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Veterans' Entitlements Act 1986

Authoritative Version
Act No. 27 of 1986 as amended, taking into account amendments up to Treasury Laws Amendment (2021 Measures No. 3) Act 2021
An Act to provide for the payment of pensions and other benefits to, and to provide medical and other treatment for, veterans and certain other persons, and for other purposes
Administered by: Veterans' Affairs
Registered 12 Aug 2021
Start Date 30 Jun 2021
Table of contents.

Commonwealth Coat of Arms of Australia

Veterans’ Entitlements Act 1986

No. 27, 1986

Compilation No. 171

Compilation date:                              30 June 2021

Includes amendments up to:            Act No. 61, 2021

Registered:                                         12 August 2021

This compilation is in 4 volumes

Volume 1:       sections 1–45UY

Volume 2:       sections 46–93ZG

Volume 3:       sections 94–216

Volume 4:       Schedules

                        Endnotes

Each volume has its own contents

About this compilation

This compilation

This is a compilation of the Veterans’ Entitlements Act 1986 that shows the text of the law as amended and in force on 30 June 2021 (the compilation date).

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

Uncommenced amendments

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

Application, saving and transitional provisions for provisions and amendments

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

Editorial changes

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

Modifications

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

Self‑repealing provisions

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

  

  

  


Contents

Part IIIB—Provisions applying to service pension, income support supplement and veteran payment                                                                                                                                        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......................................... 6

46ABA.................. Meaning of gainful work.................................................... 7

46AC..................... Unused concession balance................................................ 9

46AD.................... No double income reductions under sections 46AA and 115G               10

Division 2—Business income                                                                                   12

46B........................ Ordinary income from a business—treatment of trading stock                12

46C........................ Permissible reductions of business income....................... 12

Division 3—Income from financial assets (including income streams (short term) and certain income streams (long term))                                                                          14

46D....................... Deemed income from financial assets—persons other than members of couples     14

46E........................ Deemed income from financial assets—members of a couple  16

46H....................... Deeming threshold............................................................ 18

46J......................... Below threshold rate, above threshold rate....................... 19

46K........................ Actual return on financial assets not treated as ordinary income              19

46L........................ Certain money and financial investments not taken into account              19

46M....................... Valuation and revaluation of certain financial investments 20

Division 4—Income from income streams not covered by Division 3 21

Subdivision B—Income streams that are not family law affected income streams      21

46SA..................... Scope of Subdivision........................................................ 21

46T........................ Income from asset‑test exempt income stream.................. 21

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

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

46VA.................... Income from market‑linked asset‑test exempt income stream.. 23

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

46X....................... Income—asset‑tested income stream (long term) that is not a defined benefit income stream  25

46Y....................... Income—asset‑tested income stream (long term) that is a defined benefit income stream        26

46YA.................... Income from certain low‑payment asset‑tested income streams               27

46YB..................... Income—asset‑tested income stream (lifetime)................. 28

Subdivision C—Family law affected income streams                                    29

46Z........................ Scope of Subdivision........................................................ 29

46ZA..................... Income from asset‑test exempt income streams................ 29

46ZB..................... Income from asset‑tested income stream (long term)........ 30

46ZBA.................. Income from asset‑tested income stream (lifetime)........... 30

46ZC..................... Decision‑making principles.............................................. 31

Division 6—Income tests—conversion of foreign currency amounts 32

47.......................... Application of Division.................................................... 32

47A....................... Conversion of foreign currency amounts.......................... 32

47B........................ Base exchange rate............................................................ 32

47C........................ Re‑assessed exchange rate................................................ 32

47D....................... Applicability of re‑assessed exchange rate........................ 33

47E........................ Rounding off exchange rates............................................ 34

Division 7—Income tests—disposal of ordinary income                         35

48.......................... Disposal of ordinary income............................................. 35

48A....................... Amount of disposition...................................................... 36

48B........................ Disposal of ordinary income—not a member of a couple. 36

48C........................ Disposal of ordinary income—members of couples......... 36

48E........................ Dispositions more than 5 years old to be disregarded....... 37

Division 9—New Enterprise Incentive Scheme                                             39

