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 9—New Enterprise Incentive Scheme 35
50.......................... General effect of Division................................................. 35
50A....................... Reduction in rate of payments under this Part if recipient or partner also receiving payments under NEIS.......................................................................................... 35
50B........................ Rate reduction under this Division.................................... 36
Division 11—General provisions relating to the assets test 37
Subdivision A—Value of person’s assets 37
52.......................... Certain assets to be disregarded in calculating the value of a person’s assets 37
52AA.................... Value of superannuation investments determined by Minister to be disregarded 46
52A....................... Value of asset‑tested income streams that are not defined benefit income streams 47
52B........................ Value of asset‑tested income streams that are defined benefit income streams 48
52BA..................... Value of asset‑tested FLA income streams....................... 49
52BB..................... Value of partially asset‑test exempt income streams......... 50
52BC..................... Value of superannuation reserves for superannuation funds of 4 members or less 50
52C........................ Effect of charge or encumbrance on value of assets.......... 51
52CA..................... Effect of certain liabilities on value of assets used in primary production 52
52D....................... Loans................................................................................ 53
Subdivision B—Dispositions of assets (general provisions) 53
52E........................ Disposal of assets............................................................. 53
52F........................ Amount of disposition...................................................... 54
52FAAA............... Application of asset deprivation rules to cease in respect of certain assets 55
Subdivision BA—Dispositions of assets before 1 July 2002 55
52FAA.................. Application....................................................................... 55
52FA..................... Disposal of assets in pre‑pension years—not a member of a couple 55
52G....................... Disposal of assets in pension years—not a member of a couple 56
52GA.................... Disposal of assets in pre‑pension years—members of couples 57
52H....................... Disposal of assets in pension years—members of couples 59
52J......................... Dispositions more than 5 years old to be disregarded....... 61
Subdivision BB—Dispositions of assets on or after 1 July 2002 61
52JA...................... Disposition of assets in tax year—individuals.................. 61
52JB...................... Dispositions of assets in 5 year period—individuals........ 62
52JC...................... Disposition of assets in tax year—members of couples.... 63
52JD...................... Disposition of assets in 5 year period—members of couples.. 65
52JE...................... Certain dispositions to be disregarded.............................. 66
Subdivision C—Provisions relating to special residences and special residents 67
52KA..................... Application of Subdivision to granny flat residents.......... 67
52L........................ Basis for different treatment.............................................. 67
52M....................... Entry contribution............................................................. 68
52N....................... Extra allowable amount..................................................... 70
52P........................ Renegotiation of retirement village agreement................... 72
52Q....................... Residents who are not members of a couple..................... 72
52R........................ Members of couples......................................................... 73
52S........................ Members of illness separated couple (both in special residences) 74
52T........................ Members of illness separated couple (partner not in special residence and partner property owner) 76
52U....................... Members of illness separated couple (partner not in special residence and partner not property owner) 78
52V....................... Members of ordinary couple with different principal homes (both in special residences) 79
52W....................... Members of ordinary couple with different principal homes (partner not in special residence and partner property owner)................................................................ 81
52X....................... Members of ordinary couple with different principal homes (partner not in special residence and partner not property owner)................................................................ 82
Subdivision D—Financial hardship 84
52Y....................... Access to financial hardship rules..................................... 84
52Z........................ Application of financial hardship rules............................. 85
Subdivision E—Pension loans scheme 88
52ZAAA............... Pension loans scheme definitions..................................... 88
52ZA..................... Eligibility for participation in pension loans scheme......... 90
52ZB..................... Effect of participation in pension loans scheme—pension rate 92
52ZC..................... Effect of participation in pension loans scheme—creation of debt 93
52ZCA.................. Effect of participation in pension loans scheme—maximum loan available 94
52ZD..................... Need for a request to participate........................................ 96
52ZE...................... Need for a request to later nominate or change guaranteed amount or rate of pension 97
52ZF...................... Existence of debt results in charge over real assets........... 98
52ZG..................... Debt not to be recovered until after death.......................... 99
52ZH..................... Enforcement of charge.................................................... 100
52ZJ...................... Person ceases to participate in pension loans scheme if debt exceeds maximum loan available 101
52ZK..................... Person withdraws from pension loans scheme............... 101
52ZKA.................. Repayment or recovery of debt after pension loans scheme ceases to operate because debt exceeds maximum loan available or person withdraws................................. 102
52ZL...................... Registration of charge..................................................... 103
52ZM.................... Manner of enforcement of charge................................... 103
Subdivision F—Commutation of asset‑test exempt income stream 104
52ZMA................. Debt resulting from commutation of asset‑test exempt income stream contrary to subsection 5JA(2), 5JB(2) or 5JBA(2).......................................................................... 104
Division 11A—Means test treatment of private companies and private trusts 108
Subdivision A—Introduction 108
52ZN..................... Simplified outline............................................................ 108
52ZO..................... Definitions...................................................................... 109
52ZP...................... Relatives......................................................................... 113
52ZQ..................... Associates....................................................................... 114
52ZR..................... When a company is sufficiently influenced by an entity. 115
52ZS...................... Majority voting interest in a company............................. 116
52ZT...................... Entitled to acquire........................................................... 116
52ZU..................... Transfer of property or services...................................... 116
52ZV..................... Constructive transfers of property or services to an entity 117
52ZW.................... Active involvement with a primary production enterprise 118
52ZX..................... Power to veto decisions of a trustee................................ 118
52ZY..................... Extra‑territorial operation................................................ 119
52ZZ...................... Application to things happening before commencement. 119
Subdivision B—Designated private companies 119
52ZZA................... Designated private companies......................................... 119
Subdivision C—Designated private trusts 121
52ZZB................... Designated private trusts................................................. 121
Subdivision D—Controlled private companies 122
52ZZC................... Controlled private companies.......................................... 122
52ZZD................... Direct voting interest in a company................................. 124
52ZZE................... Voting power.................................................................. 124
52ZZF................... Direct control interest in a company................................ 125
52ZZG................... Interest in a share............................................................ 126
Subdivision E—Controlled private trusts 127
52ZZH................... Controlled private trusts.................................................. 127
52ZZI.................... Interest in a trust............................................................. 131
Subdivision F—Attributable stakeholders and attribution percentages 132
52ZZJ.................... Attributable stakeholder, asset attribution percentage and income attribution percentage 132
Subdivision G—Attribution of income of controlled private companies and controlled private trusts 134
52ZZK................... Attribution of income...................................................... 134
52ZZL................... No double counting of attributed income........................ 135
52ZZM.................. Ordinary income of a company or trust.......................... 136
52ZZN................... Ordinary income from a business—treatment of trading stock 137
52ZZO................... Permissible reductions of business and investment income 137
52ZZP................... Derivation periods.......................................................... 138
52ZZQ................... Attribution periods.......................................................... 139
Subdivision H—Attribution of assets of controlled private companies and controlled private trusts 140
52ZZR................... Attribution of assets........................................................ 140
52ZZS................... When attributed asset is unrealisable............................... 141
52ZZT................... Effect of charge or encumbrance on value of assets........ 142
52ZZU................... Effect of unsecured loan on value of assets.................... 143
52ZZV................... Value of company’s or trust’s assets etc......................... 144
Subdivision I—Modification of asset deprivation rules 144
52ZZW.................. Individual disposes of asset to company or trust............ 144
52ZZX................... Disposal of asset by company or trust............................ 145
52ZZY................... Individual ceases to be an attributable stakeholder of a company or trust 148
52ZZZ................... Individual disposes of asset to company or trust before 1 January 2002—individual is attributable stakeholder........................................................................................ 149
52ZZZA................ Individual disposes of asset to company or trust before 1 January 2002—individual’s spouse is attributable stakeholder...................................................................... 150
Subdivision J—Modification of income deprivation rules 151
52ZZZB................. Individual disposes of ordinary income to company or trust 151
52ZZZC................. Disposal of income by company or trust........................ 152
52ZZZD................ Individual disposes of income to company or trust before 1 January 2002—individual is attributable stakeholder...................................................................... 155
52ZZZE................. Individual disposes of income to company or trust before 1 January 2002—individual’s spouse is attributable stakeholder...................................................................... 156
Subdivision K—Concessional primary production trusts 157
52ZZZF................. Concessional primary production trusts.......................... 157
52ZZZG................ Individual ceases to be an attributable stakeholder of a trust—receipt of remuneration or other benefits from trust during asset deprivation period............................... 161
52ZZZH................ Net value of asset............................................................ 163
52ZZZI.................. Value of entity’s assets................................................... 164
52ZZZJ.................. When asset is controlled by an individual....................... 164
52ZZZK................. Adjusted net value of asset............................................. 165
52ZZZL................. Adjusted net primary production income........................ 165
52ZZZM................ Net income of a primary production enterprise............... 166
52ZZZN................ Net income from a primary production enterprise—treatment of trading stock 167
52ZZZO................ Permissible reductions of income from carrying on a primary production enterprise 168
Subdivision L—Anti‑avoidance 169
52ZZZP................. Anti‑avoidance................................................................ 169
Subdivision M—Decision‑making principles 170
52ZZZQ................ Decision‑making principles............................................ 170
Subdivision N—Information management 171
52ZZZR................. Transitional period.......................................................... 171
52ZZZS................. Information‑gathering powers........................................ 171
52ZZZT................. Commission may obtain tax information........................ 172
52ZZZU................ Disclosure of tax information......................................... 173
52ZZZV................ Disclosure of tax file number information...................... 174
Division 11B—Private financial provision for certain people with disabilities 176
Subdivision A—Special disability trusts 176
52ZZZW................ What is a special disability trust?.................................... 176
52ZZZWA............. Beneficiary requirements................................................ 176
52ZZZWB............. Trust purpose requirements............................................ 178
52ZZZWC............. Trust deed requirements.................................................. 180
52ZZZWD............. Trustee requirements....................................................... 180
52ZZZWE............. Trust property requirements............................................ 181
52ZZZWEA.......... Trust expenditure requirements....................................... 182
52ZZZWF............. Reporting requirements................................................... 183
52ZZZWG............. Audit requirements......................................................... 183
