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Veterans' Entitlements Act 1986

Authoritative Version
  • - C2015C00093
  • In force - Superseded Version
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Act No. 27 of 1986 as amended, taking into account amendments up to Statute Law Revision Act (No. 1) 2015
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 25 Mar 2015
Start Date 25 Mar 2015
End Date 19 Jun 2015
Table of contents.

Veterans’ Entitlements Act 1986

No. 27, 1986

Compilation No. 122

Compilation date:                              25 March 2015

Includes amendments up to:            Act No. 5, 2015

Registered:                                         25 March 2015

This compilation is in 4 volumes

Volume 1:       sections 1–45UY

Volume 2:       sections 46–93ZG

Volume 3:       sections 94–216

Volume 4:       Schedules

                        Endnotes

Each volume has its own contents

 

About this compilation

This compilation

This is a compilation of the Veterans’ Entitlements Act 1986 that shows the text of the law as amended and in force on 25 March 2015 (the compilation date).

This compilation was prepared on 12 March 2015.

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

Uncommenced amendments

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

Application, saving and transitional provisions for provisions and amendments

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

Modifications

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

Self‑repealing provisions

If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes.

  

  

  


Contents

Part IIIB—Provisions 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—Income from financial assets (including income streams (short term) and certain income streams (long term))                                                                          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....................... 16

46K........................ Actual return on financial assets not treated as ordinary income              16

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

46M....................... Valuation and revaluation of certain financial investments 17

Division 4—Income from income streams not covered by Division 3 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  19

46V....................... Income—income stream is a defined benefit income stream 20

46VA.................... Income from market‑linked asset‑test exempt income stream.. 20

46W....................... Income from asset‑tested income stream (long term)........ 22

46X....................... Income—income stream not a defined benefit income stream  23

46Y....................... Income—income stream is a defined benefit income stream 23

46YA.................... Income from certain low‑payment asset‑tested income streams               24

Subdivision C—Family law affected income streams                                    26

46Z........................ Scope of Subdivision........................................................ 26

46ZA..................... Income from asset‑test exempt income streams................ 26

46ZB..................... Income from asset‑tested income stream (long term)........ 27

46ZC..................... Decision‑making principles.............................................. 27

Division 6—Income tests—conversion of foreign currency amounts 28

47.......................... Application of Division.................................................... 28

47A....................... Conversion of foreign currency amounts.......................... 28

47B........................ Base exchange rate............................................................ 28

47C........................ Re‑assessed exchange rate................................................ 28

47D....................... Applicability of re‑assessed exchange rate........................ 29

47E........................ Rounding off exchange rates............................................ 30

Division 7—Income tests—disposal of ordinary income                         31

48.......................... Disposal of ordinary income............................................. 31

48A....................... Amount of disposition...................................................... 32

48B........................ Disposal of ordinary income—not a member of a couple. 32

48C........................ Disposal of ordinary income—members of couples......... 32

48E........................ Dispositions more than 5 years old to be disregarded....... 33

Division 8—Retirement assistance for farmers                                            35

Subdivision 1—General                                                                                          35

49.......................... Purpose of Division.......................................................... 35

49AA.................... Applicable cut‑off date...................................................... 35

49AB..................... Pre‑assessment request..................................................... 36

49A....................... Division to apply to certain transfers of estates in farms etc. 37

49B........................ How to assess the value of farms etc. subject to a transfer 40

Subdivision 2—Modification of provisions relating to assets test               41

49C........................ Transfer of estate in farm etc. not disposal of an asset...... 41

Subdivision 3—Claims for service pension or income support supplement 43

49D....................... Provisional commencement day........................................ 43

Subdivision 4—Requests for increase in rate of service pension or income support supplement              44

49E........................ Application....................................................................... 44

49F........................ Request for increase.......................................................... 44

49G....................... Making a request.............................................................. 44

49H....................... Determination of request................................................... 45

Subdivision 5—Farmers’ income test                                                                 46

49J......................... Does a person satisfy the farmers’ income test?............... 46

Subdivision 6—Transitional: ex gratia payments                                           50

49K........................ Ex gratia payments............................................................ 50

Division 8A—Retirement assistance for sugarcane farmers                52

Subdivision A—General                                                                                         52

49L........................ Purpose of Division.......................................................... 52

49M....................... RASF commencement and closing days........................... 52

49N....................... Applicable cut‑off date...................................................... 52

49P........................ Pre‑assessment request..................................................... 53

49Q....................... Division to apply to certain transfers of estates in sugarcane farms etc.   54

