... 252

58N....... Transfer to portable pension........................................................... 253

Division 18—Indexation                                                                                          255

Subdivision A—Preliminary                                                                               255

59.......... Analysis of Division....................................................................... 255

59A....... Indexed and adjusted amounts........................................................ 255

Subdivision B—CPI indexation                                                                          259

59B....... CPI Indexation Table...................................................................... 259

59C....... Indexation of amounts..................................................................... 265

59D....... Indexation factor............................................................................. 267

59E........ Rounding off indexed amounts....................................................... 267

59EAA.. Indexation using Pensioner and Beneficiary Living Cost Index...... 267

59EAB.. Living cost indexation factor........................................................... 268

59EAC.. Rounding off amounts.................................................................... 270

59EA..... Certain indexed amounts to be increased in line with increases in Male Total Average Weekly Earnings                270

Subdivision C—Adjustment of other rates                                                       272

59G....... Adjustment of single pension rate MBR amount............................ 272

59GA.... Adjustment of rent free area............................................................ 272

59GB.... Adjustment of adjusted income free area......................................... 272

59H....... Adjustment of pension “single” non‑property owner AVL............ 273

59J........ Adjustment of special illness separated special resident AVL......... 273

59LA..... Adjustment of ceiling rate............................................................... 274

Part IIIC—Compensation recovery                                                                       275

Division 1—General                                                                                                  275

59M...... General effect of Part...................................................................... 275

59N....... Certain lump sums to be treated as though they were received as periodic payments               276

59O....... Effect of certain State and Territory laws........................................ 277

Division 2—Enforcement of compensation rights                                     278

59P........ Commission may require person to take action to obtain compensation 278

Division 3—Receipt of compensation                                                               280

59Q....... Pension etc. not payable during lump sum preclusion period.......... 280

59QA.... Deemed lump sum payments arising from separate payments........ 283

59R....... Person may have to repay amount where both lump sum and pension have been received      283

59S........ Lump sum compensation not counted as ordinary income.............. 285

59T........ Effect of periodic compensation payments on rate of person’s compensation affected pension               285

59TA..... Effect of periodic compensation payments on rate of partner’s compensation affected pension               286

59U....... Claim for compensation affected pension granted to person qualified for compensation affected payment under Social Security Act.................................................................................... 287

59V....... Rate reduction under both income/assets test and this Part.............. 288

59W...... Person may have to repay amount where both periodic compensation payments and pension have been received  288

59X....... Periodic compensation payments not counted as ordinary income.. 290

Division 4—Compensation payers                                                                     291

59Y....... Commission may send preliminary notice to potential compensation payer             291

59Z........ Potential compensation payer must notify Department of liability... 291

59ZA..... Commission may send recovery notice to compensation payer....... 292

59ZB..... Preliminary notice or recovery notice suspends liability to pay compensation          295

59ZC..... Compensation payer’s payment to Commonwealth discharges liability to compensation recipient          296

59ZD..... Offence to make compensation payment after receiving preliminary notice or recovery notice                296

Division 5—Insurers                                                                                                 298

59ZE..... Commission may send preliminary notice to insurer....................... 298

59ZF..... Insurer must notify Department of liability..................................... 298

59ZG..... Commission may send recovery notice to insurer........................... 299

59ZH..... Preliminary notice or recovery notice to insurer suspends both insurer’s and compensation payer’s liability          302

59ZI...... Insurer’s payment to Commonwealth discharges liability............... 303

59ZJ...... Offence to make compensation payment after receiving preliminary notice or recovery notice                303

Division 6—Miscellaneous                                                                                     305

59ZK..... Commission may give recovery notice either to compensation payer or to insurer but not to both           305

59ZL..... Commission may disregard some payments................................... 305

59ZM.... Part to bind Crown.......................................................................... 306

Part IIID—Quarterly pension supplement                                                         307

60.......... When this Part applies..................................................................... 307

60A....... Quarterly pension supplement......................................................... 307

60B....... Rate of quarterly pension supplement............................................. 307

60C....... Payment of quarterly pension supplement....................................... 308

Part IIIE—Clean energy payments                                                                        309

Division 1—Clean energy advances                                                                 309

Subdivision A—Eligibility for clean energy advances                                 309

61A....... Persons receiving clean energy underlying payments..................... 309

61B....... One advance for each clean energy underlying payment................. 310

Subdivision B—Amount of a clean energy advance                                     310

61C....... Amount of a clean energy advance.................................................. 310

61D....... Clean energy advance daily rate..................................................... 311

61E........ Number of advance days................................................................. 313

Subdivision C—Top‑up payments of clean energy advance                       314

61F........ Top‑up payments of clean energy advance...................................... 314

Subdivision D—Payment of clean energy advance                                       315

61G....... Payment of clean energy advance.................................................... 315

Subdivision E—Debts                                                                                            315

61H....... Debts relating to clean energy advances.......................................... 315

Division 3—Essential medical equipment payment                                   317

Subdivision A—Definitions                                                                                  317

63A....... Definitions...................................................................................... 317

Subdivision B—Eligibility for essential medical equipment payment     317

63B....... Eligibility for essential medical equipment payment........................ 317

63C....... The medical needs requirement....................................................... 319

63D....... The concession card requirement.................................................... 320

63E........ The energy account requirement...................................................... 321

63F........ Availability of payments................................................................. 321

63G....... Amount of payment........................................................................ 322

63H....... Debts arising in respect of essential medical equipment payments.. 322

Subdivision C—Claim for essential medical equipment payment             323

63J........ Need for a claim.............................................................................. 323

63K....... Special requirements regarding claims for essential medical equipment payment     323

63L........ Who can claim?............................................................................... 323

63M...... Making a claim................................................................................ 323

63N....... Claimant must be an Australian resident......................................... 324

63P........ Claim may be withdrawn................................................................ 324

Subdivision D—Investigation of claim                                                             325

63Q....... Secretary to investigate claim and submit it to Commission............ 325

Subdivision E—Consideration and determination of claim                       325

63R....... Duties of Commission in relation to claim...................................... 325

63S........ Entitlement determination................................................................ 326

63T........ Date of effect of determination........................................................ 326

Division 4—Review of decisions                                                                         327

64A....... Review of certain decisions............................................................. 327

64B....... Application for review.................................................................... 327

64C....... Commission’s powers where request for review............................ 327

64D....... Date of effect of certain review decisions........................................ 328

64E........ Commission must make written record of review decision and reasons.. 328

64F........ Person who requested review to be notified of decision................. 328

64G....... Powers of Commission to gather evidence..................................... 329

64H....... Withdrawal of request for review.................................................... 330

Division 5—Multiple entitlement exclusions                                                 331

65A....... Multiple entitlement exclusions....................................................... 331

Part IV—Pensions for members of Defence Force or Peacekeeping Force and their dependants         332

Division 1—Interpretation                                                                                     332

68.......... Interpretation................................................................................... 332

69.......... Application of Part to members of the Forces................................. 336

69A....... Application of Part to members of the Forces who render hazardous service          340

69B....... Application of Part to persons who rendered British nuclear test defence service    340

Division 2—Eligibility for pension                                                                     343

70.......... Eligibility for pension under this Part.............................................. 343

70A....... Most defence‑caused injuries, diseases and deaths of members of the Defence Force no longer covered by this Act........................................................................................................ 351

71.......... Application of certain provisions of Part II..................................... 353

72.......... Dual entitlement to pension............................................................. 355

Division 3—Rates of pension                                                                                356

73.......... Application of Divisions 4 and 5 of Part II..................................... 356

Division 4—Pension and other compensation                                              357

73A....... This Division does not apply to certain payments........................... 357

74.......... Payments by way of compensation or damages.............................. 357

75.......... Proceedings against third party....................................................... 362

76.......... Payment of damages to Commonwealth......................................... 364

77.......... Discharge of liability of Commonwealth to pay damages............... 366

78.......... Other payments of compensation.................................................... 367

79.......... Overpayments of pension............................................................... 368

Part IVA—Advance payments of pension and income support supplement        370

Division 1—General                                                                                                  370

79A....... Definition........................................................................................ 370

Division 2—Eligibility for advance payment                                               371

79B....... Eligibility for advance payment....................................................... 371

Division 3—Applying for advance payment                                                 372

79C....... Application...................................................................................... 372

79D....... Who can apply................................................................................ 372

79E........ Making an application..................................................................... 372

79G....... Applicant must be Australian resident and in Australia................... 372

79H....... Application may be withdrawn....................................................... 373

Division 4—Determination of application and payment of advance payment   374

79I......... Commission to determine application.............................................. 374

79J........ Payment of advance payment.......................................................... 375

Division 5—Amount of advance payment                                                     376

79K....... Amount of advance payment........................................................... 376

Division 6—Advance payment deductions                                                    378

79L........ Advance payment deduction........................................................... 378

79M...... Amount of advance payment deduction—basic calculation............. 378

79N....... Person may request larger advance payment deduction................... 378

79O....... Reduction of advance payment deduction in cases of severe financial hardship       379

79P........ The final advance payment deduction.............................................. 379

79Q....... Payment rate insufficient to cover advance payment deduction....... 380

79R....... Rounding of amounts...................................................................... 380

79S........ Unrepaid advance payments to deceased partner to be disregarded. 380

Division 7—Review by Commission                                                                 381

79T........ Request for review.......................................................................... 381

79U....... Commission’s powers.................................................................... 381

79V....... Commission must make written record of review decision and reasons.. 381

79W...... Person who requested review to be notified of decision................. 382

79X....... Powers of Commission to gather evidence..................................... 382

79Y....... Withdrawal of request for review.................................................... 383

Part V—Medical and other treatment                                                                  384

80.......... Interpretation................................................................................... 384

81.......... Application of Part V...................................................................... 385

84.......... Provision of treatment..................................................................... 385

85.......... Veterans eligible to be provided with treatment............................... 387

85A....... Treatment under section 279 or 280 of the MRCA for aggravated injuries or diseases            392

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........................................................................................ 392

86.......... Dependants eligible to be provided with treatment.......................... 393

88A....... Commission may determine specified veterans and others are eligible to be provided with specified treatment       395

89.......... Treatment at hospitals and other institutions.................................... 396

90.......... Guide to the provision of treatment................................................. 396

90A....... Determination etc. of Repatriation Private Patient Principles........... 398

90B....... Application of Repatriation Private Patient Principles..................... 399

91.......... Pharmaceutical benefits................................................................... 399

92.......... Counselling services and psychiatric assessment............................ 401

93.......... Recovery of cost of treatment.......................................................... 402

93A....... Charges payable to Commonwealth................................................ 405

93B....... False statements relating to treatment.............................................. 406

93C....... Knowingly making false statements relating to treatment................ 408

93D....... Bribery etc....................................................................................... 409

93E........ Prohibited practices in relation to the rendering of pathology services 412

93F........ Offences against 2 or more provisions............................................ 414

93G....... Statements inadmissible in evidence................................................ 415

93H....... Recovery of amounts paid because of false statements................... 415

93J........ Prosecution of offences................................................................... 417

Part VA—Extension of Repatriation Pharmaceutical Benefits Scheme  418

Division 1—Definitions                                                                                            418

93K....... Definitions...................................................................................... 418

Division 2—Pharmaceutical benefits may be obtained                           419

93L........ Certain veterans and mariners may obtain pharmaceutical benefits. 419

Division 3—Eligibility for, and entitlement to, pharmaceutical benefits card    420

Subdivision A—Eligibility                                                                                   420

93M...... Who is eligible?............................................................................... 420

Subdivision B—Entitlement                                                                                421

93N....... Entitlement to a pharmaceutical benefits card under this Part.......... 421

Division 4—Claim for pharmaceutical benefits card under this Part 422

93P........ Need for a claim.............................................................................. 422

93Q....... Who can claim?............................................................................... 422

93R....... Making a claim................................................................................ 422

93T........ Claimant must be an Australian resident and in Australia............... 422

93U....... Claim may be withdrawn................................................................ 423

Division 5—Investigation of claim                                                                     424

93V....... Secretary to investigate claim and submit it to Commission............ 424

Division 6—Consideration and determination of claim                         425

93W...... Duties of Commission in relation to claim...................................... 425

93X....... Entitlement determination................................................................ 425

93Y....... Date of effect of determination........................................................ 425

Division 7—Review of decisions                                                                         427

93Z........ Review of certain decisions............................................................. 427

93ZA..... Application for review.................................................................... 427

93ZB..... Commission’s powers where request for review............................ 427

93ZC..... Date of effect of certain review decisions........................................ 428

93ZD..... Commission must make written record of review decision and reasons.. 428

93ZE..... Person who requested review to be notified of decision................. 428

93ZF..... Powers of Commission to gather evidence..................................... 429

93ZG..... Withdrawal of request for review.................................................... 430


Part IIIBProvisions applicable to service pensions and income support supplement

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), sections 46D to 46L (deemed income from financial assets) and sections 46Q to 46YA (income from income streams).

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 fifty‑second 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.

Employment income greater than or equal to income concession amount

             (2)  If the person’s employment 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 employment income for that period is reduced by an amount equal to the income concession amount.

Note:          For employment income see section 46AB.

Example 1: David earns $2,250 of employment income in a pension period. David’s rate of service pension or income support supplement for that period is greater than nil.

                   David’s employment income for that period is reduced by $250, leaving David $2,000 of employment income for that period.

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

                   Amy’s employment income for that period is reduced by $250, leaving Amy $750 of employment 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 employment 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 employment 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 employment 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 $750.

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

                   Amy’s unused concession balance is now $850.

             (4)  If the person’s unused concession balance (see section 46AC) is greater than nil but less than the amount of the person’s employment 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 employment 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 earns $1,250 of employment 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 employment income for that period is reduced by $250, leaving Bill $1,000 of employment income for that period.

                   Assume Bill’s unused concession balance is $800.

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

                   Bill’s unused concession balance is now nil.

Employment income less than income concession amount

          (4A)  If the person has employment 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 employment 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 employment income (before it was reduced).

Note:          For employment income see section 46AB.

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

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

                   Emma’s unused concession balance is increased by $150.

No employment income

          (4B)  If:

                     (a)  the person has no employment 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 employment income see section 46AB.

Definition

          (4C)  The income concession amount for a pension period is $250.

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 SCH6‑E3 of Schedule 6.

          (5A)  If:

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

                     (b)  the person’s partner’s employment income (within the meaning 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 SCH6‑E3 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 earned, derived or received, or that is taken to have been earned, derived or received, by the person from remunerative work undertaken by the person as an employee in an employer/employee relationship; and

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

                              (i)  salary, wages, commissions and employment‑related fringe benefits that are so earned, derived or received or taken to have been so earned, derived or received; 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; or

                      (i)  dad and partner 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.

46AC  Unused concession balance

Initial unused concession balance of nil

             (1)  A person has an unused concession balance of nil on the first day that is after 30 June 2011 and is a day on which section 46AA applies to the person.

Maximum unused concession balance

             (2)  If, apart from this subsection, the person’s unused concession balance would exceed $6,500, that balance is instead taken to be $6,500.

Example:    John has an unused concession balance of $6,400. John earns $50 of employment income in a pension period.

Instead of John’s unused concession balance increasing to $6,600 under subsection 46AA(4A), John’s unused concession balance increases to $6,500.

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 employment income 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 employment 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 earns $100 of employment 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 employment 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 $150.


 

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.

Note:          Different provisions apply when working out a person’s ordinary income from a farm to find whether:

(a)    the person satisfies the farmers’ income test for the purposes of Division 8 (see subparagraph 49J(3)(b)(ii) and paragraph 49J(3)(e)); or

(b)    the person satisfies the sugarcane farmers’ income test for the purposes of Division 8A (see subparagraph 49Y(3)(b)(ii) and paragraph 49Y(3)(e)).

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 8‑1 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 40‑B of the Income Tax Assessment Act 1997; and

                     (c)  amounts that relate to the business and are allowable deductions under section 290‑60 of the Income Tax Assessment Act 1997.

Note:          Different provisions apply when working out a person’s ordinary income from a farm to find whether:

(a)    the person satisfies the farmers’ income test for the purposes of Division 8 (see subparagraph 49J(3)(b)(ii) and paragraph 49J(3)(e)); or

(b)    the person satisfies the sugarcane farmers’ income test for the purposes of Division 8A (see subparagraph 49Y(3)(b)(ii) and paragraph 49Y(3)(e)).

             (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 8‑1 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 8‑1 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 3Deemed income from financial assets

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.

Note:          The whole of Division 3 does not apply when working out a person’s ordinary income to find whether:

(a)    the person satisfies the farmers’ income test for the purposes of Division 8 (see paragraphs 49J(2)(c) and (3)(c)); or

(b)    the person satisfies the sugarcane farmers’ income test for the purposes of Division 8A (see paragraphs 49Y(2)(c) and (3)(c)).