52ZZZWH............. Waiver of contravention of this Division........................ 185
Subdivision B—Income of special disability trusts 186
52ZZZWI.............. Attribution of income...................................................... 186
52ZZZWJ.............. Income amounts from special disability trusts................ 186
Subdivision C—Assets of special disability trusts 186
52ZZZWK............. Attribution of assets........................................................ 186
Subdivision D—Transfers to special disability trusts 187
52ZZZWL............. Effect of certain transfers to special disability trusts....... 187
52ZZZWM............ The effect of exceeding the $500,000 limit..................... 188
52ZZZWN............. Transfers by the immediate family members prior to reaching pension age etc. 189
52ZZZWO............. Transfers by principal beneficiaries or partners.............. 190
52ZZZWP............. Cessation of special disability trusts............................... 191
52ZZZWQ............. Effect of this Subdivision............................................... 192
Division 12—Service pensioner and income support supplement recipient benefits 193
Subdivision A—Introduction 193
53.......................... Fringe benefits and treatment at Departmental expense for certain service pensioners 193
Subdivision B—Fringe benefits 193
53A....................... Fringe benefits................................................................ 193
53B........................ Commission must determine continued fringe benefits eligibility circumstances 194
Subdivision C—Treatment at Departmental expense 194
53D....................... Eligibility for treatment at Departmental expense............ 194
53E........................ Veterans to satisfy certain conditions.............................. 196
Division 12A—Payments after bereavement 198
Subdivision A—Bereavement period 198
53H....................... Definition........................................................................ 198
Subdivision B—Death of pensioner’s partner (where partner was receiving a pension or a social security pension) 198
53J......................... Application..................................................................... 198
53K........................ What happens if pensioner’s reassessed rate equals or exceeds combined pensioner couple rate 198
53L........................ What happens if pensioner’s reassessed rate is less than combined pensioner couple rate 199
53M....................... Determination of amount of pension and social security pension 200
53N....................... Transfer to another pension............................................ 201
53NA.................... No liability of financial institution for certain payments to pensioner 202
Subdivision C—Death of pensioner 202
53P........................ Application..................................................................... 202
53Q....................... Payment of one instalment.............................................. 203
Subdivision D—Death of dependent child 203
53R........................ Application..................................................................... 203
53S........................ When reassessed pension rate in respect of pensioner comes into effect 203
53T........................ Bereavement payment..................................................... 204
Division 13—Recipient obligations 205
54.......................... Secretary may require notification of an event or change of circumstances 205
54A....................... Secretary may require recipient to give particular information relevant to the payment of pension 207
54AA.................... Secretary may require recipient to give information, produce documents or appear before an officer 208
54B........................ Document served with a section 54 notice...................... 210
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 211
54C........................ Interpretation................................................................... 212
Division 14—Pensioners in certain institutions 213
55.......................... Pension may be suspended or forfeited when pensioner in gaol or in psychiatric confinement following criminal charge................................................................ 213
55A....................... Instalments may be redirected to partner or child............ 214
Division 15—Variation and termination 215
56.......................... Automatic termination or rate reduction—recipient complying with section 54 notification obligations 215
56A....................... Automatic termination—recipient not complying with section 54 notification obligations 216
56B........................ Automatic rate reduction—recipient not complying with section 54 notification obligations 217
56C........................ Rate increase determination............................................. 217
56D....................... Rate reduction determination........................................... 218
56DA.................... No rate increase or reduction for small amounts............. 219
56E........................ Cancellation or suspension determination—general........ 220
56EA..................... Cancellation or suspension determination for failure to comply with section 54A notice 220
56EB..................... Cancellation or suspension for failure to take action to obtain a comparable foreign pension 221
56EC..................... Cancellation determination where pension not payable... 221
56F........................ Resumption of a payment after suspension..................... 222
56G....................... Date of effect of favourable determination...................... 222
56GA.................... Date of effect of determination under section 56C—dependent child 223
56H....................... Date of effect of adverse determination........................... 223
56J......................... Pension may be cancelled at pensioner’s request............ 226
56K........................ Pension may be suspended if instalments not drawn...... 227
56L........................ Commission may end suspension................................... 227
56M....................... Effect of cancellation or suspension................................ 227
56N....................... Changes to payments by computer................................. 228
Division 16—Review of decisions 229
57.......................... Claimants and service pensioners may seek review of certain decisions 229
57A....................... Application for review.................................................... 230
57B........................ Commission’s powers where request for review............ 230
57C........................ Date of effect of certain review decisions....................... 231
57D....................... Commission must make written record of review decision and reasons 231
57E........................ Person who requested review to be notified of decision. 232
57F........................ Powers of Commission to gather evidence..................... 232
57G....................... Withdrawal of request for review................................... 233
57H....................... Commission may reimburse certain expenses................. 234
Division 17—Administration of pension payments 235
Subdivision A—General administration of pension payments 235
58.......................... Application of Subdivision............................................. 235
58A....................... Payment by instalments.................................................. 235
58C........................ Manner of payment......................................................... 238
58D....................... Agents............................................................................ 238
58E........................ Pension payday falling on public holiday etc.................. 239
58F........................ Payment into bank account etc........................................ 239
58J......................... Payments to Commissioner of Taxation or Child Support Registrar 240
Subdivision B—Payment of pension outside Australia 241
58K........................ Age, invalidity and partner service pensions and income support supplement generally portable 241
58L........................ Payment of pension outside Australia............................. 241
58M....................... No portability if claim based on short‑term residence..... 242
58N....................... Transfer to portable pension........................................... 242
Division 18—Indexation 244
Subdivision A—Preliminary 244
59.......................... Analysis of Division....................................................... 244
59A....................... Indexed and adjusted amounts........................................ 244
Subdivision B—CPI indexation 250
59B........................ CPI Indexation Table...................................................... 250
59C........................ Indexation of amounts.................................................... 258
59D....................... Indexation factor............................................................. 259
59E........................ Rounding off indexed amounts....................................... 260
59EAA.................. Indexation using Pensioner and Beneficiary Living Cost Index 260
59EAB.................. Living cost indexation factor........................................... 261
59EAC.................. Rounding off amounts.................................................... 263
59EA..................... Certain indexed amounts to be increased in line with increases in Male Total Average Weekly Earnings........................................................................................ 263
Subdivision C—Adjustment of other rates 265
59G....................... Adjustment of single pension rate MBR amount............ 265
59GA.................... Adjustment of rent free area............................................ 265
59GB..................... Adjustment of adjusted income free area........................ 266
59H....................... Adjustment of pension single non‑property owner AVL 266
59J......................... Adjustment of special illness separated special resident AVL 266
59LA..................... Adjustment of ceiling rate............................................... 267
Part IIIC—Compensation recovery 269
Division 1—General 269
59M....................... General effect of Part...................................................... 269
59N....................... Certain lump sums to be treated as though they were received as periodic payments 270
59O....................... Effect of certain State and Territory laws........................ 271
Division 2—Enforcement of compensation rights 272
59P........................ Commission may require person to take action to obtain compensation 272
Division 3—Receipt of compensation 274
59Q....................... Pension etc. not payable during lump sum preclusion period.. 274
59QA.................... Deemed lump sum payments arising from separate payments 277
59R........................ Person may have to repay amount where both lump sum and pension have been received 278
59S........................ Lump sum compensation not counted as ordinary income 279
59T........................ Effect of periodic compensation payments on rate of person’s compensation affected pension 279
59TA..................... Effect of periodic compensation payments on rate of partner’s compensation affected pension 280
59U....................... Claim for compensation affected pension granted to person qualified for compensation affected payment under Social Security Act......................................................... 281
59V....................... Rate reduction under both income/assets test and this Part 283
59W....................... Person may have to repay amount where both periodic compensation payments and pension have been received........................................................................... 283
59X....................... Periodic compensation payments not counted as ordinary income 285
Division 4—Compensation payers 286
59Y....................... Commission may send preliminary notice to potential compensation payer 286
59Z........................ Potential compensation payer must notify Department of liability 286
59ZA..................... Commission may send recovery notice to compensation payer 287
59ZB..................... Preliminary notice or recovery notice suspends liability to pay compensation 291
59ZC..................... Compensation payer’s payment to Commonwealth discharges liability to compensation recipient 291
59ZD..................... Offence to make compensation payment after receiving preliminary notice or recovery notice 291
Division 5—Insurers 293
59ZE...................... Commission may send preliminary notice to insurer...... 293
59ZF...................... Insurer must notify Department of liability..................... 293
59ZG..................... Commission may send recovery notice to insurer........... 294
59ZH..................... Preliminary notice or recovery notice to insurer suspends both insurer’s and compensation payer’s liability........................................................................................ 298
59ZI....................... Insurer’s payment to Commonwealth discharges liability 298
59ZJ...................... Offence to make compensation payment after receiving preliminary notice or recovery notice 298
Division 6—Miscellaneous 300
59ZK..................... Commission may give recovery notice either to compensation payer or to insurer but not to both 300
59ZL...................... Commission may disregard some payments................... 300
59ZM.................... Part to bind Crown......................................................... 301
Part IIID—Quarterly pension supplement 302
60.......................... When this Part applies.................................................... 302
60A....................... Quarterly pension supplement........................................ 302
60B........................ Rate of quarterly pension supplement............................. 303
60C........................ Payment of quarterly pension supplement...................... 303
Part IIIE—Clean energy payments 305
Division 1—Clean energy advances 305
Subdivision A—Eligibility for clean energy advances 305
61A....................... Persons receiving clean energy underlying payments..... 305
61B........................ One advance for each clean energy underlying payment. 306
Subdivision B—Amount of a clean energy advance 306
61C........................ Amount of a clean energy advance................................. 306
61D....................... Clean energy advance daily rate..................................... 307
61E........................ Number of advance days................................................ 310
Subdivision C—Top‑up payments of clean energy advance 310
61F........................ Top‑up payments of clean energy advance..................... 310
Subdivision D—Payment of clean energy advance 312
61G....................... Payment of clean energy advance................................... 312
Subdivision E—Debts 312
61H....................... Debts relating to clean energy advances.......................... 312
Division 2—Energy supplements 314
Subdivision A—Energy supplements for pensions under Parts II and IV 314