50.......................... General effect of Division................................................. 39

50A....................... Reduction in rate of payments under this Part if recipient or partner also receiving payments under NEIS.......................................................................................... 39

50B........................ Rate reduction under this Division.................................... 40

Division 11—General provisions relating to the assets test                   41

Subdivision A—Value of person’s assets                                                            41

52.......................... Certain assets to be disregarded in calculating the value of a person’s assets           41

52AA.................... Value of superannuation investments determined by Minister to be disregarded     50

52A....................... Value of asset‑tested income streams that are not defined benefit income streams, asset‑tested income streams (lifetime) or family law affected income streams............... 51

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

52BAA.................. Value of asset‑tested income streams (lifetime) that are managed investments         53

52BAB.................. Value of asset‑tested income streams (lifetime) that are not managed investments   55

52BA..................... Value of asset‑tested FLA income streams....................... 62

52BB..................... Value of partially asset‑test exempt income streams......... 63

52BC..................... Value of superannuation reserves for superannuation funds of 4 members or less  63

52C........................ Effect of charge or encumbrance on value of assets.......... 64

52CA..................... Effect of certain liabilities on value of assets used in primary production                65

52CB..................... Value of life policy........................................................... 67

52D....................... Loans................................................................................ 67

Subdivision B—Dispositions of assets (general provisions)                          68

52E........................ Disposal of assets............................................................. 68

52F........................ Amount of disposition...................................................... 68

52FAAA............... Application of asset deprivation rules to cease in respect of certain assets               69

Subdivision BA—Dispositions of assets before 1 July 2002                          69

52FAA.................. Application....................................................................... 69

52FA..................... Disposal of assets in pre‑pension years—not a member of a couple        70

52G....................... Disposal of assets in pension years—not a member of a couple              70

52GA.................... Disposal of assets in pre‑pension years—members of couples                71

52H....................... Disposal of assets in pension years—members of couples 73

52J......................... Dispositions more than 5 years old to be disregarded....... 75

Subdivision BB—Dispositions of assets on or after 1 July 2002                  76

52JA...................... Disposition of assets in tax year—individuals.................. 76

52JB...................... Dispositions of assets in 5 year period—individuals........ 77

52JC...................... Disposition of assets in tax year—members of couples.... 78

52JD...................... Disposition of assets in 5 year period—members of couples.. 79

52JE...................... Certain dispositions to be disregarded.............................. 81

Subdivision C—Provisions relating to special residences and special residents            82

52KA..................... Application of Subdivision to granny flat residents.......... 82

52L........................ Basis for different treatment.............................................. 82

52M....................... Entry contribution............................................................. 82

52N....................... Extra allowable amount..................................................... 84

52P........................ Renegotiation of retirement village agreement................... 86

52Q....................... Residents who are not members of a couple..................... 87

52R........................ Members of couples......................................................... 88

52S........................ Members of illness separated couple (both in special residences)            89

52T........................ Members of illness separated couple (partner not in special residence and partner property owner)        91

52U....................... Members of illness separated couple (partner not in special residence and partner not property owner)  93

52V....................... Members of ordinary couple with different principal homes (both in special residences)        94

52W....................... Members of ordinary couple with different principal homes (partner not in special residence and partner property owner)................................................................ 96

52X....................... Members of ordinary couple with different principal homes (partner not in special residence and partner not property owner)................................................................ 97

Subdivision D—Financial hardship                                                                     98

52Y....................... Access to financial hardship rules..................................... 98

52Z........................ Application of financial hardship rules........................... 100

Subdivision E—Pension loans scheme                                                              103

52ZAAA............... Pension loans scheme definitions................................... 103

52ZA..................... Eligibility for participation in pension loans scheme....... 104

52ZB..................... Effect of participation in pension loans scheme—pension rate 107

52ZC..................... Effect of participation in pension loans scheme—creation of debt           108

52ZCA.................. Effect of participation in pension loans scheme—maximum loan available              109

52ZD..................... Need for a request to participate...................................... 110

52ZE...................... Need for a request to later nominate or change nominated amount or rate of pension              111

52ZEA................... Non‑receipt of service pension or income support supplement                111