49R........................ How to assess the total net value of sugarcane farms etc. subject to a transfer         58

Subdivision B—Modification of provisions relating to assets test              60

49S........................ Transfer of estate in sugarcane farm etc. not disposal of an asset             60

Subdivision C—Claims for service pension or income support supplement 62

49T........................ Provisional commencement day........................................ 62

Subdivision D—Requests for increase in rate of service pension or income support supplement             62

49U....................... Application....................................................................... 62

49V....................... Request for increase.......................................................... 63

49W....................... Making a request.............................................................. 63

49X....................... Determination of request................................................... 63

Subdivision E—Sugarcane farmers’ income test                                             64

49Y....................... Does a person satisfy the sugarcane farmers’ income test? 64

Division 9—New Enterprise Incentive Scheme                                             70

50.......................... General effect of Division................................................. 70

50A....................... Reduction in rate of payments under this Part if recipient or partner also receiving payments under NEIS.......................................................................................... 70

50B........................ Rate reduction under this Division.................................... 71

Division 11—General provisions relating to the assets test                   72

Subdivision A—Value of person’s assets                                                            72

52.......................... Certain assets to be disregarded in calculating the value of a person’s assets           72

52AA.................... Value of superannuation investments determined by Minister to be disregarded     81

52A....................... Value of asset‑tested income streams that are not defined benefit income streams   82

52B........................ Value of asset‑tested income streams that are defined benefit income streams         83

52BA..................... Value of asset‑tested FLA income streams....................... 84

52BB..................... Value of partially asset‑test exempt income streams......... 85

52BC..................... Value of superannuation reserves for superannuation funds of 4 members or less  85

52C........................ Effect of charge or encumbrance on value of assets.......... 86

52CA..................... Effect of certain liabilities on value of assets used in primary production                87

52D....................... Loans................................................................................ 88

Subdivision B—Dispositions of assets (general provisions)                          88

52E........................ Disposal of assets............................................................. 88

52F........................ Amount of disposition...................................................... 89

52FAAA............... Application of asset deprivation rules to cease in respect of certain assets               90

Subdivision BA—Dispositions of assets before 1 July 2002                          90

52FAA.................. Application....................................................................... 90

52FA..................... Disposal of assets in pre‑pension years—not a member of a couple        90

52G....................... Disposal of assets in pension years—not a member of a couple              91

52GA.................... Disposal of assets in pre‑pension years—members of couples                92

52H....................... Disposal of assets in pension years—members of couples 94

52J......................... Dispositions more than 5 years old to be disregarded....... 96

Subdivision BB—Dispositions of assets on or after 1 July 2002                  96

52JA...................... Disposition of assets in tax year—individuals.................. 96

52JB...................... Dispositions of assets in 5 year period—individuals........ 97

52JC...................... Disposition of assets in tax year—members of couples.... 98

52JD...................... Disposition of assets in 5 year period—members of couples.. 100

52JE...................... Certain dispositions to be disregarded............................ 101

Subdivision C—Provisions relating to special residences and special residents            102

52KA..................... Application of Subdivision to granny flat residents........ 102

52L........................ Basis for different treatment............................................ 102

52M....................... Entry contribution........................................................... 103

52N....................... Extra allowable amount................................................... 105

52P........................ Renegotiation of retirement village agreement................. 107

52Q....................... Residents who are not members of a couple................... 107

52R........................ Members of couples....................................................... 108

52S........................ Members of illness separated couple (both in special residences)            109

52T........................ Members of illness separated couple (partner not in special residence and partner property owner)        111

52U....................... Members of illness separated couple (partner not in special residence and partner not property owner)  113

52V....................... Members of ordinary couple with different principal homes (both in special residences)        114

52W....................... Members of ordinary couple with different principal homes (partner not in special residence and partner property owner).............................................................. 116

52X....................... Members of ordinary couple with different principal homes (partner not in special residence and partner not property owner).............................................................. 117

Subdivision D—Financial hardship                                                                   119

52Y....................... Access to financial hardship rules................................... 119

52Z........................ Application of financial hardship rules........................... 120

Subdivision E—Pension loans scheme                                                              123

52ZAAA............... Pension loans scheme definitions................................... 123

52ZA..................... Eligibility for participation in pension loans scheme....... 125

52ZB..................... Effect of participation in pension loans scheme—pension rate 127

52ZC..................... Effect of participation in pension loans scheme—creation of debt           128

52ZCA.................. Effect of participation in pension loans scheme—maximum loan available              129

52ZD..................... Need for a request to participate...................................... 131