             (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

Facts:         Elaine, a single pensioner, has $36,500 worth of financial assets. $1,500 is in a cheque account not earning any interest. $25,000 is earning 6% in interest and $10,000 is earning 8% in interest. The below threshold rate is 5%. The above threshold rate is 7%.

Result:       

Step 1.        The total value of Elaine’s financial assets ($36,500) is higher than her deeming threshold ($30,000—see subsection 46H(1)). So, the deeming threshold is multiplied by the below threshold rate:

Step 2.        Elaine’s deeming threshold of $30,000 is subtracted from the total value of her financial assets ($36,500). The remainder is $6,500.

Step 3.        The amount of $6,500 is multiplied by the above threshold rate (7%):

Step 4.        The amounts worked out at Steps 1 and 3 are added together:

                   The ordinary income that Elaine is deemed to receive from her financial assets is $1,955 per year.

             (4)  The person is taken, for the purposes of this Act, to receive one fifty‑second of the amount calculated under subsection (3) 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.

Note:          The whole of Division 3 does not apply when working out a person’s ordinary income to find whether:

(a)    the person satisfies the farmers’ income test for the purposes of Division 8 (see paragraphs 49J(2)(c) and (3)(c)); or

(b)    the person satisfies the sugarcane farmers’ income test for the purposes of Division 8A (see paragraphs 49Y(2)(c) and (3)(c)).

             (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

Facts:         Maree and Peter, a couple, have $68,500 worth of financial assets. They have $3,500 in a savings account earning interest at 2.8% and deposits of $25,000 and $40,000 earning 5% p.a. and 8% p.a. in interest respectively. The below threshold rate is 5%. The above threshold rate is 7%.

Result:       

Step 1.        The total value of the couple’s financial assets ($68,500) is higher than their deeming threshold ($50,000—see subsection 46H(2)). So, the deeming threshold is multiplied by the below threshold rate:

Step 2.        The couple’s deeming threshold of $50,000 is subtracted from the total value of their financial assets ($68,500). The remainder is $18,500.

Step 3.        The amount of $18,500 is multiplied by the above threshold rate (7%):

Step 4.        The amounts worked out at Steps 1 and 3 are added together:

                   The ordinary income that the couple is deemed to receive from their financial assets is $3,795 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:

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.

Note:          When working out a person’s ordinary income to find whether the person satisfies the farmers’ income test for the purposes of Division 8 or the sugarcane farmers’ income test for the purposes of Division 8A, actual returns on financial assets are taken to be ordinary income (see paragraphs 49J(2)(d) and (3)(d) and 49Y(2)(d) and (3)(d)).

             (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

Subdivision BIncome streams that are not family law affected income streams

46SA  Scope of Subdivision

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

46T  Income from asset‑test exempt income stream

             (1)  For the purpose of working out the annual rate of ordinary income of a person from an asset‑test 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 asset‑test 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 asset‑test 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:

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:

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

                   If the asset‑test 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:

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 market‑linked asset‑test exempt income stream

             (1)  If either of the following conditions is satisfied in relation to the asset‑test 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:

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:

where:

default amount means 100% of the amount worked out for the financial year using the formula in subsection 5JBA(5) (for pro‑rating, 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 pro‑rata 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 asset‑tested income stream (long term)

             (1)  For the purpose of working out the annual rate of ordinary income of a person from an asset‑tested 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—income stream not a defined benefit income stream

                   If the asset‑tested 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:

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 asset‑tested 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:

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

                   If the asset‑tested 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:

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 low‑payment asset‑tested income streams

             (1)  If:

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

                     (b)  either:

                              (i)  the income stream is an allocated pension within the meaning of the Superannuation Industry (Supervision) Regulations 1994, or is any other pension determined, by legislative instrument, by the Minister; or

                             (ii)  the income stream is an annuity (within the meaning of the Superannuation Industry (Supervision) Act 1993) provided under a contract that meets the standards determined, by legislative instrument, by the Minister; 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:

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:

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.

Subdivision CFamily law affected income streams

46Z  Scope of Subdivision

                   This Subdivision applies to family law affected income streams.

46ZA  Income from asset‑test exempt income streams

             (1)  For the purpose of working out the annual rate of ordinary income of a person from an asset‑test 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 decision‑making principles in force under section 46ZC.

46ZB  Income from asset‑tested income stream (long term)

             (1)  For the purpose of working out the annual rate of ordinary income of a person from an asset‑tested 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 decision‑making principles in force under section 46ZC.

46ZC  Decision‑making principles

                   The Commission may, by legislative instrument, formulate principles (decision‑making 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).


 

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 re‑assessed 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  Re‑assessed 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 re‑assessed exchange rate has already been worked out under this subsection for the purposes of the next foreign exchange period—the last re‑assessed exchange rate so worked out;

the re‑assessed 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 re‑assessed exchange rate in a previous application of that subsection.

47D  Applicability of re‑assessed exchange rate

             (1)  The Commission must determine in writing the day on which a re‑assessed 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 re‑assessed exchange rate:

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

                     (b)  remains applicable until:

                              (i)  a new re‑assessed 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 re‑assessed 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 that 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 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 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 short‑term or long‑term 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 or an 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 the ordinary income could reasonably have expected that the person or the person’s partner would become eligible to receive a service pension or an income support supplement.


 

Division 8Retirement assistance for farmers

Subdivision 1General

49  Purpose of Division

                   This Division deals with the transfer of farming interests to family members of a younger generation. The purpose of the Division is to provide that, if the conditions set out in the Division are met, the value of any such interests transferred by a qualifying farmer, his or her partner, or a former partner of the qualifying farmer, will be disregarded in determining:

                     (a)  whether a service pension or an income support supplement is payable; or

                     (b)  at what rate a service pension or an income support supplement is payable.

49AA  Applicable cut‑off date

                   In this Division:

applicable cut‑off date means:

                     (a)  in relation to a transfer, where:

                              (i)  the transfer was not completed before 1 July 2001; and

                             (ii)  a pre‑assessment request in relation to the transfer was lodged with the Department before 1 August 2001; and

                            (iii)  the Department responded affirmatively to the request;

                            the first day after the end of the period of 3 months beginning on the day on which the Department responded to the request; and

                     (b)  in relation to any other transfer—1 July 2001.

49AB  Pre‑assessment request

Pre‑assessment request

             (1)  For the purposes of this Division, a pre‑assessment request is a written request by a person:

                     (a)  for advice about whether this Division would apply to the person, or to the person’s partner, in the event that a proposed transfer were to take place; and

                     (b)  that sets out sufficient information to enable the advice to be given.

             (2)  For the purposes of subsection (1), a written request does not include a request made by email.

Contact by telephone etc.—timing of request

             (3)  For the purposes of this Division, if:

                     (a)  a person contacted the Department:

                              (i)  by telephone; or

                             (ii)  by fax; or

                            (iii)  by email; or

                            (iv)  in person;

                            for advice about whether this Division would apply to the person, or to the person’s partner, in the event that a proposed transfer were to take place; and

                     (b)  the person followed up that contact by lodging a pre‑assessment request with the Department within 21 days after the day on which the person contacted the Department;

the person is taken to have lodged the pre‑assessment request on the day on which the person contacted the Department.

Affirmative response to pre‑assessment request

             (4)  For the purposes of this Division, if a person lodges a pre‑assessment request, the Department is taken to have responded affirmatively to that request if, and only if, the Secretary, or an officer of the Department, gives the person a written notice:

                     (a)  that contains advice to the effect that this Division would apply to the person, or to the person’s partner, in the event that the proposed transfer were to take place; and

                     (b)  that specifies the date on which the notice was issued.

Timing of response

             (5)  The Department is taken to have responded to a pre‑assessment request on the date specified in the notice as the date on which the notice was issued.

49A  Division to apply to certain transfers of estates in farms etc.

             (1)  Subject to subsection (3), this Division applies to a person if:

                     (a)  at any time after 14 September 1992 but before the applicable cut‑off date, the person, being then a qualifying farmer, transferred by way of gift to one, or more than one, eligible descendant (either solely to the eligible descendant or jointly to him or her and his or her partner):

                              (i)  his or her qualifying interest in the farm or farms in which he or she had such an interest; and

                             (ii)  all the qualifying interests that he or she had in relevant farm assets; and

                     (b)  the person, or (if the person is a member of a couple) the person or his or her partner:

                              (i)  has reached retirement age; or

                             (ii)  will reach retirement age before 1 July 2001; and

                     (c)  the total value for the purposes of this section of the farm or farms, and the relevant farm assets, referred to in paragraph (a) does not exceed $500,000; and

                     (d)  during the last 3 years before the transfer was completed, the eligible descendant or each of the eligible descendants:

                              (i)  had been actively involved with the farm or any of the farms; or

                             (ii)  would, in the opinion of the Commission, have been so involved but for exceptional circumstances beyond his or her control; and

                     (e)  if the person is a member of a couple—the person’s partner does not have:

                              (i)  a legal estate or interest in the farm or farms referred to in subparagraph (a)(i) or in any other farm; or

                             (ii)  a legal interest in any relevant farm asset; and

                      (f)  the person satisfies the farmers’ income test for the purposes of this Division.

Note 1:       For qualifying farmer, transfer, eligible descendant, qualifying interest, farm and relevant farm assets, see subsection 5P(1).

Note 2:       For retirement age see subsection 5Q(1).

Note 3:       For the value for the purposes of this section of a farm or relevant farm asset see subsection (4) and for actively involved with a farm see subsection (5).

Note 4:       For the farmers’ income test see section 49J.

             (2)  Subject to subsection (3), this Division also applies to a person if:

                     (a)  at any time after 14 September 1992 but before the applicable cut‑off date, the person, being then an eligible former partner of a qualifying farmer, transferred by way of gift to one, or more than one, eligible descendant of the farmer (either solely to the eligible descendant or jointly to him or her and his or her partner):

                              (i)  his or her qualifying interest in the farm or farms in which he or she had such an interest; and

                             (ii)  all the qualifying interests that he or she had in relevant farm assets; and

                     (b)  the person has reached retirement age or will reach retirement age before 1 July 2001; and

                     (c)  the total value for the purposes of this section of the farm or farms, and the relevant farm assets, referred to in paragraph (a) does not exceed $500,000; and

                     (d)  during the last 3 years before the transfer was completed, the eligible descendant or each of the eligible descendants:

                              (i)  had been actively involved with the farm or any of the farms; or

                             (ii)  would, in the opinion of the Commission, have been so involved but for exceptional circumstances beyond his or her control; and

                     (e)  the person satisfies the farmers’ income test for the purposes of this Division.

Note 1:       For eligible former partner of a qualifying farmer, transfer, eligible descendant, qualifying interest, farm and relevant farm assets see subsection 5P(1).

Note 2:       For retirement age see subsection 5Q(1).

Note 3:       For the value for the purposes of this section of a farm or relevant farm asset see subsection (4) and for actively involved with a farm see subsection (5).

Note 4:       For the farmers’ income test see section 49J.

             (3)  This Division does not apply to the person if:

                     (a)  immediately before the transfer, the eligible descendant, or one of the eligible descendants, referred to in paragraph (1)(a) or (2)(a) (as the case may be) had a qualifying interest in:

                              (i)  the farm or one of the farms referred to in paragraph (1)(a)(i) or (2)(a)(i); or

                             (ii)  any relevant farm asset; and

                     (b)  the eligible descendant had acquired the qualifying interest in the farm, or in the relevant farm asset, after 14 September 1997; and

                     (c)  the consideration, or part of the consideration, for the interest so acquired was the wages forgone by the eligible descendant while he or she was working as an employee on the farm or any of the farms.

Note:          For transfer, eligible descendant, qualifying interest, farm and relevant farm asset see subsection 5P(1).

             (4)  If a person transfers a qualifying interest that the person has in a farm or a relevant farm asset, then:

                     (a)  if paragraph (b) does not apply—the value for the purposes of this section of the farm or relevant farm asset is its value when the transfer is completed; or

                     (b)  if, immediately before the transfer by the person of his or her qualifying interest in the farm or relevant farm asset, the transferee had a qualifying interest in the farm or relevant farm asset—the value for the purposes of this section of the farm or relevant farm asset is its value when the transfer is completed less the value of the transferee’s qualifying interest in it at that time.

             (5)  For the purposes of paragraphs (1)(d) and (2)(d), a person is taken to have been actively involved with a farm during a particular period if, during that period, the person:

                     (a)  has contributed a significant part of his or her labour to the development of the farm; 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 farm enterprise.

49B  How to assess the value of farms etc. subject to a transfer

Value of farm affected by previous transaction

             (1)  If:

                     (a)  a transfer of a kind referred to in paragraph 49A(1)(a) or (2)(a) is completed after 14 September 1997; and

                     (b)  at any time before the transfer but after 14 September 1997, the person making the transfer entered into a transaction or transactions as a result of which:

                              (i)  the value of the farm or farms in which the person had a qualifying interest immediately before the transfer is less than the value that that farm or those farms would have had immediately before the transfer if the person had not entered into the transaction or transactions (the unreduced farm value); or

                             (ii)  the value of the relevant farm assets in which the person had a qualifying interest immediately before the transfer is less than the value that those relevant farm assets would have had immediately before the transfer if the person had not entered into the transaction or transactions (the unreduced assets value);

then, for the purposes of section 49A:

                     (c)  the value of that farm or those farms is taken to be an amount equal to the unreduced farm value; and

                     (d)  the value of those relevant farm assets is taken to be an amount equal to the unreduced assets value.

Life interest retained in principal home on farm

             (2)  If, when transferring by way of gift to another person his or her qualifying interest in a farm, a person retains a freehold estate, a leasehold interest or a life interest in the dwelling‑house on the farm, and any adjacent area of land used primarily for private or domestic purposes in association with that dwelling‑house, that constitute the person’s principal home, then, for the purposes of section 49A:

                     (a)  the person is taken to have transferred the whole of his or her qualifying interest in the farm by way of gift; but

                     (b)  when assessing the value of the farm, the value of the dwelling‑house and any adjacent area of land used primarily for private or domestic purposes in association with that dwelling‑house is not to be included.

General rule

             (3)  Subject to this section, apply section 52CA in working out the value of a farm or farms, and any relevant farm assets, for the purposes of this Division.

Note:          For transfer, qualifying interest, eligible descendant, farm and relevant farm asset see subsection 5P(1).

Subdivision 2Modification of provisions relating to assets test

49C  Transfer of estate in farm etc. not disposal of an asset

             (1)  If this Division applies to a person because of subsection 49A(1), then, subject to subsections (3) and (5):

                     (a)  the transfer by the person of his or her qualifying interest in a farm or in a relevant farm asset is taken not to be a disposal of an asset (within the meaning of section 52E); and

                     (b)  if the person’s partner has also transferred by way of gift to an eligible descendant of the person any qualifying interest in a farm or in a relevant farm asset, that transfer is taken not to be a disposal of an asset (within the meaning of section 52E).

             (2)  If this Division applies to a person because of subsection 49A(2), then, subject to subsections (4) and (5), the transfer by the person of his or her qualifying interest in a farm or in a relevant farm asset is taken not to be a disposal of an asset (within the meaning of section 52E).

             (3)  If the applicable cut‑off date in relation to the transfer referred to in paragraph (1)(a) was 1 July 2001, and:

                     (a)  when the transfer was completed; or

                     (b)  in the case of such a transfer that was completed before 15 September 1997—on 15 September 1997;

neither the person making the transfer nor his or her partner had reached retirement age, subsection (1) only applies after one of them reaches that age.

             (4)  If the applicable cut‑off date in relation to the transfer referred to in subsection (2) was 1 July 2001, and:

                     (a)  when the transfer was completed; or

                     (b)  in the case of such a transfer that was completed before 15 September 1997—on 15 September 1997;

the person making the transfer had not reached retirement age, subsection (2) only applies after the person reaches that age.

Note 1:       For transfer, qualifying interest, eligible descendant, farm and relevant farm asset see subsection 5P(1).

Note 2:       For retirement age see subsection 5Q(1).

             (5)  Disregard subsections (1) and (2) when working out a rate for the purposes of Division 6 of Part IIIAB.

Note:          Part IIIAB provides for the payment of a pension bonus to a person who is eligible for a designated pension (as defined by section 45TA) if the person has deferred claiming that pension for a period of at least one year and the person, or the person’s partner, has worked gainfully during that period.