52ZF...................... Existence of debt results in charge over real assets......... 113

52ZG..................... Debt not to be recovered until after death........................ 114

52ZH..................... Enforcement of charge.................................................... 115

52ZJ...................... Person ceases to participate in pension loans scheme if debt exceeds maximum loan available               116

52ZJA................... Commission may cease person’s participation in pension loans scheme  116

52ZK..................... Person withdraws from pension loans scheme............... 117

52ZKA.................. Repayment or recovery of debt after pension loans scheme ceases to operate          117

52ZL...................... Registration of charge..................................................... 118

52ZM.................... Manner of enforcement of charge................................... 119

Subdivision F—Commutation of asset‑test exempt income stream           119

52ZMA................. Debt resulting from commutation of asset‑test exempt income stream contrary to subsection 5JA(2), 5JB(2) or 5JBA(2).......................................................................... 119

Division 11A—Means test treatment of private companies and private trusts 123

Subdivision A—Introduction                                                                               123

52ZN..................... Simplified outline............................................................ 123

52ZO..................... Definitions...................................................................... 124

52ZP...................... Relatives......................................................................... 128

52ZQ..................... Associates....................................................................... 129

52ZR..................... When a company is sufficiently influenced by an entity. 130

52ZS...................... Majority voting interest in a company............................. 131

52ZT...................... Entitled to acquire........................................................... 131

52ZU..................... Transfer of property or services...................................... 131

52ZV..................... Constructive transfers of property or services to an entity 132

52ZW.................... Active involvement with a primary production enterprise 133

52ZX..................... Power to veto decisions of a trustee................................ 133

52ZY..................... Extra‑territorial operation................................................ 134

52ZZ...................... Application to things happening before commencement. 134

Subdivision B—Designated private companies                                              134

52ZZA................... Designated private companies......................................... 134

Subdivision C—Designated private trusts                                                        136

52ZZB................... Designated private trusts................................................. 136

Subdivision D—Controlled private companies                                              137

52ZZC................... Controlled private companies.......................................... 137

52ZZD................... Direct voting interest in a company................................. 139

52ZZE................... Voting power.................................................................. 139

52ZZF................... Direct control interest in a company................................ 140

52ZZG................... Interest in a share............................................................ 141

Subdivision E—Controlled private trusts                                                        142

52ZZH................... Controlled private trusts.................................................. 142

52ZZI.................... Interest in a trust............................................................. 146

Subdivision F—Attributable stakeholders and attribution percentages  147

52ZZJ.................... Attributable stakeholder, asset attribution percentage and income attribution percentage         147

Subdivision G—Attribution of income of controlled private companies and controlled private trusts  149

52ZZK................... Attribution of income...................................................... 149

52ZZL................... No double counting of attributed income........................ 150

52ZZM.................. Ordinary income of a company or trust.......................... 151

52ZZN................... Ordinary income from a business—treatment of trading stock                152

52ZZO................... Permissible reductions of business and investment income 152

52ZZP................... Derivation periods.......................................................... 153

52ZZQ................... Attribution periods.......................................................... 154

Subdivision H—Attribution of assets of controlled private companies and controlled private trusts     155

52ZZR................... Attribution of assets........................................................ 155

52ZZS................... When attributed asset is unrealisable............................... 156

52ZZT................... Effect of charge or encumbrance on value of assets........ 157

52ZZU................... Effect of unsecured loan on value of assets.................... 159

52ZZV................... Value of company’s or trust’s assets etc......................... 159

Subdivision I—Modification of asset deprivation rules                               159

52ZZW.................. Individual disposes of asset to company or trust............ 159

52ZZX................... Disposal of asset by company or trust............................ 160

52ZZY................... Individual ceases to be an attributable stakeholder of a company or trust 163

52ZZZ................... Individual disposes of asset to company or trust before 1 January 2002—individual is attributable stakeholder........................................................................................ 164

52ZZZA................ Individual disposes of asset to company or trust before 1 January 2002—individual’s spouse is attributable stakeholder...................................................................... 165

Subdivision J—Modification of income deprivation rules                         166

52ZZZB................. Individual disposes of ordinary income to company or trust 166