52ZE...................... Need for a request to later nominate or change guaranteed amount or rate of pension             132

52ZF...................... Existence of debt results in charge over real assets......... 133

52ZG..................... Debt not to be recovered until after death........................ 134

52ZH..................... Enforcement of charge.................................................... 135

52ZJ...................... Person ceases to participate in pension loans scheme if debt exceeds maximum loan available               136

52ZK..................... Person withdraws from pension loans scheme............... 136

52ZKA.................. Repayment or recovery of debt after pension loans scheme ceases to operate because debt exceeds maximum loan available or person withdraws................................. 137

52ZL...................... Registration of charge..................................................... 138

52ZM.................... Manner of enforcement of charge................................... 138

Subdivision F—Commutation of asset‑test exempt income stream           139

52ZMA................. Debt resulting from commutation of asset‑test exempt income stream contrary to subsection 5JA(2), 5JB(2) or 5JBA(2).......................................................................... 139

Division 11A—Means test treatment of private companies and private trusts 143

Subdivision A—Introduction                                                                               143

52ZN..................... Simplified outline............................................................ 143

52ZO..................... Definitions...................................................................... 144

52ZP...................... Relatives......................................................................... 148

52ZQ..................... Associates....................................................................... 149

52ZR..................... When a company is sufficiently influenced by an entity. 150

52ZS...................... Majority voting interest in a company............................. 151

52ZT...................... Entitled to acquire........................................................... 151

52ZU..................... Transfer of property or services...................................... 151

52ZV..................... Constructive transfers of property or services to an entity 152

52ZW.................... Active involvement with a primary production enterprise 153

52ZX..................... Power to veto decisions of a trustee................................ 153

52ZY..................... Extra‑territorial operation................................................ 153

52ZZ...................... Application to things happening before commencement. 154

Subdivision B—Designated private companies                                              154

52ZZA................... Designated private companies......................................... 154

Subdivision C—Designated private trusts                                                        156

52ZZB................... Designated private trusts................................................. 156

Subdivision D—Controlled private companies                                              157

52ZZC................... Controlled private companies.......................................... 157

52ZZD................... Direct voting interest in a company................................. 159

52ZZE................... Voting power.................................................................. 160

52ZZF................... Direct control interest in a company................................ 160

52ZZG................... Interest in a share............................................................ 161

Subdivision E—Controlled private trusts                                                        163

52ZZH................... Controlled private trusts.................................................. 163

52ZZI.................... Interest in a trust............................................................. 166

Subdivision F—Attributable stakeholders and attribution percentages  167

52ZZJ.................... Attributable stakeholder, asset attribution percentage and income attribution percentage         167

Subdivision G—Attribution of income of controlled private companies and controlled private trusts  169

52ZZK................... Attribution of income...................................................... 169

52ZZL................... No double counting of attributed income........................ 170

52ZZM.................. Ordinary income of a company or trust.......................... 171

52ZZN................... Ordinary income from a business—treatment of trading stock                172

52ZZO................... Permissible reductions of business and investment income 172

52ZZP................... Derivation periods.......................................................... 173

52ZZQ................... Attribution periods.......................................................... 174

Subdivision H—Attribution of assets of controlled private companies and controlled private trusts     175

52ZZR................... Attribution of assets........................................................ 175

52ZZS................... When attributed asset is unrealisable............................... 176

52ZZT................... Effect of charge or encumbrance on value of assets........ 177

52ZZU................... Effect of unsecured loan on value of assets.................... 178

52ZZV................... Value of company’s or trust’s assets etc......................... 179

Subdivision I—Modification of asset deprivation rules                               179

52ZZW.................. Individual disposes of asset to company or trust............ 179

52ZZX................... Disposal of asset by company or trust............................ 180

52ZZY................... Individual ceases to be an attributable stakeholder of a company or trust 183

52ZZZ................... Individual disposes of asset to company or trust before 1 January 2002—individual is attributable stakeholder........................................................................................ 184

52ZZZA................ Individual disposes of asset to company or trust before 1 January 2002—individual’s spouse is attributable stakeholder...................................................................... 185

Subdivision J—Modification of income deprivation rules                         186

52ZZZB................. Individual disposes of ordinary income to company or trust 186

52ZZZC................. Disposal of income by company or trust........................ 187

52ZZZD................ Individual disposes of income to company or trust before 1 January 2002—individual is attributable stakeholder...................................................................... 190

52ZZZE................. Individual disposes of income to company or trust before 1 January 2002—individual’s spouse is attributable stakeholder...................................................................... 191

Subdivision K—Concessional primary production trusts                           192