Subdivision 3Claims for service pension or income support supplement

49D  Provisional commencement day

                   If:

                     (a)  a person, or a person’s partner, has reached retirement age; and

                     (b)  this Division applies because of a transfer of qualifying interests by the person or the person’s partner; and

                     (c)  the person makes a claim under this Act for a service pension or an income support supplement;

then, despite any other provision of this Act, the claimant’s provisional commencement day is:

                     (d)  if the transfer was completed before 15 September 1997 and the person makes the claim before 15 September 1998—15 September 1997 or the day on which the person becomes qualified for the pension or supplement, whichever is later; or

                     (e)  if the transfer was completed after 14 September 1997 but before 15 September 1998 and the person makes the claim before 15 September 1998:

                              (i)  the day on which the transfer was completed; or

                             (ii)  the day on which the person becomes qualified for the pension or supplement;

                            whichever is later; or

                      (f)  if the transfer was completed after 14 September 1998 but before the applicable cut‑off date and the person makes the claim during the period of 3 months that starts on the day on which the transfer was completed:

                              (i)  the day on which the transfer was completed; or

                             (ii)  the day on which the person becomes qualified for the pension or supplement;

                            whichever is later; or

                     (g)  in any other case—the day on which the claim is made.

Subdivision 4Requests for increase in rate of service pension or income support supplement

49E  Application

             (1)  This Subdivision applies if:

                     (a)  a person, or a person’s partner, has reached retirement age; and

                     (b)  this Division applies because of a transfer of qualifying interests by the person or the person’s partner; and

                     (c)  the person is receiving a service pension or an income support supplement under this Act; and

                     (d)  the value of the qualifying interests has been included in the value of the person’s assets, or the partner’s assets, when calculating the rate of the person’s pension or supplement.

49F  Request for increase

                   If:

                     (a)  the rate at which a service pension or an income support supplement is being, or has been, paid to a person is less than the rate (the increased rate) at which it would be, or would have been, paid if the value of the qualifying interests transferred by the person or the person’s partner had not been included in the value of the person’s assets, or of the partner’s assets, in calculating the rate of the person’s pension or supplement; and

                     (b)  the person wants the pension or supplement to be paid at the increased rate;

the person must make a request to that effect.

49G  Making a request

             (1)  A request under section 49F:

                     (a)  must be made in writing; and

                     (b)  must be in accordance with a form approved by the Commission; and

                     (c)  must be lodged at an office of the Department in Australia in accordance with section 5T.

             (2)  A request made by lodging a document in accordance with section 5T is taken to have been made on a day determined under that section.

49H  Determination of request

             (1)  If:

                     (a)  a person makes a request under section 49F in respect of a service pension or an income support supplement; and

                     (b)  the Commission is satisfied that the rate at which the pension or supplement is being, or has been, paid to the person is less than the rate at which it would be, or would have been, paid if the value of the qualifying interests transferred by the person or the person’s partner had not been included in the value of the person’s assets, or the partner’s assets, when calculating the rate of the person’s pension or supplement;

the Commission must determine that the request is to be granted.

             (2)  The determination takes effect:

                     (a)  if the transfer was completed before 15 September 1998 and the person makes the request before that day—on 15 September 1997 or the day on which the transfer was completed, whichever is later; or

                     (b)  if the transfer was completed after 14 September 1998 but before the applicable cut‑off date and the person makes the request during the period of 3 months that starts on the day on which the transfer is completed—on the day on which the transfer was completed; or

                     (c)  in any other case—on the day on which the request is made.

Subdivision 5Farmers’ income test

49J  Does a person satisfy the farmers’ income test?

How to work out whether the farmers’ income test is satisfied

             (1)  This is how to work out whether a person who has transferred his or her qualifying interest in a farm or farms satisfies the farmers’ income test for the purposes of this Division:

Method statement

Step 1.   Work out under subsection (2) the amount of the person’s ordinary income (other than ordinary income from farming) for each of the last 3 financial years before the applicable completion day (the income test years).

              If the person was a member of a couple on the applicable completion day, work out also under subsection (2) the amount of his or her partner’s ordinary income (other than ordinary income from farming) for the 3 income test years.

              Add up all the amounts so obtained. The result is called the person’s total non‑farm income.

Step 2.   Work out under subsection (3) the amount of the person’s ordinary income from farming for each of the 3 income test years.

              If the person was a member of a couple on the applicable completion day, work out also under subsection (3) the amount of his or her partner’s ordinary income from farming for the 3 income test years.

              Add up all the amounts of positive income for both the person and the person’s partner and deduct from that total the amounts of negative income (if any) for both the person and the person’s partner. The result is called the person’s total farm income (which may be either positive or negative).

Step 3.   Work out the person’s total income for the 3 income test years:

               (a)     if the person’s total farm income is a positive amount—by adding that amount to the amount of the person’s total non‑farm income; or

              (b)     if the person’s total farm income is a negative amount—by deducting that amount from the amount of the person’s total non‑farm income.

Step 4.   Work out under subsection (4) the maximum basic rate for age service pension applicable to the person. Multiply that rate by 3. The result is called the person’s maximum basic entitlement.

Step 5.   If the person’s total income for the 3 income test years is less than the person’s maximum basic entitlement, the person satisfies the farmers’ income test for the purposes of this Division.

              If the person’s total income for the 3 income test years equals or exceeds the person’s maximum basic entitlement, the person does not satisfy the farmers’ income test for the purposes of this Division.

Person’s ordinary income from all sources other than farming

             (2)  For the purpose of working out a person’s ordinary income from all sources other than farming during a financial year, the following provisions have effect:

                     (a)  Divisions 1, 4, 6 and 7 of this Part apply to the person;

                     (b)  Division 2 of this Part applies to the person as if any reference in that Division to a tax year were a reference to that financial year;

                     (c)  Division 3 of this Part does not apply to the person;

                     (d)  any return on a financial asset that the person has actually received during the financial year is taken to be ordinary income of the person.

Person’s ordinary income from farming

             (3)  For the purpose of working out a person’s ordinary income from farming during a financial year, the following provisions have effect:

                     (a)  Divisions 1, 4, 6 and 7 of this Part apply to the person;

                     (b)  Division 2 of this Part applies to the person as if:

                              (i)  any reference in subsection 46B(1) to a tax year were a reference to that financial year; and

                             (ii)  subsection 46B(2) and section 46C were omitted;

                     (c)  Division 3 of this Part does not apply to the person;

                     (d)  any return on a financial asset that the person has actually received during the financial year and that relates to a farm or a relevant farm asset is taken to be ordinary income of the person from farming;

                     (e)  if, at the end of the financial year, the value of all trading stock on hand that relates to a farm is less than the value of all such trading stock on hand at the beginning of that financial year—the amount of the difference is to be deducted from that part of the person’s ordinary income from farming for that financial year that is income in the form of profits;

                      (f)  there is also to be deducted from the person’s ordinary income from farming:

                              (i)  losses and outgoings that relate to a farm and are allowable deductions for the purposes of section 8‑1 of the Income Tax Assessment Act 1997; and

                           (iia)  amounts that relate to a relevant farm asset and can be deducted for the decline in value of the asset under Subdivision 40‑B of the Income Tax Assessment Act 1997; and

                            (iii)  amounts that relate to a farm or a relevant farm asset and are allowable deductions under subsection 82AAC(1) of the Income Tax Assessment Act 1936;

                     (g)  if a negative result is obtained after applying paragraphs (e) and (f)—the person’s ordinary income from farming for the financial year is a negative income;

                     (h)  if paragraph (g) does not apply—the person’s ordinary income from farming for the financial year is a positive income.

Person’s maximum basic rate for age service pension

             (4)  For the purposes of Step 4 in the Method statement in subsection (1), the maximum basic rate for age service pension applicable to the person is:

                     (a)  if the person was a member of a couple at any time during the 3 years immediately before the operative day—the sum of:

                              (i)  an amount equal to twice the amount that was, on the operative day, the maximum basic rate for a partnered person under point SCH6‑B1; and

                             (ii)  an amount equal to twice the pension supplement under Module BA in Schedule 6; or

                     (b)  otherwise—the sum of:

                              (i)  the amount that was, on the operative day, the maximum basic rate for a person who is not a member of a couple under point SCH6‑B1; and

                             (ii)  the pension supplement under Module BA in Schedule 6.

Definitions

             (5)  In this section:

applicable completion day, in relation to a transfer, means the earlier of:

                     (a)  the day on which the transfer was completed; and

                     (b)  30 June 2001.

income, in relation to a person, has the same meaning as in subsection 5H(1), except that, in addition to any amount that is not income of the person because of subsection 5H(4), (5) or (8), any payment to the person under:

                     (a)  the AUSTUDY scheme; or

                     (b)  the Social Security Act; or

                     (c)  the Farm Household Support Act 1992;

is not income of the person for the purposes of this section.

operative day means:

                     (a)  if the transfer of the person’s qualifying interest in the farm or farms was completed before 15 September 1997—that day; or

                     (b)  otherwise—the applicable completion day in relation to the transfer of the person’s qualifying interest in the farm or farms.

ordinary income from farming, in relation to a person who has a qualifying interest in a farm or farms, means the ordinary income of the person from the farm or farms and any relevant farm assets.

Subdivision 6Transitional: ex gratia payments

49K  Ex gratia payments

             (1)  If:

                     (a)  apart from this subsection, an amount would have become payable under this Act to a person in respect of a period; and

                     (b)  the amount would not have become payable if Subdivisions 1 to 5 of this Division had not been amended by the Social Security and Veterans’ Entitlements Legislation Amendment (Retirement Assistance for Farmers) Act 2001; and

                     (c)  the person has been paid an ex gratia payment from the Commonwealth in respect of that period;

the amount mentioned in paragraph (a) is not payable to the person.

             (2)  If:

                     (a)  apart from this subsection, an amount would have become payable under this Act to a person in respect of a period; and

                     (b)  the amount exceeds the amount that would have been payable if Subdivisions 1 to 5 of this Division had not been amended by the Social Security and Veterans’ Entitlements Legislation Amendment (Retirement Assistance for Farmers) Act 2001; and

                     (c)  the person has been paid an ex gratia payment from the Commonwealth in respect of that period;

the amount mentioned in paragraph (a) is reduced by the amount of the excess.


 

Division 8ARetirement assistance for sugarcane farmers

Subdivision AGeneral

49L  Purpose of Division

                   This Division deals with the transfer of sugarcane farming interests to family members of a younger generation. The purpose of the Division is to provide that, if the conditions set out in the Division are met, the value of any such interests transferred by a qualifying sugarcane farmer, his or her partner, or an eligible former partner of a qualifying sugarcane farmer, will be disregarded in determining:

                     (a)  whether a service pension or an income support supplement is payable; or

                     (b)  at what rate a service pension or an income support supplement is payable.

49M  RASF commencement and closing days

             (1)  For the purposes of this Division:

                     (a)  the RASF commencement day is the day on which this Division commences; and

                     (b)  the RASF closing day is (subject to any determination under subsection (2)) the day that is 3 years after the RASF commencement day.

             (2)  The Minister may, by written determination, specify a day that is later than the day mentioned in paragraph (1)(b) as the RASF closing day.

             (3)  A determination under subsection (2) is a legislative instrument.

49N  Applicable cut‑off date

                   In this Division:

applicable cut‑off date means:

                     (a)  in relation to a transfer, where:

                              (i)  the transfer was not completed before the RASF closing day; and

                             (ii)  a pre‑assessment request in relation to the transfer was lodged with the Department within the period of 28 days immediately after the RASF closing day; and

                            (iii)  the Department responded affirmatively to the request;

                            the first day after the end of the period of 13 weeks beginning on the day on which the Department responded to the request; and

                     (b)  in relation to any other transfer—the RASF closing day.

49P  Pre‑assessment request

Pre‑assessment request

             (1)  For the purposes of this Division, a pre‑assessment request is a written request by a person:

                     (a)  for advice about whether this Division would apply to the person, or to the person’s partner, in the event that a proposed transfer were to take place; and

                     (b)  that sets out sufficient information to enable the advice to be given.

             (2)  For the purposes of subsection (1), a written request does not include a request made by e‑mail.

Contact by telephone etc.—timing of request

             (3)  For the purposes of this Division, if:

                     (a)  a person contacted the Department:

                              (i)  by telephone; or

                             (ii)  by fax; or

                            (iii)  by e‑mail; or

                            (iv)  in person;

                            for advice about whether this Division would apply to the person, or to the person’s partner, in the event that a proposed transfer were to take place; and

                     (b)  the person followed up that contact by lodging a pre‑assessment request with the Department within 21 days after the day on which the person contacted the Department;

the person is taken to have lodged the pre‑assessment request on the day on which the person contacted the Department.

Affirmative response to pre‑assessment request

             (4)  For the purposes of this Division, if a person lodges a pre‑assessment request, the Department is taken to have responded affirmatively to that request if, and only if, the Secretary, or an officer of the Department, gives the person a written notice:

                     (a)  that contains advice to the effect that this Division would apply to the person, or to the person’s partner, in the event that the proposed transfer were to take place; and

                     (b)  that specifies the date on which the notice was issued.

Timing of response

             (5)  The Department is taken to have responded to a pre‑assessment request on the date specified in the notice as the date on which the notice was issued.

49Q  Division to apply to certain transfers of estates in sugarcane farms etc.

             (1)  Subject to subsections (3) and (4), this Division applies to a person if:

                     (a)  at any time after the RASF commencement day but before the applicable cut‑off date, the person, being then a qualifying sugarcane farmer, transferred by way of gift to one, or more than one, eligible descendant (either solely to the eligible descendant or jointly to him or her and his or her partner):

                              (i)  his or her eligible interest in the sugarcane farm or sugarcane farms in which he or she had such an interest; and

                             (ii)  all the eligible interests that he or she had in relevant sugarcane farm assets; and

                     (b)  the person, or (if the person is a member of a couple) the person or his or her partner:

                              (i)  has reached retirement age; or

                             (ii)  will reach retirement age before the RASF closing day; and

                     (c)  the total net value (calculated in accordance with section 49R) of the sugarcane farm or sugarcane farms, and the relevant sugarcane farm assets, in which the person had eligible interests does not exceed $500,000; and

                     (d)  during the last 3 years before the transfer was completed, the eligible descendant or each of the eligible descendants:

                              (i)  had been actively involved with the sugarcane farm or any of the sugarcane farms; or

                             (ii)  would, in the opinion of the Commission, have been so involved but for exceptional circumstances beyond his or her control; and

                     (e)  if the person is a member of a couple—the person’s partner does not have an eligible interest in any sugarcane farm or relevant sugarcane farm asset; and

                      (f)  the person satisfies the sugarcane farmers’ income test for the purposes of this Division.

Note 1:       For eligible descendant see subsection 5P(1).

Note 2:       For eligible interest, qualifying sugarcane farmer, relevant sugarcane farm asset, sugarcane farm and transfer, see subsection 5PAA(1).

Note 3:       For retirement age see subsection 5Q(1).

Note 4:       For actively involved with a sugarcane farm see subsection (5).

Note 5:       For the total net value of a sugarcane farm, or sugarcane farms, and relevant sugarcane farm assets see section 49R.

Note 6:       For the sugarcane farmers’ income test see section 49Y.

             (2)  Subject to subsections (3) and (4), this Division also applies to a person if:

                     (a)  at any time after the RASF commencement day but before the applicable cut‑off date, the person, being then an eligible former partner of a qualifying sugarcane farmer, transferred by way of gift to one, or more than one, eligible descendant of the farmer (either solely to the eligible descendant or jointly to him or her and his or her partner):

                              (i)  his or her eligible interest in the sugarcane farm or sugarcane farms in which he or she had such an interest; and

                             (ii)  all the eligible interests that he or she had in relevant sugarcane farm assets; and

                     (b)  the person has reached retirement age or will reach retirement age before the RASF closing day; and

                     (c)  the total net value (calculated in accordance with section 49R) of the sugarcane farm or sugarcane farms, and the relevant sugarcane farm assets, in which the person had eligible interests does not exceed $500,000; and

                     (d)  during the last 3 years before the transfer was completed, the eligible descendant or each of the eligible descendants:

                              (i)  had been actively involved with the sugarcane farm or any of the sugarcane farms; or

                             (ii)  would, in the opinion of the Commission, have been so involved but for exceptional circumstances beyond his or her control; and

                     (e)  the person satisfies the sugarcane farmers’ income test for the purposes of this Division.

Note 1:       For eligible descendant see subsection 5P(1).

Note 2:       For eligible former partner of a qualifying sugarcane farmer, eligible interest, relevant sugarcane farm asset, sugarcane farm and transfer see subsection 5PAA(1).

Note 3:       For retirement age see subsection 5Q(1).