62A....................... Energy supplement for disability pension....................... 314
62B........................ Energy supplement for war widow/war widower pension 315
62C........................ Disregard nil rate in certain circumstances...................... 316
62D....................... Electing for quarterly payment of energy supplement for pension under Part II or IV 316
Subdivision B—Quarterly energy supplement for service pension 318
62E........................ Quarterly energy supplement for service pension........... 318
Division 3—Essential medical equipment payment 320
Subdivision A—Definitions 320
63A....................... Definitions...................................................................... 320
Subdivision B—Eligibility for essential medical equipment payment 320
63B........................ Eligibility for essential medical equipment payment........ 320
63C........................ The medical needs requirement....................................... 322
63D....................... The concession card requirement.................................... 323
63E........................ The energy account requirement..................................... 324
63F........................ Availability of payments................................................. 325
63G....................... Amount of payment........................................................ 325
63H....................... Debts arising in respect of essential medical equipment payments 326
Subdivision C—Claim for essential medical equipment payment 326
63J......................... Need for a claim.............................................................. 326
63K........................ Special requirements regarding claims for essential medical equipment payment 327
63L........................ Who can claim?............................................................... 327
63M....................... Making a claim............................................................... 327
63N....................... Claimant must be an Australian resident......................... 328
63P........................ Claim may be withdrawn................................................ 328
Subdivision D—Investigation of claim 329
63Q....................... Secretary to investigate claim and submit it to Commission 329
Subdivision E—Consideration and determination of claim 329
63R........................ Duties of Commission in relation to claim...................... 329
63S........................ Entitlement determination................................................ 330
63T........................ Date of effect of determination........................................ 330
Division 4—Review of decisions 331
64A....................... Review of certain decisions............................................ 331
64B........................ Application for review.................................................... 331
64C........................ Commission’s powers where request for review............ 331
64D....................... Date of effect of certain review decisions....................... 332
64E........................ Commission must make written record of review decision and reasons 332
64F........................ Person who requested review to be notified of decision. 332
64G....................... Powers of Commission to gather evidence..................... 333
64H....................... Withdrawal of request for review................................... 334
Division 5—Multiple entitlement exclusions 336
65A....................... Multiple entitlement exclusions....................................... 336
Part IIIF—One‑off energy assistance payment 337
66.......................... One‑off energy assistance payment—this Act................ 337
67.......................... One‑off energy assistance payment—MRCA................ 338
67A....................... One‑off energy assistance payment—Safety, Rehabilitation and Compensation Act 1988 340
67B........................ More than one entitlement............................................... 340
67C........................ Claim not required for one‑off energy assistance payment 340
67D....................... Payment of one‑off energy assistance payment.............. 341
Part IV—Pensions for members of Defence Force or Peacekeeping Force and their dependants 342
Division 1—Interpretation 342
68.......................... Interpretation................................................................... 342
69.......................... Application of Part to members of the Forces................. 347
69A....................... Application of Part to members of the Forces who render hazardous service 351
69B........................ Application of Part to persons who rendered British nuclear test defence service 351
Division 2—Eligibility for pension 354
70.......................... Eligibility for pension under this Part............................. 354
70A....................... Most defence‑caused injuries, diseases and deaths of members of the Defence Force no longer covered by this Act.................................................................................. 363
71.......................... Application of certain provisions of Part II..................... 364
72.......................... Dual entitlement to pension............................................. 366
Division 3—Rates of pension 368
73.......................... Application of Divisions 4 and 5 of Part II..................... 368
Division 4—Pension and other compensation 369
73A....................... This Division does not apply to certain payments........... 369
74.......................... Payments by way of compensation or damages.............. 369
75.......................... Proceedings against third party....................................... 375
76.......................... Payment of damages to Commonwealth......................... 377
77.......................... Discharge of liability of Commonwealth to pay damages 379
78.......................... Other payments of compensation.................................... 380
79.......................... Overpayments of pension............................................... 381
Part IVA—Advance payments of pension and income support supplement 383
Division 1—General 383
79A....................... Definition........................................................................ 383
Division 2—Eligibility for advance payment 384
79B........................ Eligibility for advance payment....................................... 384
Division 3—Applying for advance payment 385
79C........................ Application..................................................................... 385
79D....................... Who can apply................................................................ 385
79E........................ Making an application..................................................... 385
79G....................... Applicant must be Australian resident and in Australia.. 385
79H....................... Application may be withdrawn....................................... 386
Division 4—Determination of application and payment of advance payment 387
79I......................... Commission to determine application............................. 387
79J......................... Payment of advance payment.......................................... 388
Division 5—Amount of advance payment 389
79K........................ Amount of advance payment.......................................... 389
Division 6—Advance payment deductions 391
79L........................ Advance payment deduction........................................... 391
79M....................... Amount of advance payment deduction—basic calculation 391
79N....................... Person may request larger advance payment deduction.. 391
79O....................... Reduction of advance payment deduction in cases of severe financial hardship 392
79P........................ The final advance payment deduction............................. 393
79Q....................... Payment rate insufficient to cover advance payment deduction 393
79R........................ Rounding of amounts..................................................... 393
79S........................ Unrepaid advance payments to deceased partner to be disregarded 394
Division 7—Review by Commission 395
79T........................ Request for review.......................................................... 395
79U....................... Commission’s powers.................................................... 395
79V....................... Commission must make written record of review decision and reasons 396
79W....................... Person who requested review to be notified of decision. 396
79X....................... Powers of Commission to gather evidence..................... 396
79Y....................... Withdrawal of request for review................................... 397
Part V—Medical and other treatment 399
80.......................... Interpretation................................................................... 399
81.......................... Application of Part V...................................................... 400
84.......................... Provision of treatment..................................................... 401
85.......................... Veterans eligible to be provided with treatment.............. 403
85A....................... Treatment under section 279 or 280 of the MRCA for aggravated injuries or diseases 409
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................................................ 409
86.......................... Dependants eligible to be provided with treatment.......... 410
88A....................... Commission may determine specified veterans and others are eligible to be provided with specified treatment........................................................................................ 413
89.......................... Treatment at hospitals and other institutions................... 413
90.......................... Guide to the provision of treatment................................. 414
90A....................... Determination etc. of Repatriation Private Patient Principles 416
90B........................ Application of Repatriation Private Patient Principles..... 417
91.......................... Pharmaceutical benefits................................................... 417
92.......................... Counselling services and psychiatric assessment............ 419
93.......................... Recovery of cost of treatment......................................... 420
93A....................... Charges payable to Commonwealth................................ 423
93B........................ False statements relating to treatment.............................. 425
93C........................ Knowingly making false statements relating to treatment 426
93D....................... Bribery etc...................................................................... 428
93E........................ Prohibited practices in relation to the rendering of pathology services 432
93F........................ Offences against 2 or more provisions........................... 434
93G....................... Statements inadmissible in evidence............................... 434
93H....................... Recovery of amounts paid because of false statements... 435
93J......................... Prosecution of offences.................................................. 436
Part VA—Extension of Repatriation Pharmaceutical Benefits Scheme 438
Division 1—Definitions 438
93K........................ Definitions...................................................................... 438
Division 2—Pharmaceutical benefits may be obtained 439
93L........................ Certain veterans and mariners may obtain pharmaceutical benefits 439
Division 3—Eligibility for, and entitlement to, pharmaceutical benefits card 440
Subdivision A—Eligibility 440
93M....................... Who is eligible?.............................................................. 440
Subdivision B—Entitlement 441
93N....................... Entitlement to a pharmaceutical benefits card under this Part 441
Division 4—Claim for pharmaceutical benefits card under this Part 442
93P........................ Need for a claim.............................................................. 442
93Q....................... Who can claim?............................................................... 442
93R........................ Making a claim............................................................... 442
93T........................ Claimant must be an Australian resident and in Australia 443
93U....................... Claim may be withdrawn................................................ 443
Division 5—Investigation of claim 445
93V....................... Secretary to investigate claim and submit it to Commission 445
Division 6—Consideration and determination of claim 446
93W....................... Duties of Commission in relation to claim...................... 446
93X....................... Entitlement determination................................................ 446
93Y....................... Date of effect of determination........................................ 446
Division 7—Review of decisions 448
93Z........................ Review of certain decisions............................................ 448
93ZA..................... Application for review.................................................... 448
93ZB..................... Commission’s powers where request for review............ 448
93ZC..................... Date of effect of certain review decisions....................... 448
93ZD..................... Commission must make written record of review decision and reasons 449
93ZE...................... Person who requested review to be notified of decision. 449
93ZF...................... Powers of Commission to gather evidence..................... 450
93ZG..................... Withdrawal of request for review................................... 451
Part IIIB—Provisions applicable to service pensions and income support supplement
Division 1—Ordinary 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 1A—Work 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 2—Business income
46B Ordinary income from a business—treatment of trading stock
(1) If:
(a) a person carries on a business; and
(b) the value of all the trading stock on hand at the end of a tax year is greater than the value of all the trading stock on hand at the beginning of that tax year;
the person’s ordinary income for that tax year in the form of profits from the business is to include the amount of the difference in values.
(2) If:
(a) a person carries on a business; and
(b) the value of all the trading stock on hand at the end of a tax year is less than the value of all the trading stock on hand at the beginning of that tax year;
the person’s ordinary income for that tax year in the form of profits from the business is to be reduced by the amount of the difference in values.
46C Permissible reductions of business income
(1) Subject to subsection (2), if a person carries on a business, the person’s ordinary income from the business is to be reduced by:
(a) losses and outgoings that relate to the business and are allowable deductions for the purposes of section 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.