52ZZZF................. Concessional primary production trusts.......................... 192

52ZZZG................ Individual ceases to be an attributable stakeholder of a trust—receipt of remuneration or other benefits from trust during asset deprivation period............................... 196

52ZZZH................ Net value of asset............................................................ 198

52ZZZI.................. Value of entity’s assets................................................... 198

52ZZZJ.................. When asset is controlled by an individual....................... 199

52ZZZK................. Adjusted net value of asset............................................. 199

52ZZZL................. Adjusted net primary production income........................ 200

52ZZZM................ Net income of a primary production enterprise............... 201

52ZZZN................ Net income from a primary production enterprise—treatment of trading stock        202

52ZZZO................ Permissible reductions of income from carrying on a primary production enterprise               202

Subdivision L—Anti‑avoidance                                                                          203

52ZZZP................. Anti‑avoidance................................................................ 203

Subdivision M—Decision‑making principles                                                  205

52ZZZQ................ Decision‑making principles............................................ 205

Subdivision N—Information management                                                      205

52ZZZR................. Transitional period.......................................................... 205

52ZZZS................. Information‑gathering powers........................................ 205

52ZZZT................. Commission may obtain tax information........................ 206

52ZZZU................ Disclosure of tax information......................................... 208

52ZZZV................ Disclosure of tax file number information...................... 209

Division 11B—Private financial provision for certain people with disabilities  210

Subdivision A—Special disability trusts                                                           210

52ZZZW................ What is a special disability trust?.................................... 210

52ZZZWA............. Beneficiary requirements................................................ 210

52ZZZWB............. Trust purpose requirements............................................ 212

52ZZZWC............. Trust deed requirements.................................................. 214

52ZZZWD............. Trustee requirements....................................................... 214

52ZZZWE............. Trust property requirements............................................ 215

52ZZZWEA.......... Trust expenditure requirements....................................... 216

52ZZZWF............. Reporting requirements................................................... 217

52ZZZWG............. Audit requirements......................................................... 217

52ZZZWH............. Waiver of contravention of this Division........................ 219

Subdivision B—Income of special disability trusts                                       220

52ZZZWI.............. Attribution of income...................................................... 220

52ZZZWJ.............. Income amounts from special disability trusts................ 220

Subdivision C—Assets of special disability trusts                                          220

52ZZZWK............. Attribution of assets........................................................ 220

Subdivision D—Transfers to special disability trusts                                   221

52ZZZWL............. Effect of certain transfers to special disability trusts....... 221

52ZZZWM............ The effect of exceeding the $500,000 limit..................... 222

52ZZZWN............. Transfers by the immediate family members prior to reaching pension age etc.       223

52ZZZWO............. Transfers by principal beneficiaries or partners.............. 224

52ZZZWP............. Cessation of special disability trusts............................... 225

52ZZZWQ............. Effect of this Subdivision............................................... 226

Division 12—Service pensioner and income support supplement recipient benefits       227

Subdivision A—Introduction                                                                               227

53.......................... Fringe benefits and treatment at Departmental expense for certain service pensioners             227

Subdivision B—Fringe benefits                                                                          227

53A....................... Fringe benefits................................................................ 227

53B........................ Commission must determine continued fringe benefits eligibility circumstances     228

Subdivision C—Treatment at Departmental expense                                   228

53D....................... Eligibility for treatment at Departmental expense............ 228

53E........................ Veterans to satisfy certain conditions.............................. 230

Division 12A—Payments after bereavement                                               232

Subdivision A—Bereavement period                                                                232

53H....................... Definition........................................................................ 232

Subdivision B—Death of pensioner’s partner (where partner was receiving a pension or a social security pension)                                                                                                       232

53J......................... Application..................................................................... 232

53K........................ What happens if pensioner’s reassessed rate equals or exceeds combined pensioner couple rate            232

53L........................ What happens if pensioner’s reassessed rate is less than combined pensioner couple rate       233

53M....................... Determination of amount of pension and social security pension             234

53N....................... Transfer to another pension............................................ 235

53NA.................... No liability of financial institution for certain payments to pensioner       236

Subdivision C—Death of pensioner                                                                   236

53P........................ Application..................................................................... 236

53Q....................... Payment of one instalment.............................................. 237

Subdivision D—Death of dependent child                                                        237

53R........................ Application..................................................................... 237

53S........................ When reassessed pension rate in respect of pensioner comes into effect  237

53T........................ Bereavement payment..................................................... 238

Division 13—Recipient obligations                                                                    239