Note 4:       For actively involved with a sugarcane farm see subsection (5).

Note 5:       For the total net value of a sugarcane farm, or sugarcane farms, and relevant sugarcane farm assets see section 49R.

Note 6:       For the sugarcane farmers’ income test see section 49Y.

             (3)  This Division does not apply to the person if:

                     (a)  immediately before the transfer, the eligible descendant, or one of the eligible descendants, referred to in paragraph (1)(a) or (2)(a) (as the case may be) had an eligible interest in:

                              (i)  the sugarcane farm or one of the sugarcane farms referred to in subparagraph (1)(a)(i) or (2)(a)(i); or

                             (ii)  any relevant sugarcane farm asset; and

                     (b)  the eligible descendant had acquired the eligible interest in the farm, or in the relevant farm asset, after 29 April 2004; and

                     (c)  the consideration, or part of the consideration, for the interest so acquired was the wages forgone by the eligible descendant while he or she was working as an employee on the farm or any of the farms.

Note 1:       For eligible descendant see subsection 5P(1).

Note 2:       For eligible interest, relevant sugarcane farm asset, sugarcane farm and transfer see subsection 5PAA(1).

             (4)  This Division does not apply to the person (the transferor) if:

                     (a)  the eligible interest, or any part of the eligible interest, that was transferred is an interest that the transferor had in a sugarcane farm, or sugarcane farms, or any relevant sugarcane farm asset because the value of the transferor’s assets included an amount calculated by reference to the value of the farm, or farms, or relevant farm asset (see paragraphs 5PAA(5)(e) and (6)(c)); and

                     (b)  immediately after the transfer to the eligible descendant, or eligible descendants, referred to in paragraph (1)(a) or (2)(a) (as the case may be), the eligible interest, or any part of the eligible interest, transferred was held by a trust that was a concessional primary production trust in relation to the transferor.

Note 1:       For eligible descendant see subsection 5P(1).

Note 2:       For eligible interest, relevant sugarcane farm asset and sugarcane farm see subsection 5PAA(1).

Note 3:       For the transfer of eligible interests that are such interests because of paragraphs 5PAA(5)(e) and (6)(c) see subsection 5PAA(12).

Note 4:       For concessional primary production trust see section 52ZZZF.

             (5)  For the purposes of paragraphs (1)(d) and (2)(d), a person is taken to have been actively involved with a sugarcane farm during a particular period if, during that period, the person:

                     (a)  has contributed a significant part of his or her labour to the development of the sugarcane farm; 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 sugarcane farm enterprise.

49R  How to assess the total net value of sugarcane farms etc. subject to a transfer

Meaning of total net value

             (1)  For the purposes of subsections 49Q(1) and (2), the total net value of a sugarcane farm, or sugarcane farms, and relevant sugarcane farm assets, the eligible interests in which have been transferred, is to be calculated as follows:

where:

market value of sugarcane farm assets means the total of the market values of the sugarcane farm, or sugarcane farms, and relevant sugarcane farm assets immediately before the transfer of the eligible interests.

sugarcane farm debts means the total of any amounts of money that:

                     (a)  had been borrowed for the purposes of undertaking one or more sugarcane farm enterprises on the sugarcane farm or sugarcane farms; and

                     (b)  had not been repaid before the transfer of the eligible interests.

Note:          The total net value of a sugarcane farm, or sugarcane farms, and relevant sugarcane farm assets is not affected by the number of persons who have interests in them.

             (2)  Subsection (1) has effect subject to subsections (3), (4) and (5).

Value of farm reduced by value of transferee’s interest

             (3)  If:

                     (a)  a person transfers eligible interests that the person has in a sugarcane farm, or sugarcane farms, and relevant sugarcane farm assets; and

                     (b)  immediately before the transfer by the person of his or her eligible interests in the farm, or farms, and relevant farm assets, the transferee had an eligible interest in the farm, or one of those farms, or a relevant farm asset;

then, the total net value of the farm, or farms, and relevant farm assets is the amount worked out under subsection (1) reduced by the value of the transferee’s eligible interest in the farm or relevant farm asset at that time.

Value of farm affected by previous transaction

             (4)  If:

                     (a)  a person transfers his or her eligible interests in a sugarcane farm, or sugarcane farms, and relevant sugarcane farm assets; and

                     (b)  at any time after 29 April 2004 the person making the transfer entered into a transaction or transactions; and

                     (c)  the result of the transaction or transactions was that the total net value (worked out in accordance with subsection (1)) of the farm, or farms, and relevant farm assets immediately before the transfer is less than the total net value that that farm, or those farms, and relevant farm assets would have had immediately before the transfer if the person had not entered into the transaction or transactions (the unreduced value);

then, the total net value of the farm, or farms, and relevant farm assets is taken to be an amount equal to the unreduced value.

Life interest retained in principal home on farm

             (5)  If:

                     (a)  a person transfers eligible interests that the person has in a farm by way of gift; and

                     (b)  the person retains a freehold estate, a leasehold interest or a life interest in the dwelling‑house on the farm, and any adjacent area of land used primarily for private or domestic purposes in association with that dwelling‑house, that constitute the person’s principal home;

then:

                     (c)  for the purposes of subsections 49Q(1) and (2), the person is taken to have transferred the whole of his or her eligible interest in the farm by way of gift; and

                     (d)  in assessing the market value of the farm for the purposes of subsection (1), the value of the dwelling‑house and any adjacent area of land used primarily for private or domestic purposes in association with that dwelling‑house is not to be included.

Note:          For eligible interest, relevant sugarcane farm asset, sugarcane farm and transfer see subsection 5PAA(1).

Subdivision BModification of provisions relating to assets test

49S  Transfer of estate in sugarcane farm etc. not disposal of an asset

             (1)  If this Division applies to a person because of subsection 49Q(1), then, subject to subsections (4) and (6):

                     (a)  the transfer by the person of his or her eligible interest in a sugarcane farm or in a relevant sugarcane farm asset is taken not to be a disposal of an asset (within the meaning of section 52E); and

                     (b)  if the person’s partner has also transferred by way of gift to an eligible descendant of the person any eligible interest in a sugarcane farm or in a relevant sugarcane farm asset, that transfer is taken not to be a disposal of an asset (within the meaning of section 52E).

             (2)  If this Division applies to a person because of subsection 49Q(2), then, subject to subsections (5) and (6), the transfer by the person of his or her eligible interest in a sugarcane farm or in a relevant sugarcane farm asset is taken not to be a disposal of an asset (within the meaning of section 52E).

             (3)  To avoid doubt, subsections (1) and (2) have effect despite sections 52ZZX and 52ZZY.

             (4)  If:

                     (a)  the applicable cut‑off date in relation to the transfer referred to in paragraph (1)(a) was the RASF closing day; and

                     (b)  when the transfer was completed neither the person making the transfer nor his or her partner had reached retirement age;

subsection (1) only applies after one of them reaches that age.

             (5)  If:

                     (a)  the applicable cut‑off date in relation to the transfer referred to in subsection (2) was the RASF closing day; and

                     (b)  when the transfer was completed the person making the transfer had not reached retirement age;

subsection (2) only applies after the person reaches that age.

Note 1:       For eligible descendant see subsection 5P(1).

Note 2:       For eligible interest, RASF closing day, relevant sugarcane farm asset, sugarcane farm and transfer see subsection 5PAA(1).

Note 3:       For retirement age see subsection 5Q(1).

             (6)  Disregard subsections (1) and (2) when working out a rate for the purposes of Division 6 of Part IIIAB.

Note:          Part IIIAB provides for the payment of a pension bonus to a person who is eligible for a designated pension (as defined by section 45TA) if the person has deferred claiming that pension for a period of at least one year and the person, or the person’s partner, has worked gainfully during that period.

Subdivision CClaims for service pension or income support supplement

49T  Provisional commencement day

                   If:

                     (a)  a person, or a person’s partner, has reached retirement age; and

                     (b)  this Division applies because of a transfer of eligible interests by the person or the person’s partner; and

                     (c)  the person makes a claim under this Act for a service pension or an income support supplement within the period of 13 weeks starting on the day on which the transfer was completed;

then, despite any other provision of this Act, the claimant’s provisional commencement day is:

                     (d)  the day on which the transfer was completed; or

                     (e)  the day on which the person becomes qualified for the pension or supplement;

whichever is later.

Subdivision DRequests for increase in rate of service pension or income support supplement

49U  Application

                   This Subdivision applies if:

                     (a)  a person, or a person’s partner, has reached retirement age; and

                     (b)  this Division applies because of a transfer of eligible interests by the person or the person’s partner; and

                     (c)  the person is receiving a service pension or income support supplement under this Act; and

                     (d)  the value of the eligible interests has been included in the value of the person’s assets, or the partner’s assets, when calculating the rate of the person’s pension or supplement.

49V  Request for increase

                   If:

                     (a)  the rate at which a service pension or income support supplement is being, or has been, paid to a person is less than the rate (the increased rate) at which it would be, or would have been, paid if the value of the eligible interests transferred by the person or the person’s partner had not been included in the value of the person’s assets, or of the partner’s assets, in calculating the rate of the person’s pension or supplement; and

                     (b)  the person wants the pension or supplement to be paid at the increased rate;

the person must make a request to that effect.

49W  Making a request

             (1)  A request under section 49V:

                     (a)  must be made in writing; and

                     (b)  must be in accordance with a form approved by the Commission; and

                     (c)  must be lodged at an office of the Department in Australia in accordance with section 5T.

             (2)  A request made by lodging a document in accordance with section 5T is taken to have been made on a day determined under that section.

49X  Determination of request

             (1)  If:

                     (a)  a person makes a request under section 49V in respect of a service pension or income support supplement; and

                     (b)  the Commission is satisfied that the rate at which the pension or supplement is being, or has been, paid to the person is less than the rate at which it would be, or would have been, paid if the value of the eligible interests transferred by the person or the person’s partner had not been included in the value of the person’s assets, or the partner’s assets, when calculating the rate of the person’s pension or supplement;

the Commission must determine that the request is to be granted.

             (2)  The determination takes effect:

                     (a)  if the person makes the request during the period of 13 weeks that starts on the day on which the transfer was completed—on the day on which the transfer was completed; or

                     (b)  in any other case—on the day on which the request is made.

Subdivision ESugarcane farmers’ income test

49Y  Does a person satisfy the sugarcane farmers’ income test?

How to work out whether the sugarcane farmers’ income test is satisfied

             (1)  This is how to work out whether a person who has transferred his or her eligible interest in a sugarcane farm or sugarcane farms satisfies the sugarcane farmers’ income test for the purposes of this Division:

Method statement

Step 1.   Work out under subsection (2) the amount of the person’s ordinary income (other than ordinary income from farming) for each of the last 3 financial years before the applicable completion day (the income test years).

              If the person was a member of a couple on the applicable completion day, work out also under subsection (2) the amount of his or her partner’s ordinary income (other than ordinary income from farming) for the 3 income test years.

              Add up all the amounts so obtained. The result is called the person’s total non‑farm income.

Step 2.   Work out under subsection (3) the amount of the person’s ordinary income from farming for each of the 3 income test years.

              If the person was a member of a couple on the applicable completion day, work out also under subsection (3) the amount of his or her partner’s ordinary income from farming for the 3 income test years.

              Add up all the amounts of positive income for both the person and the person’s partner and deduct from that total the amounts of negative income (if any) for both the person and the person’s partner. The result is called the person’s total farm income (which may be either positive or negative).

Step 3.   Work out the person’s total income for the 3 income test years:

               (a)     if the person’s total farm income is a positive amount—by adding that amount to the amount of the person’s total non‑farm income; or

              (b)     if the person’s total farm income is a negative amount—by deducting that amount from the amount of the person’s total non‑farm income.

Step 4.   Work out under subsection (4) the maximum basic rate for age service pension applicable to the person. Multiply that rate by 3. The result is called the person’s maximum basic entitlement.

Step 5.   If the person’s total income for the 3 income test years is less than the person’s maximum basic entitlement, the person satisfies the sugarcane farmers’ income test for the purposes of this Division.

              If the person’s total income for the 3 income test years equals or exceeds the person’s maximum basic entitlement, the person does not satisfy the sugarcane farmers’ income test for the purposes of this Division.

Person’s ordinary income from all sources other than farming

             (2)  For the purpose of working out a person’s ordinary income from all sources other than farming during a financial year, the following provisions have effect:

                     (a)  Divisions 1, 4, 6 and 7 of this Part apply to the person;

                     (b)  Division 2 of this Part applies to the person as if any reference in that Division to a tax year were a reference to that financial year;

                     (c)  Division 3 of this Part does not apply to the person;

                     (d)  any return on a financial asset that the person has actually received during the financial year is taken to be ordinary income of the person.

Person’s ordinary income from farming

             (3)  For the purpose of working out a person’s ordinary income from farming during a financial year, the following provisions have effect:

                     (a)  Divisions 1, 4, 6 and 7 of this Part apply to the person;

                     (b)  Division 2 of this Part applies to the person as if:

                              (i)  any reference in subsection 46B(1) to a tax year were a reference to that financial year; and

                             (ii)  subsection 46B(2) and section 46C were omitted;

                     (c)  Division 3 of this Part does not apply to the person;

                     (d)  any return on a financial asset that the person has actually received during the financial year and that relates to a farm or a relevant farm asset is taken to be ordinary income of the person from farming;

                     (e)  if, at the end of the financial year, the value of all trading stock on hand that relates to a farm is less than the value of all such trading stock on hand at the beginning of that financial year—the amount of the difference is to be deducted from that part of the person’s ordinary income from farming for that financial year that is income in the form of profits;

                      (f)  there is also to be deducted from the person’s ordinary income from farming:

                              (i)  losses and outgoings that relate to a business of primary production and are allowable deductions under section 8‑1 of the Income Tax Assessment Act 1997; and

                             (ii)  deductions for the cost of depreciating assets that are used in a business of primary production and are allowable deductions under Subdivisions 40‑A to 40‑E (inclusive), or Division 328, of the Income Tax Assessment Act 1997; and

                            (iii)  contributions that are allowable deductions under section 290‑60 of the Income Tax Assessment Act 1997;

                     (g)  if a negative result is obtained after applying paragraphs (e) and (f)—the person’s ordinary income from farming for the financial year is a negative income;

                     (h)  if paragraph (g) does not apply—the person’s ordinary income from farming for the financial year is a positive income.

Person’s maximum basic rate for age service pension

             (4)  For the purposes of Step 4 in the Method statement in subsection (1), the maximum basic rate for age service pension applicable to the person is:

                     (a)  if the person was a member of a couple at any time during the 3 years immediately before the applicable completion day—the sum of:

                              (i)  an amount equal to twice the amount that was, on the applicable completion day, the maximum basic rate for a partnered person under point SCH6‑B1; and

                             (ii)  an amount equal to twice the pension supplement under Module BA in Schedule 6; or

                     (b)  otherwise—the sum of:

                              (i)  the amount that was, on the applicable completion day, the maximum basic rate for a person who is not a member of a couple under point SCH6‑B1; and

                             (ii)  the pension supplement under Module BA in Schedule 6.

Definitions

             (5)  In this section:

applicable completion day, in relation to a transfer, means the earlier of:

                     (a)  the day on which the transfer was completed; and

                     (b)  the RASF closing day.

income, in relation to a person, has the same meaning as in subsection 5H(1), except that, in addition to any amount that is not income of the person because of subsection 5H(4), (5) or (8), any payment to the person under:

                     (a)  the AUSTUDY scheme; or

                     (b)  the Social Security Act; or

                     (c)  the Farm Household Support Act 1992;

is not income of the person for the purposes of this section.

ordinary income from farming, in relation to a person who has an eligible interest in a sugarcane farm or sugarcane farms, means the ordinary income of the person from:

                     (a)  the sugarcane farm, or sugarcane farms, and any relevant sugarcane farm assets; and

                     (b)  any other farm, or farms, or relevant farm assets in which the person has an interest.


 

Division 9New Enterprise Incentive Scheme

50  General effect of Division

                   This Division adjusts the service pension rate or income support supplement rate of a person who is receiving, or whose partner is receiving, payments under the scheme known as the New Enterprise Incentive Scheme (NEIS).

Note:          payments under the NEIS 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 NEIS

             (1)  If:

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

                     (b)  NEIS 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 is payable to a person during a pension period; and

                     (b)  NEIS is payable to the person during that pension period; and

                     (c)  an instalment of partner service pension 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 is payable to a person during a pension period; and

                     (b)  NEIS is payable to the person during that pension period; and

                     (c)  an instalment of:

                              (i)  age service pension; or

                             (ii)  invalidity service pension;

                            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 is to be reduced under this Division because of a NEIS payment, the amount of rate reduction is to be equal to the amount of the NEIS payment.