(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 3—Income from financial assets (including income streams (short term) and certain income streams (long term))
46D Deemed income from financial assets—persons other than members of couples
(1) This section applies to a person who is not a member of a couple.
(2) A person who has financial assets is taken, for the purposes of this Act, to receive ordinary income on those assets in accordance with this section.
(3) This is how to work out the ordinary income that the person is taken to receive:
Method statement
Step 1. Calculate the total value of the person’s financial assets and compare it with the person’s deeming threshold.
Note 1: For financial assets see subsection 5J(1).
Note 2: For deeming threshold see subsection 46H(1).
Step 2. This step applies only if the total value of the person’s financial assets is equal to or less than the person’s deeming threshold. Multiply the total value of the financial assets by the below threshold rate. The result represents the ordinary income that the person is taken to receive per year on his or her financial assets.
Note: For below threshold rate see subsection 46J(1).
Step 3. This step applies only if the total value of the person’s financial assets is higher than the person’s deeming threshold. Work out the person’s deemed income as follows:
(a) multiply the deeming threshold by the below threshold rate;
(b) subtract the deeming threshold from the total value of the person’s financial assets;
(c) multiply the remainder by the above threshold rate;
Note: For above threshold rate see subsection 46J(2).
(d) add up the amounts worked out at paragraph (a) and (c): the result represents the ordinary income that the person is taken to receive per year on his or her financial assets.
Example: How deemed income of a person who is not a member of a couple is worked out
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.
(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.
(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 4—Income from income streams not covered by Division 3
Subdivision B—Income streams that are not family law affected income streams
46SA Scope of Subdivision
(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 C—Family 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 6—Income 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 than 4, the rate worked out is to be taken to be the rate calculated to 4 decimal places and increased by 0.0001.
Division 7—Income 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 9—New 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 11—General provisions relating to the assets test
Subdivision A—Value of person’s assets
52 Certain assets to be disregarded in calculating the value of a person’s assets
(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.
(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 B—Dispositions 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: 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 BA—Dispositions of assets before 1 July 2002
52FAA Application
This Subdivision applies only to dispositions of assets that took place before 1 July 2002.
52FA Disposal of assets in pre‑pension years—not a member of a couple
(1) If:
(a) a person is not a member of a couple when the person claims a service pension, an income support supplement or a social security pension; and
(b) the person disposes of an asset of the person during a pre‑pension year of the person; and
(c) the amount of that disposition, or the sum of that amount and of the amounts (if any) of other dispositions of assets previously made by the person during that pre‑pension year, exceeds $10,000;
then, for the purposes of determining whether the pension is payable to the person, there is to be included in the value of the person’s assets for the period of 5 years that starts on the day on which the disposition took place:
(d) the amount by which the sum of the amount of the first‑mentioned disposition of assets and of the amounts (if any) of other dispositions of assets previously made by the person during that pre‑pension year exceeds $10,000; or
(e) the amount of the first‑mentioned disposition;
whichever is the lesser amount.
Note 1: For disposes of assets see section 52E.
Note 2: For amount of disposition see section 52F.
Note 3: If a pension is payable to the person, section 52G operates to determine the rate of payment and section 52FA ceases to apply to the person.
52G Disposal of assets in pension years—not a member of a couple
(1) If, on or after 1 March 1986 and before 1 July 2002:
(a) a person who is not a member of a couple has, during a pension year of the person, disposed of assets of the person; and
(b) the amount of that disposition of assets, or the sum of that amount and of the amounts (if any) of other dispositions of assets previously made by the person during that pension year, exceeds $10,000;
then, for the purposes of this Act, there is to be included in the value of the person’s assets for the period of 5 years that starts on the day on which the disposition takes place:
(c) the amount by which the sum of the amount of the first‑mentioned disposition of assets, and of the amounts (if any) of other dispositions of assets previously made by the person during that pension year, exceeds $10,000; or
(d) the amount of the first‑mentioned disposition of assets;
whichever is the lesser amount.
52GA Disposal of assets in pre‑pension years—members of couples
(1) Subject to subsections (3), (4) and (5), if:
(a) a person disposes of an asset; and
(b) the person is a member of a couple when the person or the person’s partner claims a service pension, an income support supplement or a social security pension; and
(c) the person disposes of the asset:
(i) during a pre‑pension year of the person; or
(ii) if the person does not claim a service pension, an income support supplement or a social security pension but the person’s partner claims such a pension—during a pre‑pension year of the person’s partner; and
(d) the amount of that disposition, or the sum of that amount and the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during that pre‑pension year, exceeds $10,000;
then, for the purposes of determining whether the pension is payable to the person:
(e) there is to be included in the value of the person’s assets for the period of 5 years that starts on the day on which the disposition took place:
(i) 50% of the amount by which the sum of the amount of the first‑mentioned disposition and of the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during that pre‑pension year exceeds $10,000; or
(ii) 50% of the amount of the first‑mentioned disposition;
whichever is the lesser amount; and
(f) there is to be included in the value of the assets of the person’s partner for the period of 5 years that starts on the day on which the disposition took place:
(i) 50% of the amount by which the sum of the amount of the first‑mentioned disposition and of the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during that pre‑pension year exceeds $10,000; or
(ii) 50% of the amount of the first‑mentioned disposition;
whichever is the lesser amount.
Note 1: For disposes of assets see section 52E.
Note 2: For amount of disposition see section 52F.
Note 3: If a pension is payable to the person, section 52H operates to determine the rate of payment and section 52GA ceases to apply to the person.
(3) If:
(a) amounts are included under subsection (1) in the value of the assets of a person who is a member of a couple and in the value of the assets of the person’s partner because of a disposition of an asset by the person; and
(b) the person and the person’s partner cease to be members of the same couple;
any amount that was included in the value of the person’s former partner’s assets because of that disposition is to be included in the value of the person’s assets.
(4) If:
(a) an amount is included under subsection (1) in the value of the assets of a person who is a member of a couple and in the value of the assets of the person’s partner because of a disposition of an asset by the person; and
(b) the person dies;
an amount is not to be included in the value of the assets of the person’s partner because of that disposition.
(5) If:
(a) an amount is included under subsection (1) in the value of the assets of a person who is a member of a couple and in the value of the assets of the person’s partner because of a disposition of an asset by the person; and
(b) the partner dies;
any amount that would, if the partner had not died, be included in the value of the partner’s assets because of the disposition is to be included in the value of the person’s assets.
52H Disposal of assets in pension years—members of couples
(1) Subject to subsections (3) and (4), where, on or after 1 March 1986 and before 1 July 2002:
(a) a person who is a member of a couple has disposed of assets of the person:
(i) during a pension year of the person; or
(ii) if the person is not receiving a service pension, income support supplement or a social security pension but the person’s partner is receiving such a pension—during a pension year of the person’s partner; and
(b) the amount of that disposition of assets, or the sum of that amount and the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during that pension year, exceeds $10,000;
then, for the purposes of this Act:
(c) there is to be included in the value of the person’s assets for the period of 5 years that starts on the day on which the disposition takes effect:
(i) 50% of the amount by which the sum of the amount of the first‑mentioned disposition of the assets and of the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during the pension year exceeds $10,000; or
(ii) 50% of the amount of the first‑mentioned disposition of assets;
whichever is the lesser amount; and
(d) there is to be included in the value of the assets of the person’s partner for the period of 5 years that starts on the day on which the disposition takes place:
(i) 50% of the amount by which the sum of the amount of the first‑mentioned disposition of the assets and of the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during the pension year exceeds $10,000; or
(ii) 50% of the amount of the first‑mentioned disposition of assets;
whichever is the lesser amount.
(3) Where:
(a) amounts are included under subsection (1) in the value of a person’s assets who is a member of a couple and in the assets of the person’s partner because of a disposition of assets by the person; and
(b) the person and the person’s partner cease to be members of the same couple;
any amount that was included in the value of the person’s former partner’s assets because of that disposition is to be included in the value of the person’s assets.
(4) Where:
(a) an amount is included under subsection (1) in the value of the assets of a person who is a member of a couple and the value of the assets of the person’s partner because the person has disposed of an asset; and
(b) the person dies;
no amount is to be included in the value of the assets of the person’s partner because of that disposition.
(5) Where:
(a) an amount is included under subsection (1) in the value of the assets of a person who is a member of a couple and in the value of the assets of the person’s partner because the person has disposed of an asset; and
(b) the person’s partner dies;
any amount that would, if the person’s partner had not died, be included in the value of the assets of the person’s partner because of the disposition is to be included in the value of the person’s assets.
52J Dispositions more than 5 years old to be disregarded
This Subdivision does not apply to a disposition of assets that took place:
(a) more than 5 years before the time when:
(i) the person who disposed of those assets; or
(ii) if that person was, at the time when that disposition took place, a member of a couple—that person’s partner;
became eligible to receive a service pension or income support supplement; or
(b) less than 5 years before the time referred to in paragraph (a) and before the time when the Commission is satisfied that the person who disposed of those assets could reasonably have expected that the person or the person’s partner would become eligible to receive a service pension or income support supplement.
Subdivision BB—Dispositions of assets on or after 1 July 2002
52JA Disposition of assets in tax year—individuals
Dispositions to which section applies
(1) This section applies to a disposition (the relevant disposition) on or after 1 July 2002 of an asset by a person who is not a member of a couple at the time of the relevant disposition.
Increase in value of assets
(2) If the amount of the relevant disposition, or the sum of that amount and the amounts (if any) of other dispositions of assets previously made by the person during the tax year in which the relevant disposition took place, exceeds $10,000, then, for the purposes of this Act, the lesser of the following amounts is to be included in the value of the person’s assets for the period of 5 years starting on the day on which the relevant disposition took place:
(a) the amount of the relevant disposition;
(b) the amount by which the sum of the amount of the relevant disposition and the amounts (if any) of other dispositions of assets previously made by the person during the tax year in which the relevant disposition took place, exceeds $10,000.