54.......................... Secretary may require notification of an event or change of circumstances              239

54A....................... Secretary may require recipient to give particular information relevant to the payment of pension           241

54AA.................... Secretary may require recipient to give information, produce documents or appear before an officer      242

54B........................ Document served with a section 54 notice...................... 244

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    245

54C........................ Interpretation................................................................... 246

Division 14—Pensioners in certain institutions                                           247

55.......................... Pension may be suspended or forfeited when pensioner in gaol or in psychiatric confinement following criminal charge................................................................ 247

55A....................... Instalments may be redirected to partner or child............ 248

Division 15—Variation and termination                                                        249

56.......................... Automatic termination or rate reduction—recipient complying with section 54 notification obligations  249

56A....................... Automatic termination—recipient not complying with section 54 notification obligations       250

56B........................ Automatic rate reduction—recipient not complying with section 54 notification obligations   251

56C........................ Rate increase determination............................................. 251

56D....................... Rate reduction determination........................................... 252

56DA.................... No rate increase or reduction for small amounts............. 253

56E........................ Cancellation or suspension determination—general........ 254

56EA..................... Cancellation or suspension determination for failure to comply with section 54A notice         254

56EB..................... Cancellation or suspension for failure to take action to obtain a comparable foreign pension  255

56EC..................... Cancellation determination where pension not payable... 255

56F........................ Resumption of a payment after suspension..................... 256

56G....................... Date of effect of favourable determination...................... 256

56GA.................... Date of effect of determination under section 56C—dependent child       257

56H....................... Date of effect of adverse determination........................... 257

56J......................... Pension may be cancelled at pensioner’s request............ 260

56K........................ Pension may be suspended if instalments not drawn...... 261

56L........................ Commission may end suspension................................... 261

56M....................... Effect of cancellation or suspension................................ 261

56N....................... Changes to payments by computer................................. 262

Division 16—Review of decisions                                                                       263

57.......................... Claimants and service pensioners may seek review of certain decisions  263

57A....................... Application for review.................................................... 264

57B........................ Commission’s powers where request for review............ 264

57C........................ Date of effect of certain review decisions....................... 265

57D....................... Commission must make written record of review decision and reasons  265

57E........................ Person who requested review to be notified of decision. 266

57F........................ Powers of Commission to gather evidence..................... 266

57G....................... Withdrawal of request for review................................... 267

57H....................... Commission may reimburse certain expenses................. 268

Division 17—Administration of pension payments                                   269

Subdivision A—General administration of pension payments                   269

58.......................... Application of Subdivision............................................. 269

58A....................... Payment by instalments.................................................. 269

58C........................ Manner of payment......................................................... 272

58D....................... Agents............................................................................ 272

58E........................ Pension payday falling on public holiday etc.................. 273

58F........................ Payment into bank account etc........................................ 273

58J......................... Payments to Commissioner of Taxation or Child Support Registrar        274

Subdivision B—Payment of pension outside Australia                                275

58K........................ Age, invalidity and partner service pensions and income support supplement generally portable            275

58L........................ Payment of pension outside Australia............................. 275

58M....................... No portability if claim based on short‑term residence..... 276

58N....................... Transfer to portable pension........................................... 276

Division 18—Indexation                                                                                          278

Subdivision A—Preliminary                                                                               278

59.......................... Analysis of Division....................................................... 278

59A....................... Indexed and adjusted amounts........................................ 278

Subdivision B—CPI indexation                                                                          284

59B........................ CPI Indexation Table...................................................... 284

59C........................ Indexation of amounts.................................................... 292

59D....................... Indexation factor............................................................. 293

59E........................ Rounding off indexed amounts....................................... 293

59EAA.................. Indexation using Pensioner and Beneficiary Living Cost Index               294

59EAB.................. Living cost indexation factor........................................... 295

59EAC.................. Rounding off amounts.................................................... 296

59EA..................... Certain indexed amounts to be increased in line with increases in Male Total Average Weekly Earnings........................................................................................ 297

Subdivision C—Adjustment of other rates                                                       299

59G....................... Adjustment of single pension rate MBR amount............ 299

59GA.................... Adjustment of rent free area............................................ 299

59GB..................... Adjustment of adjusted income free area........................ 300

59H....................... Adjustment of pension “single” non‑property owner AVL 300

59J......................... Adjustment of special illness separated special resident AVL  300

59LA..................... Adjustment of ceiling rate............................................... 301

Part IIIC—Compensation recovery                                                                       303

Division 1—General                                                                                                  303

59M....................... General effect of Part...................................................... 303