             (2)  If:

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

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

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


 

Division 10General provisions relating to maintenance income

51  Apportionment of capitalised maintenance income

             (1)  The object of this section is to spread capitalised maintenance income so that it is taken into account over the whole of the period in respect of which it is received.

             (2)  If a person receives capitalised maintenance income, the maintenance income of the person that is attributable to the capitalised maintenance income during any period (in this subsection called the relevant period) in the capitalisation period is the amount calculated in accordance with the formula:

Capitalisation period—court order or registered or approved maintenance agreement

             (3)  If:

                     (a)  the capitalised maintenance income is received under or as a result of:

                              (i)  the order of a court; or

                            (ia)  a financial agreement, or Part VIIIAB financial agreement, within the meaning of the Family Law Act 1975; or

                             (ii)  a maintenance agreement registered in, or approved by, a court under the Family Law Act 1975 or the law of a State or Territory; and

                     (b)  the order or agreement specified the period in relation to which the capitalised maintenance income was to be provided; and

                     (c)  the length of the period could be ascertained with reasonable certainty when the order was made or the agreement was so registered or approved;

the capitalisation period is, subject to subsection (6), the period specified in the order or agreement.

Capitalisation period—maintained child under 18

             (4)  If:

                     (a)  the capitalised maintenance income relates to the maintenance of a maintained child of the person; and

                     (b)  the child has not turned 18 on the day on which the income is received; and

                     (c)  subsection (3) does not apply to the capitalised maintenance income;

the capitalisation period is, subject to subsection (6), the period that starts on the day on which the income is received and ends on the day immediately before the day on which the child turns 18.

Note:          for maintained child see subsection 5K(1).

Capitalisation period—partner under 65

             (5)  If:

                     (a)  the capitalised maintenance income relates to the maintenance of the person by the person’s partner or former partner; and

                     (b)  the person has not turned 65 on the day on which the income is received; and

                     (c)  subsection (3) does not apply to the capitalised maintenance income;

the capitalisation period is, subject to subsection (6), the period that starts on the day on which the income is received and ends on the day immediately before the day on which the person turns 65.

Capitalisation period—other cases

             (6)  If:

                     (a)  the Commission considers:

                              (i)  in a case falling within subsection (3) where the period referred to in that subsection was specified in an order of a court that was made by consent or in a maintenance agreement—that the period is not appropriate in the circumstances of the case; or

                             (ii)  in a case falling within subsection (4) or (5)—that the period referred to in that subsection is not appropriate in the circumstances of the case; or

                     (b)  no capitalisation period is applicable in relation to the capitalised maintenance income under subsection (3), (4) or (5);

the capitalisation period is such period as the Commission considers appropriate in the circumstances of the case.

51A  In‑kind housing maintenance—value of substitute for family home

             (1)  If:

                     (a)  a person is not a member of a couple; and

                     (b)  a person has separated from the person’s partner or former partner; and

                     (c)  immediately before the separation a residence (in this section called the former family home) was the principal home of both the person and the person’s partner or former partner; and

                     (d)  the person is receiving in‑kind housing maintenance in relation to the provision of a residence other than the former family home; and

                     (e)  the value of the other residence exceeds the value, at the time the maintenance is received, of the former family home;

only so much of the maintenance as does not exceed the maintenance that would be assessed if it were based on the value of the former family home is to be treated as special maintenance income for the purposes of this Act.

             (2)  For the purposes of subsection (1), the Commission may:

                     (a)  determine that a time specified in the determination is to be substituted for the time at which the in‑kind housing maintenance is received; or

                     (b)  determine that a specified part of in‑kind housing maintenance is to be deducted from the amount that would otherwise be the amount of that maintenance.

Note:          paragraph (a) is intended to cover situations where, for instance, there is not enough information about the current market rate of the former family home or where market values are fluctuating dramatically.

             (3)  If a person has more than one former partner, a reference in subsection (1) to the person’s former partner is a reference to the person’s last former partner.


 

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 asset‑test exempt income stream of the person, other than a partially asset‑test exempt income stream;

                  (daa)  half of the value of any partially asset‑test exempt income stream of the person;

Note:       For partially asset‑test 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

                            (iii)  a deferred annuity; 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, deferred annuities and ATO small superannuation accounts may be disregarded—see section 52AA.

                  (faa)  the value of the person’s investment in an FHSA (within the meaning of the First Home Saver Accounts Act 2008);

                    (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 scheme administered by the Commonwealth known as 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);

                   (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;

                     (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 asset‑test exempt income stream means:

                     (a)  an asset‑test 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 asset‑test exempt income stream in subsection (1AA).

       (1AC)  The Commission may determine principles for the purposes of subparagraph (b)(ii) of the definition of partially asset‑test 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.

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 12 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 24 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, a deferred annuity 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, a deferred annuity or an ATO small superannuation account; or

                     (b)  a specified class of investments in a superannuation fund, an approved deposit fund, a deferred annuity 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 asset‑tested income streams that are not defined benefit income streams

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

Note:          For defined benefit income streams see section 52B.

             (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:

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 half‑year; 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:

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

52B  Value of asset‑tested income streams that are defined benefit income streams

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

             (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:

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

52BA  Value of asset‑tested 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 decision‑making principles in force under subsection (5).

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

                     (a)  subsection (2); or

                     (b)  subsection (3).

52BB  Value of partially asset‑test 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 asset‑tested 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:

             (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:

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.

             (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 asset‑tested income stream (long‑term)

          (3A)  Subsection (1) does not apply to an asset that is an asset‑tested income stream (long‑term).

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

             (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:

             (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.

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 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 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 1:       If Division 8 or 8A applies in relation to the transfer by a person of a qualifying interest or an eligible interest in a farm or relevant farm asset, that transfer and certain transfers by the person’s partner are taken not to be disposal of assets (see sections 49C and 49S).

Note 2:       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 pre‑pension 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 pre‑pension 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 pre‑pension 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 first‑mentioned disposition of assets and of the amounts (if any) of other dispositions of assets previously made by the person during that pre‑pension year exceeds $10,000; or

                     (e)  the amount of the first‑mentioned 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 first‑mentioned 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 first‑mentioned disposition of assets;

whichever is the lesser amount.

52GA  Disposal of assets in pre‑pension 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 pre‑pension 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 pre‑pension 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 pre‑pension 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 first‑mentioned disposition and of the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during that pre‑pension year exceeds $10,000; or

                             (ii)  50% of the amount of the first‑mentioned 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 first‑mentioned disposition and of the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during that pre‑pension year exceeds $10,000; or

                             (ii)  50% of the amount of the first‑mentioned 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 first‑mentioned 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 first‑mentioned 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 first‑mentioned 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 first‑mentioned 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 one‑half 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 one‑half 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)  one‑half of the amount of the relevant disposition;

                     (b)  one‑half 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 one‑half of the excess;

                     (d)  one‑half 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 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 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 non‑property 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 non‑property 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 non‑property 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 non‑property 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 non‑property 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 non‑property 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) non‑property 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) non‑property 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) non‑property 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” non‑property owner AVL, pension “partnered” property owner AVL and pension “partnered” non‑property 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 $98,625.

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 $98,625.

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 $98,625.

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 or income support supplement is not payable to a person because of the application of an assets test; or

                             (ii)  a person’s service pension rate or income support supplement 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 or income support supplement rate.

Deduction from service pension 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 or income support supplement 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 $9.75 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 war‑like 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 disability pension payable to the person under Part II or Part 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 subparagraph 234(1)(b)(ii) of the MRCA (wholly dependent partner payment).

Note:          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:          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 pension 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:

adjusted income reduced rate, in relation to an income support supplement, means the rate worked out in relation to that supplement at Step 6 of Method statement 5 in Module A of the Rate Calculator.

assets reduced 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 8 of Method statement 1 or Step 8 of Method statement 5, as the case may be, in Module A of the Rate Calculator.

dispose of real assets has its ordinary meaning.

guaranteed amount means the amount (if any) specified under paragraph 52ZD(1A)(b) or subsection 52ZE(1) (as the case may be).

income reduced rate, in relation to a service pension, means the rate worked out in relation to that pension at Step 6 of Method statement 1 in Module A of the Rate Calculator.

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.

real assets, in relation to a person or couple, means the real property (including the principal home) of the person or couple in Australia, but does not include any real property 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

                     (b)  because of the request, the rate of the pension payable to the person is:

                              (i)  the maximum payment rate; or

                             (ii)  some other rate nominated by the person;

                            whichever is the lower; 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

                     (c)  the pension or income support supplement rate is, or is to be:

                              (i)  an income reduced rate or an adjusted income reduced rate (as the case may be); or

                             (ii)  an assets reduced rate;

                            and at least one of those reduced rates is not a nil rate; 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

                     (e)  either:

                              (i)  the value of the person’s real assets (after deduction of any guaranteed 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 1:       For income reduced rate or adjusted income reduced rate and assets reduced rate see subsection 52ZAAA(1).

Note 2:       For real assets see subsection 52ZAAA(1).

Note 3:       For guaranteed 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

                     (c)  the pension or income support supplement rate is, or is to be:

                              (i)  an income reduced rate or an adjusted income reduced rate (as the case may be); or

                             (ii)  an assets reduced rate;

                            and at least one of those reduced rates is not a nil rate; 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

                     (e)  either:

                              (i)  the value of the couple’s real assets (after deduction of any guaranteed 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 1:       For income reduced rate or adjusted income reduced rate and assets reduced rate see subsection 52ZAAA(1).

Note 2:       For real assets see subsection 52ZAAA(1).

Note 3:       For guaranteed 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 real property of the company or trust in Australia; and

                     (d)  the Commission is satisfied that the value of that 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.

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

             (1)  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

                     (d)  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;

then:

                     (e)  the rate of the pension payable to the person by operation of the scheme is to be:

                              (i)  the maximum payment rate; or

                             (ii)  some other rate nominated by the person;

                            whichever is the lower.

Note:          For 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.

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 2.   Take away from the primary loan 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 under subsection (4) 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.

             (4)  The rate at which compound interest is payable under subsection (3) is the rate fixed from time to time, by legislative instrument, by the Minister administering the Social Security Act.

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:

where:

age component amount means the amount specified in column 2 of the Table in subsection (3), in relation 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 guaranteed 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 guaranteed 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.

             (3)  The following is the Table referred to in subsection (1):

 

Age component amount table

Column 1

Age

Column 2

Age component amount

Column 1

Age

Column 2

Age component amount

55,
and each earlier year


$1,710.00

75

$3,750.00

76

$3,900.00

56

$1,780.00

77

$4,050.00

57

$1,850.00

78

$4,210.00

58

$1,920.00

79

$4,380.00

59

$2,000.00

80

$4,560.00

60

$2,080.00

81

$4,740.00

61

$2,160.00

82

$4,930.00

62

$2,250.00

83

$5,130.00

63

$2,340.00

84

$5,330.00

64

$2,430.00

85

$5,550.00

65

$2,530.00

86

$5,770.00

66

$2,630.00

87

$6,000.00

67

$2,740.00

88

$6,240.00

68

$2,850.00

89

$6,490.00

69

$2,960.00

90,
and each later year


$6,750.00

70

$3,080.00

71

$3,200.00

 

72

$3,330.00

73

$3,460.00

74

$3,600.00

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 not to be included in working out the value of real assets for the purposes of sections 52ZA and 52ZCA, or that is not to be subject to a charge under section 52ZF; and

                     (b)  specify the minimum amount (if any) that the person is to be entitled to retain out of the proceeds of the enforcement of a charge under section 52ZF; and

                     (c)  specify the rate of the pension (if any) nominated by the person for the purposes of subparagraph 52ZB(1)(e)(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 guaranteed amount or rate of pension

             (1)  A person who is participating in the pension loans scheme and who wants to:

                     (a)  nominate a minimum amount that the person is to be entitled to retain out of the proceeds of the enforcement of the charge under section 52ZF; or

                     (b)  nominate a rate of pension for the purposes of subparagraph 52ZB(1)(e)(ii); or

                     (c)  change the guaranteed 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.

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.

Note:          If there is a guaranteed amount, the charge is enforceable only to the extent that the value of the real assets exceeds the guaranteed amount (see subsection 52ZM(2)).

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.

Note:          If there is a guaranteed amount, the charge is enforceable only to the extent that the value of the real assets exceeds the guaranteed amount (see subsection 52ZM(2)).

             (3)  If:

                     (a)  the pension loans scheme ceases to operate in relation to a person because of the effect of section 52ZJ 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 2:       Section 52ZK provides for a person to withdraw from the scheme.

Note 3:       If there is a guaranteed amount, the charge is enforceable only to the extent that the value of the real assets exceeds the guaranteed amount (see subsection 52ZM(2)).

             (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.

Note:          If there is a guaranteed amount, the charge is enforceable only to the extent that the value of the real assets exceeds the guaranteed amount (see subsection 52ZM(2)).

             (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 but after deduction of any guaranteed amount, 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.

             (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.

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.

             (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 because debt exceeds maximum loan available or person withdraws

             (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 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 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

             (1)  If a charge against real assets is enforceable under this Subdivision, the Commission may, subject to subsection (2), enforce the charge against those real assets or against part of those real assets in any manner that the Commission determines in writing.

             (2)  If there is a guaranteed amount, the charge is enforceable only to the extent that the value of the real assets exceeds the guaranteed amount.

Subdivision FCommutation of asset‑test exempt income stream

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

             (1)  If:

                     (a)  a person is provided with an asset‑test 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 or income support supplement 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 or income support supplement 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 asset‑test 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 or income support supplement 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 asset‑test 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 asset‑test 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 asset‑test 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 asset‑test 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 asset‑test exempt income streams—the first income stream in that succession;

                     (d)  if the old income stream was not one of a succession of asset‑test 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 asset‑test 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 asset‑test 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 asset‑test exempt income stream; and

                     (c)  the commuted income stream was one of a succession of asset‑test 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 asset‑test exempt income streams constitute a succession of asset‑test 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, step‑child or foster‑child 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.

decision‑making principles means decision‑making 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 winding‑up 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 wound‑up 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 winding‑up event in relation to a company:

                     (a)  the company passes a resolution for its winding‑up;

                     (b)  an order is made for the winding‑up of the company;

                     (c)  any similar event.

             (6)  For the purposes of this section, a winding‑up 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 winding‑up event occurs in relation to a trust if:

                     (a)  the trust commences to be wound‑up; 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  Extra‑territorial 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)); or

                     (d)  the trust is an FHSA trust (within the meaning of the First Home Saver Accounts Act 2008).

             (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:

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 decision‑making, 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 decision‑making differs as between different types of voting or decision‑making, 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 paid‑up 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 winding‑up.

             (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 winding‑up.

             (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:

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 paid‑up 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 decision‑making 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:

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 decision‑making 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 6‑5 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 6‑5 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 decision‑making 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)  subsection 5H(12);

                            (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 8‑1 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 40‑B 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 decision‑making 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 decision‑making 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 decision‑making 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:

             (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 decision‑making 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 decision‑making 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 decision‑making 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 decision‑making 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 first‑mentioned 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;

                            (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;

                            (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 5‑year 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 decision‑making 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 5‑year 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 decision‑making 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 decision‑making 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 decision‑making 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 first‑mentioned 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;

                            (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;

                            (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 decision‑making 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 decision‑making 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 19 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 (as defined by section 5P) 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 decision‑making principles.

             (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 non‑cash 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 19 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 non‑cash 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 decision‑making 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 decision‑making 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 decision‑making 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 decision‑making 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)  subsection 5H(12);

                            (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 8‑1 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 40‑B 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 LAnti‑avoidance

52ZZZP  Anti‑avoidance

             (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;

                            (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;

                            (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 MDecision‑making principles

52ZZZQ  Decision‑making principles

                   The Commission may, by legislative instrument, formulate principles (decision‑making 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  Information‑gathering 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 or income support supplement 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;

                     (c)  to establish whether the rates at which service pension or income support supplement 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 step‑child 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 long‑term 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

                            (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)(iii) of this section), see subsection 5Q(1).

Note 3A:    For qualifying age see section 5Q.

Note 4:       For service pension and social security pension, 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

                            (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) 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)(iii) of this section), see subsection 5Q(1).

Note 3A:    For qualifying age see section 5Q.

Note 4:       For service pension and social security pension, 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:

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 cessation.

initial value of trust assets means the value of all of the assets of the trust at the time of the transfer.

subsection 52ZZZWM(2) amount means the amount (if any) that was taken under subsection 52ZZZWM(2) to be the amount of the disposal or disposition of the asset.