Previous joint dispositions
(3) If, during the tax year in which the relevant disposition took place but before the time of the relevant disposition, the person was a member of a couple who jointly disposed of an asset, a reference in subsection (2) to the amounts (if any) of other dispositions of assets previously made by the person during that tax year includes a reference to one‑half of the amount of the joint disposition.
52JB Dispositions of assets in 5 year period—individuals
Disposition to which section applies
(1) This section also applies to a disposition (the relevant disposition) on or after 1 July 2002 of an asset by a person who is not a member of a couple at the time of the relevant disposition.
Increase in value of assets
(2) If:
(a) the sum of the amount of the relevant disposition and the amounts of any previous dispositions of assets made during the rolling period by the person;
less
(b) the sum of any amounts included in the value of the person’s assets during the rolling period under section 52JA, 52JC or 52JD or any previous application or applications of this section;
exceeds $30,000, then, for the purposes of this Act, the lesser of the following amounts is to be included in the value of the person’s assets for the period of 5 years starting on the day on which the relevant disposition took place:
(c) an amount equal to the excess;
(d) the amount of the relevant disposition.
Previous joint dispositions
(3) If, during the rolling period but before the time of the relevant disposition, the person was a member of a couple who jointly disposed of an asset, the reference in paragraph (2)(a) to the amounts of any previous dispositions during the rolling period of assets by the person includes a reference to one‑half of the amount of the joint disposition.
Rolling period
(4) For the purposes of this section, the rolling period is the period comprising the tax year in which the relevant disposition took place and such (if any) of the 4 previous tax years as occurred after 30 June 2002.
52JC Disposition of assets in tax year—members of couples
Dispositions to which section applies
(1) If there is a disposition (the relevant disposition) on or after 1 July 2002 of an asset by:
(a) a person who, at the time of the relevant disposition, is a member of a couple; or
(b) the person referred to in paragraph (a) and the person who is, at that time, the partner of the person referred to in that paragraph;
subsection (2) has effect.
Increase in value of assets
(2) Subject to this section, if the amount of the relevant disposition, or the sum of that amount and the amounts (if any) of other dispositions of assets previously made by the person, the person’s partner, or the person and the person’s partner, during the tax year in which the relevant disposition took place (whether before or after they became members of the couple), exceeds $10,000, then, for the purposes of this Act, the lesser of the following amounts is to be included in the value of the assets of the person and in the value of the assets of the partner for the period of 5 years starting on the day on which the relevant disposition took place:
(a) one‑half of the amount of the relevant disposition;
(b) one‑half of the amount by which the sum of the amount of the relevant disposition, and the amounts (if any) of other dispositions of assets previously made by the person, the partner, or the person and the partner, during the tax year in which the relevant disposition took place, exceeds $10,000.
Effect of ceasing to be member of couple
(3) If, after the disposition referred to in paragraph (1)(a), the person and the person’s partner cease to be members of the same couple:
(a) no amount is to be included after the cessation in the value of the assets of the former partner because of that disposition; and
(b) any amount that would, apart from this subsection, have been so included is to be included in the value of the assets of the person.
Effect of death of person
(4) If, after the disposition referred to in paragraph (1)(a), the person dies, no amount is to be included in the value of the assets of the person’s partner because of that disposition.
Effect of death of partner
(5) If, after the disposition referred to in paragraph (1)(a), the person’s partner dies, any amount that, if the partner had not died, would have been included in the value of the assets of the partner because of that disposition is to be included in the value of the assets of the person.
52JD Disposition of assets in 5 year period—members of couples
Dispositions to which section applies
(1) If there is a disposition (the relevant disposition) on or after 1 July 2002 of an asset by:
(a) a person who, at the time of the relevant disposition, is a member of a couple; or
(b) the person referred to in paragraph (a) and the person who is, at that time, the partner of the person referred to in that paragraph;
subsection (2) has effect.
Increase in value of assets
(2) Subject to this section, if:
(a) the sum of the amount of the relevant disposition and the amounts of any previous dispositions of assets made during the rolling period by the person, the person’s partner or the person and the person’s partner;
less
(b) the sum of any amounts included in the value of the assets of the person or of the partner during the rolling period under section 52JA, 52JB or 52JC or any previous application or applications of this section;
exceeds $30,000, then, for the purposes of this Act, the lesser of the following amounts is to be included in the value of the assets of the person and in the value of the assets of the partner for the period of 5 years starting on the day on which the relevant disposition took place:
(c) an amount equal to one‑half of the excess;
(d) one‑half of the amount of the relevant disposition.
Effect of ceasing to be member of couple
(3) If, after the disposition referred to in paragraph (1)(a), the person and the person’s partner cease to be members of the same couple:
(a) no amount is to be included after the cessation in the value of the assets of the former partner because of that disposition; and
(b) any amount that would, apart from this subsection, have been so included is to be included in the value of the assets of the person.
Effect of death of person
(4) If, after the disposition referred to in paragraph (1)(a), the person dies, no amount is to be included in the value of the assets of the person’s partner because of that disposition.
Effect of death of partner
(5) If, after the disposition referred to in paragraph (1)(a), the person’s partner dies, any amount that, if the partner had not died, would have been included in the value of the assets of the partner because of that disposition is to be included in the value of the assets of the person.
Rolling period
(6) For the purposes of this section, the rolling period is the period comprising the tax year in which the relevant disposition took place and such (if any) of the 4 previous tax years as occurred after 30 June 2002.
52JE Certain dispositions to be disregarded
This Subdivision does not apply to a disposition of assets that took place:
(a) more than 5 years before the time when:
(i) the person who disposed of those assets; or
(ii) if that person was, at the time when that disposition took place, a member of a couple—that person’s partner;
became eligible to receive a service pension or income support supplement; or
(b) less than 5 years before the time referred to in paragraph (a) and before the time when the Commission is satisfied that the person who disposed of those assets could reasonably have expected that the person or the person’s partner would become eligible to receive a service pension or income support supplement.
Subdivision C—Provisions relating to special residences and special residents
52KA Application of Subdivision to granny flat residents
This Subdivision applies to a granny flat resident only if the resident acquired or retained the person’s granny flat interest in the person’s principal home on or after 22 August 1990.
52L Basis for different treatment
This Subdivision’s operation on a special resident depends on:
(a) whether the resident is:
(i) not a member of a couple; or
(ii) a member of an ordinary couple; or
(iii) a member of an illness separated couple; or
(iv) a member of an ordinary couple with different principal homes; and
(b) the resident’s entry contribution; and
(c) the resident’s extra allowable amount.
52M Entry contribution
(1) A special resident’s entry contribution is:
(a) if the resident is not a member of a couple—the resident’s individual residence contribution; or
(b) if the resident is a member of a couple, shares the resident’s principal home with the resident’s partner and is not a member of an illness separated couple—an amount equal to 50% of the resident’s individual residence contribution and of the partner’s individual residence contribution; or
(c) if the resident is a member of an illness separated couple—the resident’s individual residence contribution; or
(d) if:
(i) the resident is a member of an ordinary couple with different principal homes; and
(ii) the principal home of the resident’s partner is not a special residence;
the resident’s individual residence contribution; or
(e) if:
(i) the resident is a member of an ordinary couple with different principal homes; and
(ii) the principal home of the resident’s partner is also a special residence;
an amount equal to 50% of the resident’s individual residence contribution and of the partner’s individual residence contribution.
(1A) A special resident’s entry contribution is the resident’s individual residence contribution plus the amount paid, or agreed to be paid, for the resident’s current right (if any) to share the resident’s principal home with a partner if:
(a) the resident was a member of a couple at the time when the resident took up residence in the retirement village or granny flat; and
(b) the resident has ceased to be a member of a couple.
(1B) A special resident’s entry contribution is the resident’s individual residence contribution if:
(a) the resident was a member of a couple at the time when the sale leaseback agreement was entered into; and
(b) the resident has ceased to be a member of a couple.
(1C) For the purposes of this Division, the individual residence contribution is:
(a) for a retirement village resident—the total amount paid, or agreed to be paid, for the resident’s current right to live in the retirement village; and
(b) for a granny flat resident—the total amount paid, or agreed to be paid, for the resident’s current right to live in the granny flat; and
(c) for a sale leaseback resident—the deferred payment amount.
Note: For deferred payment amount see section 5MB.
(1D) For the purposes of paragraph (1C)(b):
(a) the total amount paid to obtain a person’s current right to live in a granny flat is the amount equal to the value of the person’s granny flat interest; and
(b) the value of a person’s granny flat interest is:
(i) unless subparagraph (ii) applies—the amount paid, or agreed to be paid, for the interest; or
(ii) if the Commission considers that, for any special reason in any particular case, that value should be another amount—that other amount.
(2) An amount that is rent or a residential care charge for the purposes of this Act is to be disregarded in applying subsections (1), (1A) and (1B).
Note: For residential care charge, see subsection 5N(1).
52N Extra allowable amount
Retirement village residence taken up before 12 June 1989
(1) If a retirement village resident became entitled to take up residence in the retirement village before 12 June 1989, the resident’s extra allowable amount is:
(a) if the resident is not a member of a couple—$64,000; or
(b) if the resident is a member of an illness separated couple—$64,000; or
(c) in any other case—$32,000.
Retirement village residence taken up on or after 12 June 1989
(2) If a retirement village resident became entitled to take up residence in the retirement village on or after 12 June 1989, the resident’s extra allowable amount is:
(a) if the resident is not a member of a couple—the amount that, as at the time when the person becomes entitled to take up that residence, is the difference between the single property owner AVL and the single non‑property owner AVL; or
(b) if the resident is a member of an illness separated couple—the amount that, as at the time when the person becomes entitled to take up that residence, is the difference between the single AVL and the single non‑property owner AVL; or
(c) in any other case—the amount that, as at the time when the person becomes entitled to take up that residence, is the difference between the partnered property owner AVL and the partnered non‑property owner AVL.