52ZZZC................. Disposal of income by company or trust........................ 167

52ZZZD................ Individual disposes of income to company or trust before 1 January 2002—individual is attributable stakeholder...................................................................... 170

52ZZZE................. Individual disposes of income to company or trust before 1 January 2002—individual’s spouse is attributable stakeholder...................................................................... 171

Subdivision K—Concessional primary production trusts                           172

52ZZZF................. Concessional primary production trusts.......................... 172

52ZZZG................ Individual ceases to be an attributable stakeholder of a trust—receipt of remuneration or other benefits from trust during asset deprivation period............................... 176

52ZZZH................ Net value of asset............................................................ 179

52ZZZI.................. Value of entity’s assets................................................... 179

52ZZZJ.................. When asset is controlled by an individual....................... 179

52ZZZK................. Adjusted net value of asset............................................. 180

52ZZZL................. Adjusted net primary production income........................ 181

52ZZZM................ Net income of a primary production enterprise............... 182

52ZZZN................ Net income from a primary production enterprise—treatment of trading stock        182

52ZZZO................ Permissible reductions of income from carrying on a primary production enterprise               183

Subdivision L—Anti‑avoidance                                                                          184

52ZZZP................. Anti‑avoidance................................................................ 184

Subdivision M—Decision‑making principles                                                  185

52ZZZQ................ Decision‑making principles............................................ 185

Subdivision N—Information management                                                      186

52ZZZR................. Transitional period.......................................................... 186

52ZZZS................. Information‑gathering powers........................................ 186

52ZZZT................. Commission may obtain tax information........................ 187

52ZZZU................ Disclosure of tax information......................................... 189

52ZZZV................ Disclosure of tax file number information...................... 190

Division 11B—Private financial provision for certain people with disabilities  191

Subdivision A—Special disability trusts                                                           191

52ZZZW................ What is a special disability trust?.................................... 191

52ZZZWA............. Beneficiary requirements................................................ 191

52ZZZWB............. Trust purpose requirements............................................ 193

52ZZZWC............. Trust deed requirements.................................................. 195

52ZZZWD............. Trustee requirements....................................................... 195

52ZZZWE............. Trust property requirements............................................ 196

52ZZZWEA.......... Trust expenditure requirements....................................... 197

52ZZZWF............. Reporting requirements................................................... 198

52ZZZWG............. Audit requirements......................................................... 198

52ZZZWH............. Waiver of contravention of this Division........................ 200

Subdivision B—Income of special disability trusts                                       201

52ZZZWI.............. Attribution of income...................................................... 201

52ZZZWJ.............. Income amounts from special disability trusts................ 201

Subdivision C—Assets of special disability trusts                                          201

52ZZZWK............. Attribution of assets........................................................ 201

Subdivision D—Transfers to special disability trusts                                   202

52ZZZWL............. Effect of certain transfers to special disability trusts....... 202

52ZZZWM............ The effect of exceeding the $500,000 limit..................... 203

52ZZZWN............. Transfers by the immediate family members prior to reaching pension age etc.       204

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

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

52ZZZWQ............. Effect of this Subdivision............................................... 207

Division 12—Service pensioner and income support supplement recipient benefits       208

Subdivision A—Introduction                                                                               208

53.......................... Fringe benefits and treatment at Departmental expense for certain service pensioners             208

Subdivision B—Fringe benefits                                                                          208

53A....................... Fringe benefits................................................................ 208

53B........................ Commission must determine continued fringe benefits eligibility circumstances     209

Subdivision C—Treatment at Departmental expense                                   210

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

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

Division 12A—Payments after bereavement                                               213

Subdivision A—Bereavement period                                                                213

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

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

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

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

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

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

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

53NAA................. Matters affecting bereavement payments under this Subdivision             217

53NA.................... No liability of financial institution for certain payments to pensioner       218

Subdivision C—Death of pensioner                                                                   218

53P........................ Application..................................................................... 218

53Q....................... Payment of one instalment.............................................. 218

Subdivision D—Death of dependent child                                                        219

53R........................ Application..................................................................... 219

53S........................ When reassessed pension rate in respect of pensioner comes into effect  219