59N....................... Certain lump sums to be treated as though they were received as periodic payments               304

59O....................... Effect of certain State and Territory laws........................ 305

Division 2—Enforcement of compensation rights                                     306

59P........................ Commission may require person to take action to obtain compensation   306

Division 3—Receipt of compensation                                                               308

59Q....................... Pension etc. not payable during lump sum preclusion period.. 308

59QA.................... Deemed lump sum payments arising from separate payments 311

59R........................ Person may have to repay amount where both lump sum and pension have been received      312

59S........................ Lump sum compensation not counted as ordinary income 313

59T........................ Effect of periodic compensation payments on rate of person’s compensation affected pension               313

59TA..................... Effect of periodic compensation payments on rate of partner’s compensation affected pension               314

59U....................... Claim for compensation affected pension granted to person qualified for compensation affected payment under Social Security Act......................................................... 315

59V....................... Rate reduction under both income/assets test and this Part 317

59W....................... Person may have to repay amount where both periodic compensation payments and pension have been received........................................................................... 317

59X....................... Periodic compensation payments not counted as ordinary income           319

Division 4—Compensation payers                                                                     320

59Y....................... Commission may send preliminary notice to potential compensation payer             320

59Z........................ Potential compensation payer must notify Department of liability            320

59ZA..................... Commission may send recovery notice to compensation payer                321

59ZB..................... Preliminary notice or recovery notice suspends liability to pay compensation         325

59ZC..................... Compensation payer’s payment to Commonwealth discharges liability to compensation recipient          325

59ZD..................... Offence to make compensation payment after receiving preliminary notice or recovery notice                325

Division 5—Insurers                                                                                                 327

59ZE...................... Commission may send preliminary notice to insurer...... 327

59ZF...................... Insurer must notify Department of liability..................... 327

59ZG..................... Commission may send recovery notice to insurer........... 328

59ZH..................... Preliminary notice or recovery notice to insurer suspends both insurer’s and compensation payer’s liability........................................................................................ 332

59ZI....................... Insurer’s payment to Commonwealth discharges liability 332

59ZJ...................... Offence to make compensation payment after receiving preliminary notice or recovery notice                332

Division 6—Miscellaneous                                                                                     334

59ZK..................... Commission may give recovery notice either to compensation payer or to insurer but not to both          334

59ZL...................... Commission may disregard some payments................... 334

59ZM.................... Part to bind Crown......................................................... 335

Part IIID—Quarterly pension supplement                                                         336

60.......................... When this Part applies.................................................... 336

60A....................... Quarterly pension supplement........................................ 336

60B........................ Rate of quarterly pension supplement............................. 337

60C........................ Payment of quarterly pension supplement...................... 337

Part IIIE—Clean energy payments                                                                        339

Division 1—Clean energy advances                                                                 339

Subdivision A—Eligibility for clean energy advances                                 339

61A....................... Persons receiving clean energy underlying payments..... 339

61B........................ One advance for each clean energy underlying payment. 340

Subdivision B—Amount of a clean energy advance                                     340

61C........................ Amount of a clean energy advance................................. 340

61D....................... Clean energy advance daily rate..................................... 341

61E........................ Number of advance days................................................ 344

Subdivision C—Top‑up payments of clean energy advance                       344

61F........................ Top‑up payments of clean energy advance..................... 344

Subdivision D—Payment of clean energy advance                                       346

61G....................... Payment of clean energy advance................................... 346

Subdivision E—Debts                                                                                            346

61H....................... Debts relating to clean energy advances.......................... 346

Division 2—Energy supplements                                                                        348

Subdivision A—Energy supplements for pensions under Parts II and IV 348

62A....................... Energy supplement for disability pension....................... 348

62B........................ Energy supplement for war widow/war widower pension 349

62C........................ Disregard nil rate in certain circumstances...................... 350

62D....................... Electing for quarterly payment of energy supplement for pension under Part II or IV             350

Subdivision B—Quarterly energy supplement for service pension          352

62E........................ Quarterly energy supplement for service pension........... 352

Division 3—Essential medical equipment payment                                   354

Subdivision A—Definitions                                                                                  354

63A....................... Definitions...................................................................... 354

Subdivision B—Eligibility for essential medical equipment payment     354

63B........................ Eligibility for essential medical equipment payment........ 354

63C........................ The medical needs requirement....................................... 356

63D....................... The concession card requirement.................................... 357

63E........................ The energy account requirement..................................... 358

63F........................ Availability of payments................................................. 359

63G....................... Amount of payment........................................................ 359

63H....................... Debts arising in respect of essential medical equipment payments           359