Granny flat residence
(2A) A granny flat resident’s extra allowable amount is:
(a) if the resident is not a member of a couple—the amount that, as at the time when the resident becomes entitled to the granny flat interest, is the difference between the pension single property owner AVL and the pension single non‑property owner AVL; or
(b) if the resident is a member of an illness separated couple—the amount that, as at the time when the resident becomes entitled to the granny flat interest, is the difference between the pension single property owner AVL and the pension single non‑property owner AVL; or
(c) in any other case—the amount that, as at the time when the resident becomes entitled to the granny flat interest, is the difference between the pension partnered property owner AVL and the pension partnered non‑property owner AVL.
Sale leaseback home
(2B) A sale leaseback resident’s extra allowable amount is:
(a) if the resident is not a member of a couple—the amount that, as at the time when the sale leaseback agreement is entered into, is the difference between the pension (single) property owner AVL and the pension (single) non‑property owner AVL; or
(b) if the resident is a member of an illness separated couple—the amount that, as at the time when the sale leaseback agreement is entered into, is the difference between the pension (single) property owner AVL and the pension (single) non‑property owner AVL; or
(c) in any other case—the amount that, as at the time when the sale leaseback agreement is entered into, is the difference between the pension (partnered) property owner AVL and the pension (partnered) non‑property owner AVL.
(3) For the purposes of this section, a person becomes entitled to take up residence in a retirement village when the person becomes entitled to take up residence in a retirement village pursuant to the agreement under which the person’s current right to live in the retirement village arises.
(4) In this section, pension “single” property owner AVL, pension “single” non‑property owner AVL, pension “partnered” property owner AVL and pension “partnered” non‑property owner AVL have the same meaning as in Division 18.
52P Renegotiation of retirement village agreement
If a person who has a right to live in a retirement village under an agreement enters into a new agreement under which the person obtains a right to live in the retirement village, then, for the purposes of this Division, the total amount paid, or agreed to be paid, for the person’s current right to live in the retirement village is the sum of the following amounts:
(a) the total amount paid under the new agreement for that right;
(b) so much (if any) of:
(i) any amount paid under an earlier agreement to obtain a right for the person to live in the retirement village; and
(ii) any amount that was, or would have been, payable to the person upon the termination of an earlier agreement;
as ought, in the Commission’s opinion, to be attributed to the cost of the person’s current right to live in the retirement village.
52Q Residents who are not members of a couple
(1) This section applies to a special resident who is not a member of a couple.
Entry contribution more than extra allowable amount
(2) Where:
(a) this section applies to a special resident; and
(b) the person’s entry contribution was more than the extra allowable amount;
the person is to be taken, for the purposes of this Act, to be a property owner.
Entry contribution equal to or below extra allowable amount
(3) Where:
(a) this section applies to a special resident; and
(b) the person’s entry contribution was equal to or less than the extra allowable amount;
then, for the purposes of this Act:
(c) the person is to be taken not to have a right or interest in relation to the person’s principal home; and
(d) the person’s assets are to be taken to include an asset the value of which is equal to the amount of the person’s entry contribution; and
(e) subsection 52(1) and sections 52G, 52JA and 52JB do not apply to an asset that the person is, because of paragraph (d) of this subsection, to be taken to have.
(4) Subsection (3) applies:
(a) whether or not the person actually has any right or interest in the person’s principal home; and
(b) whatever the value of any right or interest that the person does have in the person’s principal home.
52R Members of couples
(1) This section applies to a special resident if:
(a) the resident is a member of a couple; and
(b) the resident shares the person’s principal home with the resident’s partner.
Entry contribution more than extra allowable amount
(2) Where:
(a) this section applies to a special resident; and
(b) the person’s entry contribution was more than the extra allowable amount;
the person is to be taken, for the purposes of this Act, to be a property owner.
Entry contribution equal to or below extra allowable amount
(3) Where:
(a) this section applies to a special resident; and
(b) the person’s entry contribution was equal to or less than the extra allowable amount;
then, for the purposes of this Act:
(c) the person is to be taken not to have a right or interest in relation to the person’s principal home; and
(d) the person’s assets are to be taken to include an asset the value of which is equal to the amount of the person’s entry contribution; and
(e) subsection 52(1) and section 52H do not apply to an asset that the person is, because of paragraph (d) of this subsection, to be taken to have.
(4) Subsection (3) applies:
(a) whether or not the person actually has any right or interest in the person’s principal home; and
(b) whatever the value of any right or interest that the person does have in the person’s principal home.
52S Members of illness separated couple (both in special residences)
(1) This section applies to a special resident if:
(a) the resident is a member of an illness separated couple; and
(b) the principal home of the resident’s partner is also a special residence.
Both entry contributions above extra allowable amount
(2) Where:
(a) this section applies to a special resident; and
(b) the person’s entry contribution, and the entry contribution of the person’s partner, were each more than the extra allowable amount concerned;
then, for the purposes of this Act:
(c) the person is to be taken to be a property owner; and
(d) any right or interest of the person in the principal home of the person’s partner is to be disregarded in calculating the actual value of the person’s assets; and
(e) any right or interest of the person’s partner in his or her principal home, or in the person’s principal home, is to be disregarded in calculating the actual value of the partner’s assets.
Both entry contributions equal to or below extra allowable amount
(3) Where:
(a) this section applies to a special resident; and
(b) the person’s entry contribution, and the entry contribution of the person’s partner, were each equal to or less than the extra allowable amount concerned;
then, for the purposes of this Act:
(c) the person is to be taken not to have a right or interest in relation to the person’s principal home; and
(d) the person’s assets are to be taken to include an asset the value of which is equal to the amount of the person’s entry contribution; and
(e) subsection 52(1) and section 52H do not apply to the asset that the person is, because of paragraph (d) of this subsection, taken to have.
(4) Subsection (3) applies:
(a) whether or not the person actually has any right or interest in the person’s principal home; and
(b) whatever the value of any right or interest that the person does have in the person’s principal home.
Person’s entry contribution above extra allowable amount/partner’s entry contribution equal to or below extra allowable amount
(5) Where:
(a) this section applies to a special resident; and
(b) the person’s entry contribution was more than the extra allowable amount; and
(c) the person’s partner’s entry contribution was equal to or less than the extra allowable amount;
the following provisions apply for the purposes of the application of this Act to the person and to the person’s partner:
(d) the person is to be taken to be a property owner;
(e) both the person, and the person’s partner, are taken not to have a right or interest in relation to the partner’s principal home;
(ea) the assets of the person’s partner are taken to include an asset whose value is equal to the amount of the partner’s entry contribution;
(eb) subsection 52(1) and section 52H do not apply to the asset that the person’s partner is, because of paragraph (ea), taken to have;
(f) any right or interest of the person’s partner in the person’s principal home is to be disregarded in calculating the actual value of the partner’s assets;
(g) the assets value limit for the person and the person’s partner is to be taken to be $237,500.
Note: The amount in paragraph (g) is adjusted annually (see section 59J).
(6) Subsection (5) applies:
(a) whether or not the person’s partner actually has any right or interest in the partner’s principal home; and
(b) whatever the value of any right or interest that the partner does have in the partner’s principal home.
52T Members of illness separated couple (partner not in special residence and partner property owner)
(1) This section applies to a special resident if:
(a) the resident is a member of an illness separated couple; and
(b) the principal home of the resident’s partner is not a special residence; and
(c) the right or interest of the resident’s partner in the partner’s principal home is to be disregarded because of paragraph 52(1)(b).
Entry contribution more than extra allowable amount
(2) Where:
(a) this section applies to a special resident; and
(b) the person’s entry contribution was more than the extra allowable amount;
then:
(c) for the purposes of this Act, the person is to be taken to be a property owner; and
(d) any right or interest of the person in the principal home of the person’s partner referred to in paragraph (1)(c) is to be disregarded in calculating the actual value of the person’s assets for the purposes of this Act; and
(e) any right or interest of the person’s partner in the person’s principal home is also to be disregarded in calculating the actual value of the assets of the person’s partner for the purposes of this Act.
Entry contribution equal to or below extra allowable amount
(3) Where:
(a) this section applies to a special resident; and
(b) the person’s entry contribution was equal to or less than the extra allowable amount;
the following provisions apply for the purposes of the application of this Act to the person and to the person’s partner:
(c) both the person, and the person’s partner, are taken not to have a right or interest in relation to the person’s principal home;
(ca) the person’s assets are taken to include an asset whose value is equal to the amount of the person’s entry contribution;
(cb) subsection 52(1) and section 52H do not apply to the asset that the person is, because of paragraph (ca), taken to have;
(d) any right or interest of the person in the principal home of the person’s partner referred to in paragraph (1)(c) is to be disregarded in calculating the actual value of the person’s assets;
(e) the assets value limit of the person and the person’s partner is to be taken to be $237,500.
Note: The amount in paragraph (e) is adjusted annually (see section 59J).
(4) Subsection (3) applies:
(a) whether or not the person actually has any right or interest in the person’s principal home; and
(b) whatever the value of any right to interest that the person does have in the person’s principal home.
52U Members of illness separated couple (partner not in special residence and partner not property owner)
(1) This section applies to a special resident if:
(a) the resident is a member of an illness separated couple; and
(b) the principal home of the resident’s partner is not a special residence; and
(c) the resident’s partner does not have a right or interest in the partner’s principal home that is to be disregarded because of paragraph 52(1)(b).
Entry contribution more than extra allowable amount
(2) Where:
(a) this section applies to a special resident; and
(b) the person’s entry contribution was more than the extra allowable amount;
the following provisions apply for the purposes of the application of this Act to the person and to the person’s partner:
(c) the person is to be taken to be a property owner;
(d) any right or interest of the person’s partner in the person’s principal home is to be disregarded in calculating the actual value of the partner’s assets;
(e) the assets value limit of the person and the person’s partner is to be taken to be $237,500.
Note: The amount in paragraph (e) is adjusted annually (see section 59J).