53T........................ Bereavement payment..................................................... 219

Division 13—Recipient obligations                                                                    221

54.......................... Secretary may require notification of an event or change of circumstances              221

54A....................... Secretary may require recipient to give information relevant to payment of service pension, income support supplement or veteran payment....................................... 223

54AA.................... Secretary may require recipient to give information, produce documents or appear before an officer      225

54B........................ Document served with a section 54 notice...................... 227

54BA..................... Secretary may require person or person’s partner to take action to obtain a comparable foreign pension........................................................................................ 227

54C........................ Interpretation................................................................... 228

Division 14—Pensioners in certain institutions                                           229

55.......................... Service pension, income support supplement or veteran payment may be suspended or forfeited when person in gaol or in psychiatric confinement following criminal charge              229

55A....................... Instalments may be redirected to partner or child............ 230

Division 15—Variation and termination                                                        231

56.......................... Automatic termination or rate reduction—recipient complying with section 54 notification obligations  231

56A....................... Automatic termination—recipient not complying with section 54 notification obligations       232

56B........................ Automatic rate reduction—recipient not complying with section 54 notification obligations   233

56C........................ Rate increase determination............................................. 234

56D....................... Rate reduction determination........................................... 235

56DA.................... No rate increase or reduction for small amounts............. 235

56E........................ Cancellation or suspension determination—general........ 236

56EA..................... Cancellation or suspension determination for failure to comply with section 54A notice         236

56EB..................... Cancellation or suspension for failure to take action to obtain a comparable foreign pension  237

56EC..................... Cancellation determination where service pension, income support supplement or veteran payment not payable........................................................................................ 238

56F........................ Resumption of a payment after suspension..................... 238

56G....................... Date of effect of favourable determination...................... 239

56GA.................... Date of effect of determination under section 56C—dependent child       239

56H....................... Date of effect of adverse determination........................... 240

56J......................... Payment may be cancelled at recipient’s request............. 243

56K........................ Payment may be suspended if instalments not drawn..... 243

56L........................ Commission may end suspension................................... 244

56M....................... Effect of cancellation or suspension................................ 244

56N....................... Changes to payments by computer................................. 245

Division 16—Review of decisions                                                                       246

57.......................... Persons who may seek review of certain decisions........ 246

57A....................... Application for review.................................................... 247

57B........................ Commission’s powers where request for review............ 247

57C........................ Date of effect of certain review decisions....................... 248

57D....................... Commission must make written record of review decision and reasons  248

57E........................ Person who requested review to be notified of decision. 249

57F........................ Powers of Commission to gather evidence..................... 249

57G....................... Withdrawal of request for review................................... 251

57H....................... Commission may reimburse certain expenses................. 251

Division 17—Administration of payments                                                     252

Subdivision A—General administration of payments                                  252

58.......................... Application of Subdivision............................................. 252

58A....................... Payment by instalments.................................................. 252

58C........................ Manner of payment......................................................... 256

58D....................... Agents............................................................................ 256

58E........................ Pension payday falling on public holiday etc.................. 257

58F........................ Payment into bank account etc........................................ 257

58J......................... Payments to Commissioner of Taxation or Child Support Registrar        258

Subdivision B—Payments outside Australia                                                   259

58K........................ Age, invalidity and partner service pensions, income support supplement and veteran payment generally portable........................................................................... 259

58L........................ Manner of payment outside Australia............................. 259

58M....................... No portability if claim based on short‑term residence..... 259

58N....................... Transfer to portable pension........................................... 260

Division 18—Indexation                                                                                          262

Subdivision A—Preliminary                                                                               262

59.......................... Analysis of Division....................................................... 262

59A....................... Indexed and adjusted amounts........................................ 262

Subdivision B—CPI indexation                                                                          268

59B........................ CPI Indexation Table...................................................... 268

59C........................ Indexation of amounts.................................................... 276

59D....................... Indexation factor............................................................. 277

59E........................ Rounding off indexed amounts....................................... 278

59EAA.................. Indexation using Pensioner and Beneficiary Living Cost Index               278

59EAB.................. Living cost indexation factor........................................... 279