             (3)  If the special disability trust ceases to exist, or ceases to be a special disability trust, because the principal beneficiary dies, the value of the asset at the time of the transfer is taken for the purposes of this section to be the value of so much (if any) of the asset as has not been returned to the person who had transferred the asset to the trust.

             (4)  This section does not affect the application of section 52ZZZWL, 52ZZZWM or 52ZZZWO to the transfer prior to the cessation.

52ZZZWQ  Effect of this Subdivision

                   This Subdivision (other than section 52ZZZWN) has effect despite Subdivision B of Division 11 of Part IIIB and any other provisions of this Act.


 

Division 12Service pensioner and income support supplement recipient benefits

Subdivision AIntroduction

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

             (1)  If a person is eligible for fringe benefits, benefits and concessions of various kinds may be made available to the person by the Commonwealth, State and Territory governments and authorities and local authorities.

Note:          if a person is eligible for fringe benefits in accordance with this Division, benefits and concessions under the National Health Act 1953 may be made available to the person.

             (2)  If:

                     (a)  a veteran is receiving an age or invalidity service pension; and

                     (b)  the veteran satisfies the conditions in section 53D;

the veteran may be entitled to certain medical treatment at Departmental expense.

             (3)  Section 85 provides further treatment entitlements for veterans.

Subdivision BFringe benefits

53A  Fringe benefits

             (1)  A person who is receiving a service pension or income support supplement is eligible for fringe benefits.

             (2)  If:

                     (a)  a person is receiving an invalidity service pension; and

                     (b)  the person ceases to be eligible for that pension because the person ceases to be permanently incapacitated for work; and

                     (c)  the circumstances in which the person ceases to be permanently incapacitated for work are continued fringe benefits eligibility circumstances in accordance with a determination under section 53B;

the person remains eligible for fringe benefits for the shorter of the following periods:

                     (d)  the period those continued fringe benefits eligibility circumstances continue to exist;

                     (e)  the period of 12 months beginning on the day the person ceased to be eligible for that pension.

53B  Commission must determine continued fringe benefits eligibility circumstances

             (1)  The Commission must, by written determination, state that specified circumstances in which persons cease to be permanently incapacitated for work are continued fringe benefits eligibility circumstances for the purposes of subsection 53A(2).

Variation or revocation

             (2)  The Commission may, by written determination, vary or revoke a determination under subsection (1).

Legislative instrument

             (3)  A determination under this section is a legislative instrument.

Subdivision CTreatment at Departmental expense

53D  Eligibility for treatment at Departmental expense

             (1)  A veteran who is receiving an age or invalidity service pension is eligible to be provided with treatment under Part V for any injury suffered, or disease contracted, by the veteran if:

                     (a)  the veteran is a veteran to whom section 53E applies; and

                   (ab)  the veteran is a veteran within the meaning of paragraph (a) of the definition of veteran in subsection 5C(1); and

                     (b)  the veteran is not a veteran only because the veteran has rendered service as described in item 3 of the table in subsection 6A(1) or as described in subsection 6C(2).

Note 2:       a partner service pensioner may be eligible to be provided with treatment under Part V if he or she is receiving a pension under Part II at 50% of the general rate or higher (see subsection 85(7)).

Note 3:       some veterans who are not receiving an age or invalidity service pension because of Division 8A of Part III are treated as continuing to be eligible under section 53D to be provided with treatment under Part V (see section 83 of the Veterans’ Affairs Legislation Amendment Act 1992).

Note 4:       a veteran who was taken to be eligible for fringe benefits because of subsection 17(1) or (2) of the Veterans’ Entitlements (Rewrite) Transition Act 1991 as in force immediately before the commencement of Schedule 5 to the Veterans’ Affairs Legislation Amendment (Budget and Compensation Measures) Act 1997 and who is receiving an age or invalidity service pension is eligible under section 53D to be provided with treatment under Part V if paragraph 53D(1)(b) applies to the veteran.

             (2)  Paragraph (1)(b) does not make a veteran ineligible to be provided with treatment under Part V if the veteran satisfies the Commission that the veteran was domiciled in Australia or an external Territory immediately before the veteran’s appointment or enlistment for service as described in item 3 of the table in subsection 6A(1) or as described in subsection 6C(2).

Note:          Section 11B may affect a person’s domicile immediately before appointment or enlistment.

             (3)  If a veteran’s service pension is suspended, the Commission may determine that the veteran is to be treated, for the purposes of this section, as if the veteran were continuing to receive the service pension during the whole or a specified part of the period of suspension.

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

             (5)  This section applies to an injury suffered, or a disease contracted, by a veteran whether before or after the commencement of this section.

53E  Veterans to satisfy certain conditions

             (1)  This section applies to a veteran if:

                     (a)  the veteran is permanently blind; or

                     (b)  the veteran’s rate of service pension is neither income reduced nor assets reduced; or

                     (c)  the veteran’s rate of service pension is either income reduced or assets reduced, but the reduction does not exceed the income/assets reduction limit applicable to the veteran.

Note:          For income/assets reduction limit see subsection (2).

             (2)  The income/assets reduction limit applicable to a veteran is worked out by using Table 53E. Work out which item in the table applies to the veteran by identifying his or her family situation. The applicable income/assets reduction limit is the amount in column 3 of that item.

 

Table 53E—Income/Assets Reduction Limit

Column 1

Item

Column 2

Family situation

Column 3

Basic reduction per year

Column 4

Basic reduction per fortnight

1

Not a member of a couple

$1,924

$74

2

Partnered

$1,664

$64

Note 1:       For member of a couple and partnered see section 5E.

Note 3:       Members of illness separated and respite care couples are covered by item 2 of the table.

Note 4:       The basic reduction and additional reduction are indexed 6 monthly in line with CPI increases (see sections 59B to 59E).

             (3)  If, on a particular day:

                     (a)  the annual rate of a veteran’s ordinary income increases; and

                     (b)  as a result of the increase, the veteran’s rate of service pension is income reduced by an amount that is not more than 150% of the income/assets reduction limit applicable to the veteran;

this section continues to apply to the veteran until:

                     (c)  the end of the period of 13 weeks starting on that day; or

                     (d)  the reduction exceeds 150% of the income/assets reduction limit applicable to the veteran;

whichever happens first.


 

Division 12APayments after bereavement

Subdivision ABereavement period

53H  Definition

                   In this Division:

bereavement period, in relation to a person’s death, means the period of 98 days starting on the day on which the person died.

Note:          Payments under this Division are not affected by unrepaid advance payments of pension.

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

53J  Application

                   This Subdivision applies if:

                     (a)  a person (the pensioner) is receiving a pension; and

                     (b)  the pensioner is a member of a couple; and

                     (c)  the other member of the couple (the partner) dies; and

                     (d)  immediately before the partner died, the partner was receiving a pension or a social security pension.

Note:       Even though the partner may not actually have been receiving an amount of social security pension because the rate of the pension was nil, in some cases the partner will have been taken to be receiving the pension if adjusted disability pension (within the meaning of section 118NA) was payable to the person or the partner: see subsection 23(1D) of the Social Security Act.

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

             (1)  This section applies during the bereavement period if the rate of pension applicable to the pensioner as a result of the partner’s death is equal to or greater than the sum of the rates of pension or social security pension that were payable to the pensioner and the partner on the last day of the last pension period that ended before the partner died.

             (2)  The rate of pension that becomes applicable in respect of the pensioner as a result of the partner’s death applies with effect from the day of the partner’s death.

             (3)  Part of the rate of pension payable to the pensioner is taken to be bereavement payment. The part concerned is equal to the rate of pension or social security pension payable to the partner on the last day of the last pension period that ended before the partner died.

             (4)  This section has effect subject to section 53M.

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

             (1)  This section applies during the bereavement period if the rate of pension applicable to the pensioner as a result of the partner’s death is less than the sum of the rates of pension or social security pension that were payable to the pensioner and the partner on the last day of the last pension period that ended before the partner died.

             (2)  Pension continues to be payable to the pensioner during the bereavement period at the rate at which it was payable immediately before the partner’s death.

             (3)  The rate of pension that, apart from subsection (2), would be applicable in respect of the pensioner as a result of the partner’s death applies with effect from the day after the end of the bereavement period.

             (4)  There is payable to the pensioner, for each day in the bereavement period, a bereavement payment calculated at the rate of the pension or social security pension that was payable to the partner on the last day of the last pension period that ended before the partner died.

             (5)  All or any of the bereavement payments payable to the pensioner under subsection (4) may be paid in advance in a lump sum.

             (6)  This section has effect despite subsection 38C(2) but is subject to section 53M.

53M  Determination of amount of pension and social security pension

             (1)  This section applies in determining for the purposes of section 53K or 53L the rates of pension or social security pension that were payable to the pensioner and the partner on the last day of the last pension period that ended before the day of the partner’s death.

             (2)  If the pensioner and partner were an illness separated couple or a respite care couple on the last day of the last pension period that ended before the day of the partner’s death, the rates of pension or social security pension referred to in subsection (1) are to be worked out as if the pensioner and partner were not members of an illness separated couple or respite care couple but remained members of a couple.

             (3)  If the partner was a war widow or war widower who was receiving a service pension, the rate of that pension that was payable to the partner on the last day of the last pension period that ended before the day of the partner’s death is taken to be the rate that would have been payable if Method statement 1 or Method statement 2 (whichever is appropriate) in Module A of the Rate Calculator had applied in working out the rate of the pension and Method statement 3 or Method statement 4, as the case may be, in that Module had not applied.

             (4)  If the partner was a war widow or war widower who was receiving an income support supplement, the rate of that supplement that was payable to the partner on the last day of the last pension period that ended before the day of the partner’s death is taken to be:

                     (a)  in respect of a partner who was not permanently blind—the rate that would have been payable if the ceiling rate were greater than the adjusted income reduced rate and the assets reduced rate; or

                     (b)  in respect of a partner who was permanently blind—the sum of:

                              (i)  the maximum basic rate under point SCH6‑B1; and

                             (ii)  the partner’s pension supplement amount (worked out as if the partner was receiving a service pension worked out under subpoint SCH6‑A1(2) of Schedule 6).

             (5)  In determining under subsection (4) the rate of the income support supplement that was payable to the partner on the last day of the last pension period that ended before the day of the partner’s death, it is to be assumed that the adjusted income of the partner did not include the income referred to in paragraph (c), (ca) or (cb) of the definition of adjusted income in subsection 5H(1).

             (6)  If the partner was a war widow or war widower who was receiving a social security pension, the rate of that pension that was payable to the partner on the last day of the last pension period that ended before the day of the partner’s death is taken to be the rate that would have been payable if:

                     (a)  subsections 1064(5) and (6) and 1065(4) and (5) of the Social Security Act had not been enacted; and

                     (b)  the ordinary income of the partner did not include any instalment of pension that was payable to the partner under subsection 30(1).

             (7)  If DFISA was payable to the partner in relation to a social security pension the partner was receiving, then the rate of that pension on the last day of the last pension period that ended before the day of the partner’s death is increased by the rate of DFISA that was payable to the partner on that day.

53N  Transfer to another pension

             (1)  This section applies if, on a day during the bereavement period, the pensioner:

                     (a)  ceases to receive the pension; and

                     (b)  begins to receive another pension or to receive a social security pension.

             (2)  If the pensioner receives, for a day occurring during the remainder of the bereavement period, a payment of the other pension or of the social security pension, part of the payment is taken to be a bereavement payment. The part concerned is the amount representing the rate of pension or social security pension payable to the partner on the last day of the last pension period that ended before the day of the partner’s death.

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

             (1)  This section applies if:

                     (a)  after the partner died, an amount (the partner’s amount) of pension, DFISA or social security pension to which the partner would have been entitled if the partner had not died is paid into an account with a financial institution; and

                     (b)  the institution pays to the pensioner, out of that account, an amount that is not more than the partner’s amount.

             (2)  The financial institution is not liable to any action, claim or demand in respect of the payment to the pensioner.

             (3)  Subsection (2) has effect despite any other law.

Subdivision CDeath of pensioner

53P  Application

                   This Subdivision applies if:

                     (a)  a person (the pensioner) is receiving a pension; and

                     (b)  either:

                              (i)  the pensioner is not a member of a couple; or

                             (ii)  the pensioner is a member of a couple and the pensioner’s partner is not receiving a service pension or income support supplement, is not receiving a social security pension and is not receiving a social security benefit; and

                     (c)  the pensioner dies.

53Q  Payment of one instalment

             (1)  Sections 123 to 123E do not apply as a result of the pensioner’s death, but there is payable to any person whom the Commission thinks appropriate an amount equal to the amount of pension that would have been payable to the pensioner for the period of 14 days after the day on which the pensioner died calculated at the rate at which pension would have been payable to the pensioner (including, to remove any doubt, any amount of pension payable under this Division) on those days if the pensioner had not died.

             (2)  If the amount is paid under subsection (1) in respect of the pensioner, the Commonwealth is not liable to any action, claim or demand for further payment under that subsection in respect of the pension.

             (3)  If a lump sum bereavement payment made to the pensioner under this Division before the pensioner’s death included an amount for a pension period that occurred after the day of the pensioner’s death, the amount is not recoverable from the pensioner’s estate.

Subdivision DDeath of dependent child

53R  Application

                   This Subdivision applies if:

                     (a)  a person (the pensioner) is receiving a pension; and

                     (b)  a dependent child dies.

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

             (1)  Pension continues to be payable to the pensioner during the bereavement period as if the child had not died.

             (2)  The rate of pension that becomes applicable to the pensioner as a result of the child’s death applies with effect from the day after the end of the bereavement period.

53T  Bereavement payment

             (1)  Part of each instalment of pension that is paid to the pensioner for a pension payday that occurs during the bereavement period is taken to be a bereavement payment. The part concerned is so much of the instalment as related to the child.

             (2)  All or any of the bereavement payments payable to the pensioner under subsection (1) may be paid in advance in a lump sum.


 

Division 13Recipient obligations

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

             (1)  The Secretary may give a person:

                     (a)  to whom a service pension or income support supplement is being paid; or

                     (b)  whose claim or application for a service pension or income support supplement is under consideration by the Commission or the Administrative Appeals Tribunal; or

                     (c)  who is receiving benefits under Division 12;

a notice that requires the person to inform the Department, or an officer specified in the notice, if:

                     (d)  a specified event or change of circumstances occurs; or

                     (e)  the person becomes aware that a specified event or change of circumstances is likely to occur.

             (2)  A person referred to in paragraph (1)(a) includes a person to whom the whole or a part of a pension is being paid for the purpose of being applied for the benefit of a pensioner.

             (3)  An event or change of circumstances is not to be specified in a notice under subsection (1) unless the occurrence of that event or change of circumstances might affect:

                     (a)  the payment to the person of the pension; or

                     (b)  the provision of benefits under Division 12.

             (4)  A notice under subsection (1):

                     (a)  must be in writing; and

                     (b)  may be given personally or by post; and

                     (c)  must specify the period within which, and, subject to subsection (4A), the manner in which the person is to give the information to the Department or specified officer.

          (4A)  A document lodged as a consequence of a notice issued under subsection (1) that requires a person to inform the Department of the occurrence, or likely occurrence, of a specified event or change of circumstances:

                     (a)  is to be lodged at an office of the Department in Australia in accordance with section 5T; and

                     (b)  is taken to have been lodged on a day determined under that section.

             (5)  The period specified under paragraph (4)(c) must end not later than 14 days after:

                     (a)  the day on which the event or change of circumstances occurs; or

                     (b)  the day on which the person becomes aware that the event or change of circumstances is likely to occur.

          (5A)  If the Secretary is satisfied that there are special circumstances related to the person to whom the notice under subsection (1) is to be given, the period to be specified under paragraph (4)(c) is such period as the Secretary directs in writing, being a period that ends not less than 15 days, and not more than 28 days, after:

                     (a)  the day on which the event or change of circumstances occurs; or

                     (b)  the day on which the person becomes aware that the event or change of circumstances is likely to occur.

       (5AA)  In spite of subsection (5), if a notice under subsection (1) specifies an event that consists of the death of a person, the person to whom the notice is given is taken, for the purposes of this Act, to have informed the Department or the officer specified in the notice, as the case may be, of the death within the period specified in the notice if he or she informs the Department or officer of the death within the bereavement period.

             (6)  A person must not fail to comply with a notice under subsection (1).

Penalty:  $1,000 or imprisonment for 6 months, or both.

             (7)  An offence under subsection (6) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

             (8)  A person does not commit an offence under subsection (6) to the extent that the person is not capable of complying with the notice.

Note:          The defendant bears an evidential burden in relation to the matter in subsection (8). See subsection 13.3(3) of the Criminal Code.