(3) Subsection (2) applies:
(a) whether or not the person actually has any right or interest in the person’s principal home; and
(b) whatever the value of any right or interest that the person does have in the person’s principal home.
Entry contribution equal to or below extra allowable amount
(4) Where:
(a) this section applies to a special resident; and
(b) the person’s entry contribution was equal to or less than the extra allowable amount;
then, the following provisions apply for the purposes of the application of this Act to the person and to the person’s partner:
(c) both the person, and the person’s partner, are to be taken not to have a right or interest in relation to the person’s principal home;
(d) the person’s assets are to be taken to include an asset the value of which is equal to the amount of the person’s entry contribution;
(e) subsection 52(1) and sections 52G, 52H, 52JA, 52JB, 52JC and 52JD do not apply to the asset that the person is, because of paragraph (d) of this subsection, taken to have.
52V Members of ordinary couple with different principal homes (both in special residences)
(1) This section applies to a special resident if:
(a) the resident is a member of an ordinary couple with different principal homes; and
(b) the principal home of the resident’s partner is also a special residence.
Both entry contributions above extra allowable amount
(2) If:
(a) this section applies to a special resident; and
(b) the resident’s entry contribution, and the partner’s entry contribution, were each more than the extra allowable amount concerned;
then, for the purposes of this Act:
(c) the resident and the partner are each to be taken to be property owners; and
(d) the value of the resident’s principal home is taken to be the resident’s individual residence contribution; and
(e) the value of the partner’s principal home is taken to be the partner’s individual residence contribution; and
(f) any right or interest of the resident in:
(i) the more valuable of the two principal homes; or
(ii) where the value of the two principal homes is the same—the principal home of the younger person;
(the more valuable principal home) is to be disregarded in calculating the actual value of the resident’s assets; and
(g) any right or interest of the partner in the more valuable principal home is to be disregarded in calculating the actual value of the partner’s assets; and
(h) the assets of the person whose principal home is not the more valuable principal home are to be taken to include an asset the value of which is equivalent to the amount of that person’s entry contribution.
Both entry contributions equal to or below extra allowable amount
(3) If:
(a) this section applies to a special resident; and
(b) the resident’s entry contribution, and the partner’s entry contribution, were each less than or equal to the extra allowable amount concerned;
then, for the purposes of this Act:
(c) the resident and the partner are each to be taken not to have a right or interest in relation to the resident’s principal home or the partner’s principal home; and
(d) the resident’s assets are taken to include an amount equal to the resident’s individual residence contribution; and
(e) the partner’s assets are taken to include an amount equal to the partner’s individual residence contribution.
(4) Subsection (2) applies:
(a) whether or not the resident actually has any right or interest in the resident’s principal home; and
(b) whatever the value of any right or interest that the resident does have in the resident’s principal home; and
(c) whether or not the partner actually has any right or interest in the partner’s principal home; and
(d) whatever the value of any right or interest that the partner does have in the partner’s principal home.
52W Members of ordinary couple with different principal homes (partner not in special residence and partner property owner)
(1) This section applies to a special resident if:
(a) the resident is a member of an ordinary couple with different principal homes; and
(b) the principal home of the resident’s partner is not a special residence; and
(c) the right or interest of the resident’s partner in the partner’s principal home would, but for this section, be disregarded because of paragraph 52(1)(b).
(2) If this section applies to a special resident, then, for the purposes of this Act:
(a) the resident and the resident’s partner are each to be taken to have a right or interest in a principal home to which paragraph 52(1)(b) applies; and
(b) the value of the resident’s principal home is to be taken to be the amount of the resident’s entry contribution; and
(c) any right or interest of the resident in:
(i) the more valuable of the two principal homes; or
(ii) where the value of the two principal homes is the same—the principal home that is not a special residence;
(the more valuable principal home) is to be disregarded in calculating the actual value of the resident’s assets; and
(d) any right or interest of the partner in the more valuable principal home is to be disregarded in calculating the actual value of the partner’s assets; and
(e) the assets of the person whose principal home is not the more valuable principal home are to be taken to include an asset whose value is equivalent to the value of the less valuable principal home.
52X Members of ordinary couple with different principal homes (partner not in special residence and partner not property owner)
(1) This section applies to a special resident if:
(a) the resident is a member of an ordinary couple with different principal homes; and
(b) the principal home of the resident’s partner is not a special residence; and
(c) the partner does not have a right or interest in the partner’s principal home that is to be disregarded because of paragraph 52(1)(b).
Entry contribution above extra allowable amount
(2) If:
(a) this section applies to a special resident; and
(b) the resident’s entry contribution was more than the amount that would be the extra allowable amount if the resident were not a member of a couple;
then, for the purposes of this Act, the resident and the partner are each to be taken to have a right or interest in a principal home to which paragraph 52(1)(b) applies.
Entry contribution equal to or below extra allowable amount
(3) If:
(a) this section applies to a special resident; and
(b) the resident’s entry contribution was equal to or less than the amount that would be the extra allowable amount if the resident were not a member of a couple;
then, the following provisions apply for the purposes of the application of this Act to the resident and to the resident’s partner:
(c) both the resident, and the partner, are to be taken not to have a right or interest in relation to the resident’s principal home; and
(d) the resident’s assets are to be taken to include an asset whose value is equal to the amount of the resident’s entry contribution.
(4) Subsection (3) applies:
(a) whether or not the resident actually has any right or interest in the resident’s principal home; and
(b) whatever the value of any right or interest that the resident does have in the resident’s principal home; and
(c) whether or not the partner actually has any right or interest in the resident’s principal home; and
(d) whatever the value of any right or interest that the partner does have in the resident’s principal home.
Subdivision D—Financial hardship
52Y Access to financial hardship rules
(1) Where:
(a) either:
(i) a service pension or income support supplement is not payable to a person because of the application of an assets test; or
(ii) a person’s service pension rate or income support supplement rate is determined by the application of an assets test; and
(b) either:
(i) sections 48B and 48C (disposal of income) and 52G, 52H, 52JA, 52JB, 52JC and 52JD (disposal of assets) do not apply to the person; or
(ii) the Commission determines in writing that the application of those sections to the person should, for the purposes of this section, be disregarded; and
(c) the person, or the person’s partner, has an unrealisable asset; and
(d) the person lodges, at an office of the Department in Australia in accordance with section 5T, a written request that this section apply to the person; and
(e) the Commission is satisfied that the person would suffer severe financial hardship if this section did not apply to the person;
the Commission must determine in writing that this section applies to the person.
Note: For unrealisable asset see subsections 5L(11) and (12).
(2) If a request is lodged under paragraph (1)(d), the Secretary:
(a) must investigate the matters that the request relates to; and
(b) must, when the investigation is complete, submit to the Commission for its consideration:
(i) the request; and
(ii) the evidence that the person who made the request provided in support of the request; and
(iii) any documents that are relevant to the request and are under the Department’s control (including any evidence or documents relevant to the request that are obtained in the course of the investigation).
(3) A determination under subsection (1) takes effect:
(a) on the day on which the request under paragraph (1)(d) was lodged; or
(b) if the Commission so determines in the special circumstances of the case—on a day not more than 6 months before the day referred to in paragraph (a).
52Z Application of financial hardship rules
Value of unrealisable asset to be disregarded
(1) If section 52Y applies to a person, the value of:
(a) any unrealisable asset of the person; and
(b) any unrealisable asset of the person’s partner;
is to be disregarded in working out the person’s service pension rate or income support supplement rate.
Deduction from service pension maximum payment rate
(2) If section 52Y applies to a person, there is to be deducted from the person’s service pension maximum payment rate or income support supplement maximum payment rate an amount equal to the person’s adjusted annual rate of ordinary income.
Adjusted annual rate of ordinary income
(3) A person’s adjusted annual rate of ordinary income is an amount per year equal to the sum of:
(a) the person’s annual rate of ordinary income (other than income from assets); and
(b) the person’s annual rate of ordinary income from assets that are not assets tested; and
(c) either:
(i) the person’s annual rate of ordinary income from unrealisable assets; or
(ii) the person’s notional annual rate of ordinary income from unrealisable assets;
whichever is the greater; and
(d) an amount per year equal to $19.50 for each $250 of the value of the person’s assets (other than disregarded assets).
(3A) In working out the ordinary income of a person for the purposes of subsection (3), the following payments and amounts are to be counted:
(a) a payment of an instalment of pension under Part II or IV;
(b) a payment of an instalment of a pension (other than a pension payable in respect of a child) payable because of subsection 4(6) or (8B) of the Veterans’ Entitlements (Transitional Provisions and Consequential Amendments) Act 1986;
(d) a payment (other than a payment referred to in paragraph (a) or (b)) that is a payment in respect of incapacity or death resulting from employment in connection with a war or war‑like operations in which the Crown has been engaged;
(da) a payment of compensation (other than a payment covered by paragraph (d)) to the extent that the payment is taken into account:
(i) under Division 5A of Part II; or
(ii) under section 74;
to reduce a disability pension payable to the person under Part II or Part IV, as the case requires;
(e) a payment by way of allowance (other than loss of earnings allowance) under Part VI of this Act;
(f) a payment, by a foreign country, of an allowance or annuity that is of a similar kind to decoration allowance payable under section 102 or to Victoria Cross allowance payable under section 103;
(fa) a payment under Part VIB (prisoner of war recognition supplement);
(g) a payment of a weekly amount under section 68, 71 or 75 of the MRCA (permanent impairment);
(h) a payment of a Special Rate Disability Pension under Part 6 of Chapter 4 of the MRCA;
(i) if subsection 204(5) of the MRCA applies to a person—an amount per fortnight worked out under section 5I of this Act;
(j) a payment of a weekly amount mentioned in paragraph 234(1)(b) of the MRCA (including a reduced weekly amount because of a choice under section 236 of the MRCA) (wholly dependent partner payment).
Note 1: Subsection 204(5) of the MRCA reduces a Special Rate Disability Pension by reference to amounts of Commonwealth superannuation that the person has received or is receiving.