Subdivision C—Claim for essential medical equipment payment             360

63J......................... Need for a claim.............................................................. 360

63K........................ Special requirements regarding claims for essential medical equipment payment     360

63L........................ Who can claim?............................................................... 361

63M....................... Making a claim............................................................... 361

63N....................... Claimant must be an Australian resident......................... 362

63P........................ Claim may be withdrawn................................................ 362

Subdivision D—Investigation of claim                                                             363

63Q....................... Secretary to investigate claim and submit it to Commission 363

Subdivision E—Consideration and determination of claim                       363

63R........................ Duties of Commission in relation to claim...................... 363

63S........................ Entitlement determination................................................ 364

63T........................ Date of effect of determination........................................ 364

Division 4—Review of decisions                                                                         365

64A....................... Review of certain decisions............................................ 365

64B........................ Application for review.................................................... 365

64C........................ Commission’s powers where request for review............ 365

64D....................... Date of effect of certain review decisions....................... 366

64E........................ Commission must make written record of review decision and reasons  366

64F........................ Person who requested review to be notified of decision. 366

64G....................... Powers of Commission to gather evidence..................... 367

64H....................... Withdrawal of request for review................................... 368

Division 5—Multiple entitlement exclusions                                                 370

65A....................... Multiple entitlement exclusions....................................... 370

Part IV—Pensions for members of Defence Force or Peacekeeping Force and their dependants         371

Division 1—Interpretation                                                                                     371

68.......................... Interpretation................................................................... 371

69.......................... Application of Part to members of the Forces................. 376

69A....................... Application of Part to members of the Forces who render hazardous service          380

69B........................ Application of Part to persons who rendered British nuclear test defence service    380

Division 2—Eligibility for pension                                                                     383

70.......................... Eligibility for pension under this Part............................. 383

70A....................... Most defence‑caused injuries, diseases and deaths of members of the Defence Force no longer covered by this Act.................................................................................. 392

71.......................... Application of certain provisions of Part II..................... 393

72.......................... Dual entitlement to pension............................................. 395

Division 3—Rates of pension                                                                                397

73.......................... Application of Divisions 4 and 5 of Part II..................... 397

Division 4—Pension and other compensation                                              398

73A....................... This Division does not apply to certain payments........... 398

74.......................... Payments by way of compensation or damages.............. 398

75.......................... Proceedings against third party....................................... 404

76.......................... Payment of damages to Commonwealth......................... 406

77.......................... Discharge of liability of Commonwealth to pay damages 408

78.......................... Other payments of compensation.................................... 409

79.......................... Overpayments of pension............................................... 410

Part IVA—Advance payments of pension and income support supplement        412

Division 1—General                                                                                                  412

79A....................... Definition........................................................................ 412

Division 2—Eligibility for advance payment                                               413

79B........................ Eligibility for advance payment....................................... 413

Division 3—Applying for advance payment                                                 414

79C........................ Application..................................................................... 414

79D....................... Who can apply................................................................ 414

79E........................ Making an application..................................................... 414

79G....................... Applicant must be Australian resident and in Australia.. 414

79H....................... Application may be withdrawn....................................... 415

Division 4—Determination of application and payment of advance payment   416

79I......................... Commission to determine application............................. 416

79J......................... Payment of advance payment.......................................... 417

Division 5—Amount of advance payment                                                     418

79K........................ Amount of advance payment.......................................... 418

Division 6—Advance payment deductions                                                    420

79L........................ Advance payment deduction........................................... 420

79M....................... Amount of advance payment deduction—basic calculation 420

79N....................... Person may request larger advance payment deduction.. 420

79O....................... Reduction of advance payment deduction in cases of severe financial hardship       421

79P........................ The final advance payment deduction............................. 422

79Q....................... Payment rate insufficient to cover advance payment deduction                422

79R........................ Rounding of amounts..................................................... 422

79S........................ Unrepaid advance payments to deceased partner to be disregarded          423

Division 7—Review by Commission                                                                 424

79T........................ Request for review.......................................................... 424

79U....................... Commission’s powers.................................................... 424

79V....................... Commission must make written record of review decision and reasons  425

79W....................... Person who requested review to be notified of decision. 425

79X....................... Powers of Commission to gather evidence..................... 425

79Y....................... Withdrawal of request for review................................... 426

Part V—Medical and other treatment                                                                  428

80.......................... Interpretation................................................................... 428

81.......................... Application of Part V...................................................... 429

84.......................... Provision of treatment..................................................... 430