54A  Secretary may require recipient to give particular information relevant to the payment of pension

             (1)  The Secretary may give a person:

                     (a)  to whom a service pension or income support supplement is being paid; or

                     (b)  whose claim or application for a service pension or income support supplement is under consideration by the Commission or the Administrative Appeals Tribunal; or

                     (c)  who is receiving benefits under Division 12;

a notice that requires the person to give the Department, or an officer specified in the notice, a statement in writing about a matter that might affect:

                     (d)  the payment to the person of the service pension or income support supplement; or

                     (e)  the provision of benefits under Division 12.

             (2)  A person referred to in paragraph (1)(a) includes a person to whom the whole or a part of a pension is being paid for the purpose of being applied for the benefit of a pensioner.

             (3)  A notice under subsection (1):

                     (a)  must be in writing; and

                     (b)  may be given personally or by post; and

                     (c)  must specify the period within which, and, subject to subsection (3A), the manner in which the person is to give the information to the Department or specified officer.

          (3A)  A document lodged as a consequence of a notice issued under subsection (1) that requires a person to inform the Department about a matter of a kind specified in that subsection:

                     (a)  is to be lodged at an office of the Department in Australia in accordance with section 5T; and

                     (b)  is taken to have been lodged on a day determined under that section.

             (4)  The period specified under paragraph (3)(c) must end at least 14 days after the day on which the notice is given.

             (5)  A statement given in response to a notice under subsection (1) must be in accordance with a form approved by the Commission.

             (6)  A person must not fail to comply with a notice under subsection (1).

Penalty:  $1,000 or imprisonment for 6 months, or both.

             (7)  An offence under subsection (6) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

             (8)  A person does not commit an offence under subsection (6) to the extent that the person is not capable of complying with the notice.

Note:          The defendant bears an evidential burden in relation to the matter in subsection (8). See subsection 13.3(3) of the Criminal Code.

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

             (1)  The Secretary may give to a person who is receiving a service pension, income support supplement, or benefits under Division 12 a notice requiring the person:

                     (a)  to provide the Department, or an officer specified in the notice, with information; or

                     (b)  to produce to the Department, or an officer specified in the notice, documents in the custody or under the control of the person; or

                     (c)  to appear before an officer of the Department specified in the notice to answer questions;

relating to a matter that may affect the payment of the pension, supplement or the provision of the benefits.

             (2)  A reference in subsection (1) to a person receiving a service pension or income support supplement includes a person to whom the whole or a part of the pension or supplement is being paid for the purpose of being applied for the benefit of the pensioner.

             (3)  The Secretary may give to a person whose claim or application for a service pension or income support supplement is under consideration by the Commission or the Administrative Appeals Tribunal a notice requiring the person:

                     (a)  to provide the Department, or an officer specified in the notice, with information; or

                     (b)  to produce to the Department, or an officer specified in the notice, documents in the custody or under the control of the person; or

                     (c)  to appear before an officer of the Department specified in the notice to answer questions;

relating to the claim or application.

             (4)  Subject to subsections (4A) and (5), the notice:

                     (a)  must be in writing; and

                     (b)  may be given personally or by post; and

                     (c)  must specify:

                              (i)  when and how the person is to provide the information or produce the documents; or

                             (ii)  when and where the person is to appear before the officer.

          (4A)  A document lodged as a consequence of a notice under subsection (1) or (3) that requires a person to provide the Department with information of a kind to which paragraph (a) of that subsection applies:

                     (a)  is to be lodged at an office of the Department in Australia in accordance with section 5T; and

                     (b)  is taken to have been lodged on a day determined under that section.

             (5)  The person must not be required to provide the information, produce the documents or appear to answer questions within a period of less than 14 days after the notice is given.

             (6)  The Secretary may require the person to give or verify the information or answers:

                     (a)  on oath or affirmation; and

                     (b)  either orally or in writing.

The Secretary or specified officer may administer an oath or affirmation to the person.

             (7)  A person must not fail to comply with a notice under subsection (1) or (3).

Penalty:  Imprisonment for 6 months.

             (8)  An offence under subsection (7) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.

             (9)  A person does not commit an offence under subsection (7) to the extent that the person is not capable of complying with the notice.

Note:          The defendant bears an evidential burden in relation to the matter in subsection (9). See subsection 13.3(3) of the Criminal Code.

54B  Document served with a section 54 notice

             (1)  A notice under subsection 54(1) is taken to specify an event or change of circumstances if:

                     (a)  the notice refers to a document that sets out the event or change of circumstances; and

                     (b)  a copy of the document is given to the person with the notice.

             (2)  If a notice specifies an event or change of circumstances by reference to a document under subsection (1), the notice may specify the period within which a person is to give the information to the Department or specified officer by reference to the period set out in the document for notification of the event or change of circumstances.

54BA  Secretary may require a person to whom a service pension or income support supplement is being paid or the person’s partner to take action to obtain a comparable foreign pension

             (1)  If:

                     (a)  a person is receiving a service pension or income support supplement; and

                     (b)  the Secretary is satisfied that the person may be entitled to a comparable foreign pension if the person applied for that pension;

the Secretary may give the person a notice that requires the person to take reasonable action to obtain the comparable foreign pension.

Note:          For the consequences of a failure to comply with the notice see section 56EB.

          (1A)  If:

                     (a)  a person is receiving a service pension or income support supplement; and

                     (b)  the Secretary is satisfied that the person’s partner (if any) may be entitled to a comparable foreign pension if the partner applied for that pension;

the Secretary may give the person a notice that requires the partner to take reasonable action to obtain the comparable foreign pension.

Note:          For the consequences of a failure to comply with the notice see section 56EB.

             (2)  A notice under subsection (1) or (1A):

                     (a)  must be in writing; and

                     (b)  must be given personally or by post; and

                     (c)  must specify the period within which the reasonable action is to be taken.

             (3)  The period specified under paragraph (2)(c) must end at least 14 days after the day on which the notice is given.

             (4)  For the purposes of this section, a person takes reasonable action to obtain a comparable foreign pension only if the person takes reasonable action to obtain the pension at the highest rate applicable to the person.

54C  Interpretation

                   In this Divison:

officer means a person performing duties, or exercising powers or functions, under or in relation to this Act.

person includes an unincorporated body.


 

Division 14Pensioners in certain institutions

55  Pension may be suspended or forfeited when pensioner in gaol or in psychiatric confinement following criminal charge

             (1)  Subject to subsection (3), an instalment of a service pension or income support supplement is not payable to a person in respect of a day on which the person is:

                     (a)  in gaol; or

                     (b)  undergoing psychiatric confinement because the person has been charged with an offence.

Note:          While an instalment is not payable to a person, the person is not entitled to benefits under Division 12 because the person is not receiving a service pension or income support supplement unless a determination is in force under subsection 53D(3), 55A(1) or 85(8).

             (3)  Subsection (1) does not apply to so much of an instalment as has been redirected under a direction given under section 55A.

Meaning of in gaol

             (4)  For the purposes of this Act, a person is in gaol if:

                     (a)  the person is being lawfully detained (in prison or elsewhere) while under sentence for conviction of an offence and not on release on parole or licence; or

                     (b)  the person is undergoing a period of custody pending trial or sentencing for an offence.

Meaning of psychiatric confinement

             (5)  Subject to subsection (6), psychiatric confinement in relation to a person includes confinement in:

                     (a)  a psychiatric section of a hospital; and

                     (b)  any other place where persons with psychiatric disabilities are, from time to time, confined.

             (6)  The confinement of a person in a psychiatric institution during a period when the person is undertaking a course of rehabilitation is not to be taken to be psychiatric confinement.

55A  Instalments may be redirected to partner or child

             (1)  If:

                     (a)  an instalment of a person’s service pension or income support supplement would, but for this section, not be payable because of section 55; and

                     (b)  the person has a partner or a child;

the Commission may direct that the whole, or a specified part, of the instalment is to be paid to:

                     (c)  the partner; or

                     (d)  the child; or

                     (e)  someone else approved by the Commission.

             (2)  A payment made under paragraph (1)(e) is to be applied for the benefit of the partner or the child.

             (3)  If a payment is made under subsection (1) to the partner or a child of the person who is in gaol or undergoing psychiatric confinement because the person has been charged with an offence, the payment is to be taken, for all the purposes of this Act, to be a payment made to the person in gaol or psychiatric confinement.

Note:          this subsection has the effect that the person is receiving the service pension or income support supplement on a payday if the instalment for that payday has been wholly or partly redirected under this section: for instance, the person would be eligible for fringe benefits. This person is not eligible for another income support payment.


 

Division 15Variation and termination

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

             (1)  Where:

                     (a)  a person who is receiving a service pension or income support supplement is given a notice under section 54; and

                     (b)  the notice requires the person to inform the Department or a specified officer of the occurrence of an event or change in circumstances within a specified period (in this section called the notification period); and

                     (c)  the event or change in circumstances occurs; and

                     (d)  the person informs the Department or specified officer of the occurrence of the event or change in circumstances within the notification period in accordance with the notice; and

                     (e)  because of the occurrence of the event or change in circumstances:

                              (i)  the person ceases to be eligible for the pension or income support supplement; or

                             (ii)  the pension or income support supplement would, but for this section, cease to be payable to the person;

the pension or income support supplement continues to be payable to the person until the end of the notification period and then ceases to be payable to the person.

             (2)  If the person ceases to be eligible for a pension under subsection (1), the pension is cancelled.

Note 2:       if a pension ceases to be payable to a person under this section, the person’s eligibility for benefits under Division 12 also ceases.

             (3)  If:

                     (a)  a person who is receiving a service pension or income support supplement is given a notice under section 54; and

                     (b)  the notice requires the person to inform the Department or a specified officer of the occurrence of an event or change in circumstances within a specified period (the notification period); and

                     (c)  the event or change in circumstances occurs; and

                     (d)  the person informs the Department or specified officer of the occurrence of the event or change in circumstances within the notification period in accordance with the notice; and

                     (e)  because of the occurrence of the event or change in circumstances, the person’s rate of pension or income support supplement is to be reduced;

then, except as otherwise provided by this Act, the pension or income support supplement becomes payable to the person at the reduced rate immediately after the end of the notification period.

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

             (1)  Where:

                     (a)  a person who is receiving a service pension or income support supplement is given a notice under section 54; and

                     (b)  the notice requires the person to inform the Department or a specified officer of the occurrence of an event or change in circumstances within a specified period (in this section called the notification period); and

                     (c)  the event or change in circumstances occurs; and

                     (d)  the person does not inform the Department or specified officer of the occurrence of the event or change in circumstances within the notification period in accordance with the notice; and

                     (e)  because of the occurrence of the event or the change in circumstances:

                              (i)  the person ceases to be eligible for the pension or income support supplement; or

                             (ii)  the pension or income support supplement ceases to be payable to the person;

the pension or income support supplement ceases to be payable to the person on the day on which the event or change in circumstances occurs.

             (2)  If the person ceases to be eligible for a pension under subsection (1), the pension is cancelled.

Note:          if a pension ceases to be payable to a person under this section, the person’s eligibility for benefits under Division 12 also ceases.

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

                   Where:

                     (a)  a person who is receiving a service pension or income support supplement is given a notice under section 54; and

                     (b)  the notice requires the person to inform the Department or a specified officer of the occurrence of an event or change in circumstances within a specified period (in this section called the notification period); and

                     (c)  the event or change in circumstances occurs; and

                     (d)  the person does not inform the Department or specified officer of the occurrence of the event or change in circumstances within the notification period in accordance with the notice; and

                     (e)  because of the occurrence of the event or change in circumstances, the person’s rate of pension or income support supplement is to be reduced;

then, except where otherwise provided for by this Act, the pension or income support supplement becomes payable to the person at the reduced rate on the day on which the event or change in circumstances occurs.

56C  Rate increase determination

             (1)  If the Commission is satisfied that the rate at which a service pension or income support supplement is being, or has been, paid is less than the rate provided for by this Act, the Commission must, subject to section 56DA, determine that the rate is to be increased to the rate specified in the determination.

             (2)  If:

                     (a)  either:

                              (i)  a service pension or income support supplement has not been, or is not being, paid to a person because the rate of the pension or supplement was determined to be nil; or

                             (ii)  a service pension or income support supplement has not been, or is not being, paid to a person because the rate of the pension or supplement was reduced to nil under section 56 or 56A; and

                     (b)  the Commission is satisfied that the rate of the person’s pension or supplement as provided for by this Act is no longer nil;

the Commission must, subject to section 56DA, determine that the rate at which the pension or supplement is payable to the person is the rate specified in the determination.

             (3)  A determination:

                     (a)  must be in writing; and

                     (b)  must specify a rate assessed as provided for by this Act; and

                     (c)  may be made by the Commission on its own initiative or following a request by the pensioner for an increase in the rate of the pension or supplement.

Note:          For the date of effect of a determination under this section, see sections 56G and 56GA.

             (4)  If the Commission makes a determination under this section in respect of a person’s service pension or income support supplement, the service pension or income support supplement is payable to the person at the rate specified in the determination.

56D  Rate reduction determination

             (1)  If the Commission is satisfied that the rate at which service pension or income support supplement is being, or has been, paid is more than the rate provided for by this Act, the Commission must, subject to section 56DA, determine that the rate is to be reduced to the rate specified in the determination.

Note 1:       a determination under this section is not necessary in a case where an automatic rate reduction is produced by section 56B.

Note 2:       for the date of effect of a determination under this section, see section 56H.

             (2)  A determination under subsection (1):

                     (a)  must be in writing; and

                     (b)  must specify a rate assessed as provided for by this Act; and

                     (c)  may be made by the Commission on its own initiative or following a request by the pensioner for a decrease in the rate of the pension or supplement.

             (3)  If the Commission makes a determination under this section in respect of a person’s service pension or income support supplement, the service pension or income support supplement is payable to the person at the rate specified in the determination.

56DA  No rate increase or reduction for small amounts

             (1)  The Commission must not make a determination under section 56C or 56D if the amount by which the rate of the service pension or income support supplement would be increased or reduced (as the case may be) under the determination would be less than $26 per annum.

             (2)  Subsection (1) does not apply if the increase or reduction in the rate of the pension or supplement is necessary as a result of a matter, or change in circumstances, affecting the payment of the pension or supplement that the Commission has declared, by notice published in the Gazette, to be a matter, or change in circumstances, whose effects on the payment of a service pension or income support supplement is to be disregarded for the purposes of this subsection.

56E  Cancellation or suspension determination—general

             (1)  If the Commission is satisfied that a service pension or income support supplement is being, or has been, paid to a person to whom it is not, or was not, payable under this Act, the Commission may determine that the pension is to be cancelled or suspended.

Note 1:       a determination under this section is not necessary in a case where an automatic termination is produced by section 56 or 56A.

Note 2:       for the date of effect of a determination under this section, see section 56H.

Note 3:       when a person’s pension is suspended under section 56E, the provision of benefits under Division 12 to the person is generally suspended too. However, the Commission may decide that the person can continue to receive medical treatment under section 53D or Part V (see subsection 85(8)).

Note 4:       when a person’s pension is cancelled under section 56E, the person’s benefits under Division 12 are also cancelled.

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

             (3)  This section does not apply to a person if section 56EA applies to the person.

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

             (1)  If:

                     (a)  a person who is receiving a service pension or income support supplement is given a notice under section 54A or 54AA; and

                     (b)  the person does not comply with the requirements set out in the notice;

the Commission may determine that the pension or income support supplement is to be cancelled or suspended.

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

Note 1:       for the date of effect of a determination under this section see section 56H.

Note 2:       when a person’s pension is suspended under section 56EA, the provision of benefits under Division 12 to the person is generally suspended too. However, the Commission may decide that the person can continue to receive medical treatment under section 53D or Part V (see subsection 85(8)).

Note 3:       when a person’s pension is cancelled under section 56EA, the person’s benefits under Division 12 are also cancelled.

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

             (1)  If:

                     (a)  a person who is receiving a service pension or income support supplement has been given a notice under subsection 54BA(1) or (1A); and

                     (b)  the Commission is satisfied that the person, or the person’s partner, has not taken reasonable action to obtain the comparable foreign pension within the period specified in the notice;

the Commission may determine in writing that the service pension or income support supplement is to be cancelled or suspended.

             (2)  For the purposes of this section, a person takes reasonable action to obtain a comparable foreign pension only if the person takes reasonable action to obtain the pension at the highest rate applicable to the person.

Note:          For the date of effect of a determination under this section see section 56H.