Note 2: The payments and amounts referred to in this subsection would not be considered ordinary income elsewhere in this Act (see subsections 5H(1) and (8)).
Assets tested asset
(4) For the purposes of subsection (3), an asset is not assets tested if the asset’s value is disregarded under subsection 52(1).
Notional annual rate of ordinary income from unrealisable assets
(5) A person’s notional annual rate of ordinary income from unrealisable assets is:
(a) the amount per year equal to 2.5% of the value of the person’s and the person’s partner’s unrealisable assets; or
(b) the amount per year that could reasonably be expected to be obtained from a purely commercial application of the person’s and the person’s partner’s unrealisable assets;
whichever is the less.
(6) Subsection (2) applies:
(a) subject to subsection (8); and
(b) despite the Rate Calculator and section 45S (calculation of rate of income support supplement).
(7) Where:
(a) a person has disposed of assets and section 52G, 52H, 52JA, 52JB, 52JC or 52JD applies to the disposition; and
(b) the Commission has made a determination under subparagraph 52Y(1)(b)(ii) in relation to the disposition;
this section applies to the person as if the person had not disposed of the assets.
(8) Where the sum of the rate of pension that would, apart from this subsection, be payable to a person and the annual rate of income of the person exceeds the maximum payment rate, the rate so payable is to be reduced by the amount per year of the excess.
Subdivision E—Pension loans scheme
52ZAAA Pension loans scheme definitions
(1) In this Subdivision, unless the contrary intention appears:
adjusted income reduced rate, in relation to an income support supplement, means the rate worked out in relation to that supplement at Step 6 of Method statement 5 in Module A of the Rate Calculator.
assets reduced rate, in relation to a service pension or an income support supplement, means the rate worked out in relation to that pension or supplement at Step 8 of Method statement 1 or Step 8 of Method statement 5, as the case may be, in Module A of the Rate Calculator.
dispose of real assets has its ordinary meaning.
guaranteed amount means the amount (if any) specified under paragraph 52ZD(1A)(b) or subsection 52ZE(1) (as the case may be).
income reduced rate, in relation to a service pension, means the rate worked out in relation to that pension at Step 6 of Method statement 1 in Module A of the Rate Calculator.
maximum payment rate, in relation to a service pension or an income support supplement, means the rate worked out in relation to that pension or supplement at Step 4 of Method statement 1, Step 4 of Method statement 2 or Step 4 of Method statement 5, as the case may be, in Module A of the Rate Calculator.
real assets, in relation to a person or couple, means the real property (including the principal home) of the person or couple in Australia, but does not include any real property specified under paragraph 52ZD(1A)(a).
(2) For the purposes of this Subdivision, a reference to a charge under section 52ZF includes a reference to a charge continued in force by subsection 52ZF(3) or paragraph 52ZG(2A)(b).
(3) For the purposes of this Subdivision, a person is participating in the pension loans scheme if:
(a) the person has made a request to participate in the scheme under section 52ZD; and
(b) because of the request, the rate of the pension payable to the person is:
(i) the maximum payment rate; or
(ii) some other rate nominated by the person;
whichever is the lower; and
(c) the person owes a debt to the Commonwealth under section 52ZC.
52ZA Eligibility for participation in pension loans scheme
Person not member of a couple
(1) A person who is not a member of a couple is eligible to participate in the pension loans scheme if:
(a) the person is receiving or is eligible for a service pension or income support supplement; and
(c) the pension or income support supplement rate is, or is to be:
(i) an income reduced rate or an adjusted income reduced rate (as the case may be); or
(ii) an assets reduced rate;
and at least one of those reduced rates is not a nil rate; and
(d) the person has reached:
(i) if the person is receiving or is eligible for service pension—pension age; or
(ii) if the person is receiving or is eligible for income support supplement—qualifying age; and
(e) either:
(i) the value of the person’s real assets (after deduction of any guaranteed amount) is sufficient to secure the payment of any debt that may become payable to the Commonwealth under this Subdivision; or
(ii) subsection (3) applies to the person.
Note 1: For income reduced rate or adjusted income reduced rate and assets reduced rate see subsection 52ZAAA(1).
Note 2: For real assets see subsection 52ZAAA(1).
Note 3: For guaranteed amount see subsection 52ZAAA(1).
Note 4: For pension age see section 5QA.
Note 5: For qualifying age see section 5Q.
Person member of a couple
(2) A person who is a member of a couple is eligible to participate in the pension loans scheme if:
(a) the person is receiving or is eligible for a service pension or income support supplement; and
(c) the pension or income support supplement rate is, or is to be:
(i) an income reduced rate or an adjusted income reduced rate (as the case may be); or
(ii) an assets reduced rate;
and at least one of those reduced rates is not a nil rate; and
(d) the person:
(i) is a veteran and has reached pension age; or
(ii) is the partner of a veteran referred to in subparagraph (i); or
(iii) is receiving or is eligible for an income support supplement and has reached qualifying age; and
(e) either:
(i) the value of the couple’s real assets (after deduction of any guaranteed amount) is sufficient to secure the payment of any debt that may become payable to the Commonwealth under this Subdivision; or
(ii) subsection (3) applies to both of the members of the couple.
Note 1: For income reduced rate or adjusted income reduced rate and assets reduced rate see subsection 52ZAAA(1).
Note 2: For real assets see subsection 52ZAAA(1).
Note 3: For guaranteed amount see subsection 52ZAAA(1).
Note 4: For pension age see section 5QA.
Note 5: For qualifying age see section 5Q.
Attributable stakeholder of a company or trust
(3) This subsection applies to a person if:
(a) either:
(i) the person is an attributable stakeholder of a company or trust (within the meaning of Division 11A); or
(ii) the person is a member of a couple and the other member of the couple is an attributable stakeholder of a company or trust (within the meaning of Division 11A); and
(b) the company or trustee has given the Commonwealth a guarantee that the company or trustee will pay any debt that may become payable to the Commonwealth by the person under this Subdivision; and
(c) the company’s or trustee’s liability under the guarantee is secured by a charge against real property of the company or trust in Australia; and
(d) the Commission is satisfied that the value of that real property is sufficient to secure the payment of any amount that may become payable by the company or trustee under the guarantee; and
(e) the Commission has, by writing, approved the guarantee and the charge.
52ZB Effect of participation in pension loans scheme—pension rate
(1) If:
(a) a person is eligible to participate in the pension loans scheme; and
(b) the person makes a request to participate under section 52ZD; and
(d) the Commission is satisfied that the amount of any debt that becomes payable by the person to the Commonwealth under this Subdivision is readily recoverable;
then:
(e) the rate of the pension payable to the person by operation of the scheme is to be:
(i) the maximum payment rate; or
(ii) some other rate nominated by the person;
whichever is the lower.
Note: For maximum payment rate see subsection 52ZAAA(1).
(2) The pension at the rate payable by operation of the scheme is payable on and from the day on which the request is lodged.
(3) For the purposes of section 53A (fringe benefits), if but for the operation of the scheme the person would not have received a service pension or income support supplement, the person is to be taken to be a person who is not receiving a service pension or income support supplement.
(4) For the purposes of Subdivision C of Division 12 (treatment benefits), if but for the operation of the scheme the person would not have received a service pension or income support supplement, the person is to be taken to be a person who is not receiving an age or invalidity service pension.
52ZC Effect of participation in pension loans scheme—creation of debt
(1) If the rate of the pension payable by operation of the pension loans scheme is more than the rate that would have been received by the person but for the operation of the scheme, the person owes a debt to the Commonwealth.
(3) This is how to work out the amount of the debt owed by the person from time to time:
Method statement
Step 1. Work out the sum of the amount of pension received by the person from time to time under the pension loans scheme: the result is the primary loan amount.
Step 2. Take away from the primary loan amount the sum of the amount of pension (if any) that would have been received by the person but for the operation of the scheme: the result is the basic amount of debt.
Step 3. Add to the basic amount of debt the amount of interest payable. The interest payable is compound interest at the rate fixed under subsection (4) and compounding fortnightly: the result is the amount of debt including interest.
Step 4. Add to the amount of debt including interest the amount of any registration costs payable by the person under subsection 52ZL(4): the result is the total amount of debt.
Step 5. From the total amount of debt take away any amount of the debt already paid to the Commonwealth: the result is the current amount of debt owed by the person.
(4) The rate at which compound interest is payable under subsection (3) is the rate fixed from time to time, by legislative instrument, by the Minister administering the Social Security Act.
52ZCA Effect of participation in pension loans scheme—maximum loan available
(1) The maximum loan available to a person under the pension loans scheme is the amount worked out using the formula:
where:
age component amount means the amount specified in column 2 of the Table in subsection (3), in relation to:
(a) if the person is not a member of a couple—the age the person turned on his or her last birthday; or
(b) if the person is a member of a couple—the age the younger member of the couple turned on his or her last birthday.
value of real assets means:
(a) if neither subparagraph 52ZA(1)(e)(ii) nor subparagraph 52ZA(2)(e)(ii) applied to the person when the person made his or her request to participate in the pension loans scheme—the value of the real assets (after deduction of any guaranteed amount); or
(b) if subparagraph 52ZA(1)(e)(ii) or (2)(e)(ii) applied to the person when the person made his or her request to participate in the pension loans scheme—the value of the charge referred to in paragraph 52ZA(3)(c).
Note 1: For real assets see subsection 52ZAAA(1).
Note 2: For guaranteed amount see subsection 52ZAAA(1).
(2) For the purposes of subsection (1), the following provisions have effect:
(a) if, but for this paragraph, the value of real assets would be an amount that exceeds $10,000 but is not a multiple of $10,000, the value is to be taken to be the next lower amount that is a multiple of $10,000;
(b) if, but for this paragraph, the value of real assets would be less than $10,000, the value is to be taken to be nil.
(3) The following is the Table referred to in subsection (1):
| Age component amount table |
| Column 1 Age | Column 2 Age component amount | Column 1 Age | Column 2 Age component amount |