85.......................... Veterans eligible to be provided with treatment.............. 432

85A....................... Treatment under section 279 or 280 of the MRCA for aggravated injuries or diseases           437

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................................................ 438

86.......................... Dependants eligible to be provided with treatment.......... 438

88A....................... Commission may determine specified veterans and others are eligible to be provided with specified treatment........................................................................................ 441

89.......................... Treatment at hospitals and other institutions................... 442

90.......................... Guide to the provision of treatment................................. 442

90A....................... Determination etc. of Repatriation Private Patient Principles 444

90B........................ Application of Repatriation Private Patient Principles..... 445

91.......................... Pharmaceutical benefits................................................... 446

92.......................... Counselling services and psychiatric assessment............ 448

93.......................... Recovery of cost of treatment......................................... 448

93A....................... Charges payable to Commonwealth................................ 452

93B........................ False statements relating to treatment.............................. 453

93C........................ Knowingly making false statements relating to treatment 455

93D....................... Bribery etc...................................................................... 456

93E........................ Prohibited practices in relation to the rendering of pathology services     460

93F........................ Offences against 2 or more provisions........................... 462

93G....................... Statements inadmissible in evidence............................... 462

93H....................... Recovery of amounts paid because of false statements... 463

93J......................... Prosecution of offences.................................................. 465

Part VA—Extension of Repatriation Pharmaceutical Benefits Scheme  466

Division 1—Definitions                                                                                            466

93K........................ Definitions...................................................................... 466

Division 2—Pharmaceutical benefits may be obtained                           467

93L........................ Certain veterans and mariners may obtain pharmaceutical benefits          467

Division 3—Eligibility for, and entitlement to, pharmaceutical benefits card    468

Subdivision A—Eligibility                                                                                   468

93M....................... Who is eligible?.............................................................. 468

Subdivision B—Entitlement                                                                                469

93N....................... Entitlement to a pharmaceutical benefits card under this Part 469

Division 4—Claim for pharmaceutical benefits card under this Part 470

93P........................ Need for a claim.............................................................. 470

93Q....................... Who can claim?............................................................... 470

93R........................ Making a claim............................................................... 470

93T........................ Claimant must be an Australian resident and in Australia 471

93U....................... Claim may be withdrawn................................................ 471

Division 5—Investigation of claim                                                                     473

93V....................... Secretary to investigate claim and submit it to Commission 473

Division 6—Consideration and determination of claim                         474

93W....................... Duties of Commission in relation to claim...................... 474

93X....................... Entitlement determination................................................ 474

93Y....................... Date of effect of determination........................................ 474

Division 7—Review of decisions                                                                         476

93Z........................ Review of certain decisions............................................ 476

93ZA..................... Application for review.................................................... 476

93ZB..................... Commission’s powers where request for review............ 476

93ZC..................... Date of effect of certain review decisions....................... 476

93ZD..................... Commission must make written record of review decision and reasons  477

93ZE...................... Person who requested review to be notified of decision. 477

93ZF...................... Powers of Commission to gather evidence..................... 478

93ZG..................... Withdrawal of request for review................................... 479


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), Division 3 (income from financial assets (including income streams (short term) and certain income streams (long term)) and Division 4 (income from income streams not covered by Division 3).

46A  Certain amounts taken to be received over 12 months

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

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

                     (b)  is not:

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

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

                            (iii)  an exempt lump sum;

the person is, for the purposes of this Act, taken to receive one 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 3Income from financial assets (including income streams (short term) and certain income streams (long term))

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

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

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 not covered by Division 3

Subdivision BIncome streams that are not family law affected income streams

46SA  Scope of Subdivision

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

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

                     (a)  an asset‑tested income stream (long term) that is an account‑based pension within the meaning of the Superannuation Industry (Supervision) Regulations 1994; or

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

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

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

46T  Income from 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)  the income stream is an allocated pension within the meaning of the Superannuation Industry (Supervision) Regulations 1994; and

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

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

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

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

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

Annual rate based on total payments

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

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

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

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

                     (a)  an asset‑tested income stream (long term) that is an account‑based pension within the meaning of the Superannuation Industry (Supervision) Regulations 1994; or

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

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

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

46ZA  Income from 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;

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 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.

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;

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 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);

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

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

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

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

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

Definitions

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

partially 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.

NDIS amounts

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

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

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

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

Native title rights and interests

       (1DA)  In this section:

native title rights and interests means:

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

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

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

Application of proceeds of sale of principal home

          (1E)  Subsection (2) applies if:

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

                     (b)  either:

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

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

                     (c)  before the end of 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

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