56EC  Cancellation determination where pension not payable

             (1)  If a service pension or income support supplement is not payable to a person because the rate of the pension or supplement:

                     (a)  has been determined to be nil; or

                     (b)  has been reduced to nil under section 56 or 56A;

the Commission may determine that the pension or supplement is to be cancelled.

             (2)  The determination must be in writing.

Note:          For the date of effect of a determination under this section, see section 56H.

56F  Resumption of a payment after suspension

                   If the Commission:

                     (a)  suspends a person’s service pension or income support supplement under section 56E, 56EA or 56EB; and

                     (b)  later becomes satisfied that the pension or income support supplement is payable to the person;

the Commission may end the suspension, by determination in writing.

Note:          for the date of effect of a determination under this section, see section 56G.

56G  Date of effect of favourable determination

             (1)  The day on which a determination under section 56C or 56F (in this section called the favourable determination) takes effect is worked out in accordance with this section.

Notified change of circumstances

             (2)  If:

                     (a)  the favourable determination is made following a person having advised the Department of a change in circumstances; and

                     (b)  the change is not a decrease in the rate of the person’s maintenance income;

the determination takes effect on the day on which the advice was received or on the day on which the change occurred, whichever is the later.

Other determinations

             (3)  In any other case, the favourable determination takes effect on the day on which the determination was made or on such later day or earlier day as is specified in the determination.

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

                   If a determination under section 56C is made after a person tells the Department that the person has a child, or an additional child, that is a dependent child, the determination takes effect on the day on which the child is taken to have become a dependent child.

Note:          The day is determined by reference to the Social Security Act (see subsection 5F(2)).

56H  Date of effect of adverse determination

General

             (1)  The day on which a determination under section 56D, 56E, 56EA, 56EB or 56EC (in this section called the adverse determination) takes effect is worked out in accordance with this section.

             (2)  The adverse determination takes effect on:

                     (a)  the day on which the determination is made; or

                     (b)  if another day is specified in the determination—on that day.

             (3)  Subject to subsections (4), (5), (6), (7), (8) or (9), the day specified under paragraph (2)(b) must be later than the day on which the determination is made.

Contravention of Act

             (4)  If the adverse determination is made because a person has contravened a provision of this Act (other than subsection 54(6), 54A(6), 54AA(7) or 128(4)) the day specified under paragraph (2)(b) may be earlier than the day on which the determination is made.

False statement or misrepresentation—suspension or cancellation

             (5)  If:

                     (a)  a person has made a false statement or misrepresentation; and

                     (b)  because of the false statement or misrepresentation, any amount of a service pension or income support supplement has been paid to a person which should not have been paid;

the day specified under paragraph (2)(b) may be earlier than the day on which the determination is made.

False statement or misrepresentation—rate reduction

             (6)  If:

                     (a)  a person has made a false statement or misrepresentation; and

                     (b)  because of the false statement or misrepresentation, the rate at which a service pension or income support supplement was paid to a person was more than it should have been;

the day specified under paragraph (2)(b) may be earlier than the day on which the determination is made.

Payment of arrears of periodic compensation payments—suspension or cancellation

             (7)  If:

                     (a)  an adverse determination is made in relation to a person because of point SCH6‑E4 (payment of arrears of periodic compensation payments); and

                     (b)  a service pension or income support supplement has been paid to the person or to the person’s partner when, because of the payment of arrears of periodic compensation, the pension or income support supplement should have been cancelled or suspended;

the day specified under paragraph (2)(b) may be earlier than the day on which the determination is made.

Payment of arrears of compensation payments—rate reduction

             (8)  If:

                     (a)  an adverse determination is made in relation to a person because of point SCH6‑E4 (payment of arrears of periodic compensation payments); and

                     (b)  an amount of service pension or income support supplement was paid to the person or to the person’s partner that, because of the payment of arrears of periodic compensation, was more than the amount that should have been paid;

the day specified under paragraph (2)(b) may be earlier than the day on which the determination is made.

Duplicate payments of rent assistance

             (9)  If:

                     (a)  a decision (the veterans’ entitlements decision) was made that rent assistance (the veterans’ entitlements rent assistance) was to be included when calculating a person’s rate of service pension or income support supplement for each day in a period; and

                     (b)  the condition in subsection (10) is met for each day in that period (which is about rent assistance also being included in family tax benefit); and

                     (c)  because the inclusion of the veterans’ entitlements rent assistance was contrary to Module C of the Rate Calculator, an adverse determination is made to reduce the rate of, or cancel, the person’s service pension or income support supplement for each day in that period;

the day specified under paragraph (2)(b) must be the first day of that period and may be earlier than the day on which the determination is made.

           (10)  The condition in this subsection is met for each day in a period if:

                     (a)  both of the following apply:

                              (i)  the person was a member of a couple (other than an illness separated couple or a respite care couple) on each day in the period;

                             (ii)  when the veterans’ entitlements decision was made, a determination under the family assistance law was in force that included rent assistance when calculating the person’s, or the person’s partner’s, Part A rate of family tax benefit for each day in that period; or

                     (b)  both of the following apply:

                              (i)  the person was not a member of a couple, or was a member of an illness separated couple, or a respite care couple, on each day in the period;

                             (ii)  when the veterans’ entitlements decision was made, a determination under the family assistance law was in force that included rent assistance when calculating the person’s Part A rate of family tax benefit for each day in that period; or

                     (c)  all of the following apply:

                              (i)  when the veterans’ entitlements decision was made, no determination of a kind mentioned in subparagraph (a)(ii) or (b)(ii) (as the case requires) was in force;

                             (ii)  after the veterans’ entitlements decision was made, such a determination was made;

                            (iii)  each day in the period either is, or comes after, the day on which the determination was made.

56J  Pension may be cancelled at pensioner’s request

             (1)  The Commission may cancel a person’s age service pension, invalidity service pension, partner service pension or income support supplement if the person requests the Commission to do so.

             (2)  A request under subsection (1) must be in writing.

Note 1:       if the Commission cancels a veteran’s age service pension or invalidity service pension and the veteran’s partner receives a partner service pension, the partner service pension will also be terminated (under section 56E).

Note 2:       Cancellation of a veteran’s service pension may result in the veteran being ineligible for treatment under Part V.

56K  Pension may be suspended if instalments not drawn

                   If a pensioner has not drawn instalments of his or her age service pension, invalidity service pension, partner service pension or income support supplement for a continuous period of 6 months, the Commission may cancel or suspend the pension or income support supplement.

Note 1:       an example of a situation where this section is intended to apply is where a person has closed his or her bank account and cannot be contacted to make new banking or other arrangements for payment of the person’s service pension. It is not intended to apply where a pensioner is accumulating pension instalments in a bank account.

Note 2:       if the Commission cancels or suspends a veteran’s age service pension or invalidity service pension and the veteran’s partner receives a partner service pension, the partner service pension will also be terminated (under section 56E).

56L  Commission may end suspension

             (1)  If the Commission suspends a pension under section 56K, it may end the suspension at any time.

             (2)  The Commission may determine that the end of the suspension takes effect:

                     (a)  from the date the suspension occurred; or

                     (b)  such later date as the Commission thinks proper.

56M  Effect of cancellation or suspension

             (1)  If the Commission determines under this Division that a service pension, or the income support supplement, payable to a person is to be cancelled, the pension or supplement ceases to be payable to the person from and including the day on which the determination takes effect.

             (2)  If the Commission determines under this Division that a service pension, or the income support supplement, payable to a person is to be suspended, the pension or supplement is not payable to the person during the period:

                     (a)  commencing on the day on which the determination takes effect; and

                     (b)  ending when the suspension ends under a determination of the Commission (under section 56F or 56L).

56N  Changes to payments by computer

                   If:

                     (a)  payment to a person of a service pension or income support supplement is based upon data in a computer; and

                     (b)  the rate of the pension or supplement is increased or reduced, or the pension or supplement is cancelled or suspended, because of the operation of a computer program approved by the Commission; and

                     (c)  the program causes the change for a reason for which the Commission could determine the change;

the change is taken to have been made because of a determination by the Commission for that reason.

Note 1:       This section does not apply where:

(a)     an automatic termination is produced by section 56 or 56A; or

(b)     an automatic rate reduction is produced by section 56B.


 

Division 16Review of decisions

57  Claimants and service pensioners may seek review of certain decisions

             (1)  A claimant who is dissatisfied with a decision of the Commission:

                     (a)  in relation to a claim for a qualifying service determination under section 35B; or

                     (b)  in relation to a claim for a service pension or income support supplement; or

                     (c)  in relation to a request under section 52Y (financial hardship);

may request the Commission to review the decision.

             (2)  A pensioner who is dissatisfied with a decision of the Commission:

                     (a)  cancelling or suspending a service pension or income support supplement; or

                     (b)  terminating the suspension of a service pension or income support supplement; or

                     (c)  reducing or increasing the rate of a service pension or income support supplement; or

                     (d)  refusing a request for an increase in the rate of a service pension or income support supplement; or

                     (e)  in relation to a request under section 52Y (financial hardship);

may request the Commission to review the decision.

             (3)  A person who is dissatisfied with a decision of the Commission under Part IIIAB (pension bonus and pension bonus bereavement payment) may request the Commission to review the decision. However, this rule does not apply to a decision of the Commission under:

                     (a)  section 45TE (approval of form); or

                     (b)  section 45TG (approval of places and persons); or

                     (c)  section 45TO (declaration of non‑accruing membership); or

                     (d)  paragraph 45UK(1)(b) (approval of form).

57A  Application for review

             (1)  A request for review of a decision under section 57 must:

                     (a)  be made within 3 months after the person seeking review was notified of the decision; and

                     (b)  set out the grounds on which the request is made; and

                     (c)  be in writing; and

                     (d)  be lodged at an office of the Department in Australia in accordance with section 5T.

          (1A)  A request lodged in accordance with section 5T is taken to have been made on a day determined under that section.

             (2)  If a request for review of a decision is made in accordance with subsection (1) the Commission must review the decision.

             (3)  If the Commission has delegated its powers under this section to the person who made the decision under review, that person must not review the decision.

57B  Commission’s powers where request for review

             (1)  If the Commission reviews a decision under this Division, the Commission must affirm the decision or set it aside.

             (2)  If the Commission sets the decision aside it must, subject to subsection (3), substitute a new decision in accordance with this Act.

             (3)  If the decision set aside is:

                     (a)  a decision to cancel, suspend or reduce the rate of a service pension or income support supplement under section 56D or 56E; or

                     (b)  a decision to increase the rate of a service pension or income support supplement under section 56C;

the Commission need not substitute another decision.

Note:          for the Commission’s evidence‑gathering powers see section 57F.

57C  Date of effect of certain review decisions

             (1)  If the Commission sets aside a decision and substitutes for it a decision:

                     (a)  granting a claim for service pension or income support supplement; or

                     (b)  increasing the rate of a service pension or income support supplement;

the substituted decision takes effect from a date specified by the Commission.

             (2)  The date specified by the Commission under subsection (1) must not be earlier than the date from which the Commission could have granted the claim, or increased the rate, when the original decision was made.

             (3)  If the Commission sets aside a decision to suspend a service pension or income support supplement, the Commission may end the suspension from a date specified by the Commission, which may be a date earlier than the date of the Commission’s decision to set aside the suspension.

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

             (1)  When the Commission reviews a decision under this Division it must make a written record of its decision upon review.

             (2)  The written record must include a statement that:

                     (a)  sets out the Commission’s findings on material questions of fact; and

                     (b)  refers to the evidence or other material on which those findings are based; and

                     (c)  provides reasons for the Commission’s decision.

57E  Person who requested review to be notified of decision

             (1)  When the Commission affirms or sets aside a decision under this Division it must give the person who requested the review of the decision:

                     (a)  a copy of the Commission’s decision; and

                     (b)  subject to subsection (2), a copy of the statement about the decision referred to in subsection 57D(2); and

                     (c)  if the person has a right to apply to the Administrative Appeals Tribunal for a review of the Commission’s decision—a statement giving the person particulars of that right.

             (2)  If the statement referred to in paragraph (1)(b) contains any matter that, in the opinion of the Commission:

                     (a)  is of a confidential nature; or

                     (b)  might, if communicated to the person who requested review, be prejudicial to his or her physical or mental health or well‑being;

the copy given to the person is not to contain that matter.

57F  Powers of Commission to gather evidence

             (1)  The Commission or the Commission’s delegate may, in reviewing a decision under this Division:

                     (a)  take evidence on oath or affirmation for the purposes of the review; and

                     (b)  adjourn a hearing of the review from time to time.

             (2)  The presiding member of the Commission or the Commission’s delegate may, for the purposes of the review:

                     (a)  summon a person to appear at a hearing of the review to give evidence and to produce such documents (if any) as are referred to in the summons; and

                     (b)  require a person appearing at a hearing of the review for the purpose of giving evidence either to take an oath or to make an affirmation; and

                     (c)  administer an oath or affirmation to a person so appearing.

             (3)  The person who applied for the review under this Division is a competent and compellable witness upon the hearing of the review.

             (4)  The oath or affirmation to be taken or made by a person for the purposes of this section is an oath or affirmation that the evidence that the person will give will be true.

             (5)  The Commission’s power under paragraph (1)(a) to take evidence on oath or affirmation:

                     (a)  may be exercised on behalf of the Commission by:

                              (i)  the presiding member or the Commission’s delegate; or

                             (ii)  by another person (whether a member or not) authorised by the presiding member or the Commission’s delegate; and

                     (b)  may be exercised within or outside Australia; and

                     (c)  must be exercised subject to any limitations specified by the Commission.

             (6)  Where a person is authorised under subparagraph (5)(a)(ii) to take evidence for the purposes of a review, the person has:

                     (a)  all the powers of the Commission under subsection (1); and

                     (b)  all the powers of the presiding member under subsection (2);

for the purposes of taking that evidence.

             (7)  In this section:

Commission’s delegate means a person to whom the Commission has delegated its powers under section 57A and who is conducting the review in question.

57G  Withdrawal of request for review

             (1)  A person who requests a review under section 57 may withdraw the request at any time before it is determined by the Commission.

             (2)  To withdraw the request, the person must give written notice of withdrawal to the Secretary and the notice must be lodged at an office of the Department in Australia in accordance with section 5T.

             (3)  Subject to section 57A, a person who withdraws a request for review may subsequently make another request for review of the same decision.

Note:          section 57A provides that a person who wants to request a review of a decision must do so within 3 months after the person has received notice of the decision.

57H  Commission may reimburse certain expenses

             (1)  When the Commission, upon review of a decision under this Division:

                     (a)  grants a claim for a qualifying service determination, a service pension or income support supplement; or

                     (b)  sets aside a decision to cancel or suspend a service pension or income support supplement;

the Commission may pay to the person who requested the review an amount in respect of expenses incurred by the person in providing for the production of certificates, reports or other documents from a medical practitioner, or from a hospital or similar institution in which he or she had received medical treatment.

             (2)  Subsection (1) applies only in relation to certificates, reports or documents reasonably used for the purposes of the review.

             (3)  The amount that may be paid under subsection (1) is to be calculated in accordance with the scale approved by the Commission for the purposes of subsection 19(8).


 

Division 17Administration of pension payments

Subdivision AGeneral administration of pension payments

58  Application of Subdivision

                   This Subdivision applies to:

                     (a)  pensions payable under Part III (Service Pensions) or Part IIIA (Income Support Supplement); and

                     (b)  pension bonus and pension bonus bereavement payment payable under Part IIIAB.

58A  Payment by instalments

Payment in arrears in relation to pension periods

             (1)  Pension is payable:

                     (a)  in arrears; and

                     (b)  by instalments relating to each pension period.

Total instalment relating to a pension period

             (2)  The amount payable to a person as an instalment of pension in relation to a pension period is the total amount of pension payable to the person for the days in that period on which pension was payable to the person.

Pensions generally payable fortnightly

             (3)  Unless subsection (3A) applies to the person, an instalment of pension is payable to a person on the next payday after the end of the pension period to which the instalment relates.

Pensions may be payable weekly

          (3A)  The Commission may determine, in writing, that the total amount of an instalment of pension payable to a person in relation to a pension period is payable to the person in 2 payments (the part payments) if the person is a member of a class specified under subsection (3C).

          (3B)  A determination made under subsection (3A) is not a legislative instrument.

          (3C)  The Commission may, by legislative instrument, specify a class of persons for the purposes of subsection (3A).

          (3D)  The first of the part payments:

                     (a)  is not to exceed the total of the amount of pension (calculated in accordance with this section) payable to the person for days that:

                              (i)  are days on which the pension was payable to the person; and

                             (ii)  are included in the first 7 days of the pension period; and

                     (b)  is payable at a time determined by the Commission that is after the first 7 days of the pension period.