59EAC.................. Rounding off amounts.................................................... 280

59EA..................... Certain indexed amounts to be increased in line with increases in Male Total Average Weekly Earnings........................................................................................ 281

Subdivision C—Adjustment of other rates                                                       283

59G....................... Adjustment of single pension rate MBR amount............ 283

59GA.................... Adjustment of rent free area............................................ 283

59GB..................... Adjustment of adjusted income free area........................ 284

59H....................... Adjustment of pension single non‑property owner AVL 284

59J......................... Adjustment of special illness separated special resident AVL  284

59LA..................... Adjustment of ceiling rate............................................... 285

59LB..................... Adjustment of veteran payment maximum basic rates.... 286

Part IIIC—Compensation recovery                                                                       288

Division 1—General                                                                                                  288

59M....................... General effect of Part...................................................... 288

59N....................... Certain lump sums to be treated as though they were received as periodic payments               289

59O....................... Effect of certain State and Territory laws........................ 290

Division 2—Enforcement of compensation rights                                     291

59P........................ Commission may require person to take action to obtain compensation   291

Division 3—Receipt of compensation                                                               293

59Q....................... Pension etc. not payable during lump sum preclusion period.. 293

59QA.................... Deemed lump sum payments arising from separate payments 296

59R........................ Person may have to repay amount where both lump sum and pension have been received      297

59S........................ Lump sum compensation not counted as ordinary income 298

59T........................ Effect of periodic compensation payments on rate of person’s compensation affected pension               298

59TA..................... Effect of periodic compensation payments on rate of partner’s compensation affected pension               299

59U....................... Claim for compensation affected pension granted to person qualified for compensation affected payment under Social Security Act......................................................... 300

59V....................... Rate reduction under both income/assets test and this Part 302

59W....................... Person may have to repay amount where both periodic compensation payments and pension have been received........................................................................... 302

59X....................... Periodic compensation payments not counted as ordinary income           304

Division 4—Compensation payers                                                                     305

59Y....................... Commission may send preliminary notice to potential compensation payer             305

59Z........................ Potential compensation payer must notify Department of liability            305

59ZA..................... Commission may send recovery notice to compensation payer                306

59ZB..................... Preliminary notice or recovery notice suspends liability to pay compensation         310

59ZC..................... Compensation payer’s payment to Commonwealth discharges liability to compensation recipient          310

59ZD..................... Offence to make compensation payment after receiving preliminary notice or recovery notice                310

Division 5—Insurers                                                                                                 312

59ZE...................... Commission may send preliminary notice to insurer...... 312

59ZF...................... Insurer must notify Department of liability..................... 312

59ZG..................... Commission may send recovery notice to insurer........... 313

59ZH..................... Preliminary notice or recovery notice to insurer suspends both insurer’s and compensation payer’s liability........................................................................................ 317

59ZI....................... Insurer’s payment to Commonwealth discharges liability 317

59ZJ...................... Offence to make compensation payment after receiving preliminary notice or recovery notice                317

Division 6—Miscellaneous                                                                                     319

59ZK..................... Commission may give recovery notice either to compensation payer or to insurer but not to both          319

59ZL...................... Commission may disregard some payments................... 319

59ZM.................... Part to bind Crown......................................................... 320

Part IIID—Quarterly pension supplement                                                         321

60.......................... When this Part applies.................................................... 321

60A....................... Quarterly pension supplement........................................ 321

60B........................ Rate of quarterly pension supplement............................. 322

60C........................ Payment of quarterly pension supplement...................... 322

Part IIIE—Clean energy payments                                                                        324

Division 2—Energy supplements                                                                        324

Subdivision A—Energy supplements for pensions under Parts II and IV 324

62A....................... Energy supplement for disability pension....................... 324

62B........................ Energy supplement for war widow/war widower pension 325

62C........................ Disregard nil rate in certain circumstances...................... 326

62D....................... Electing for quarterly payment of energy supplement for pension under Part II or IV             327

Subdivision B—Quarterly energy supplement for service pension          328

62E........................ Quarterly energy supplement for service pension........... 328

Division 3—Essential medical equipment payment                                   330

Subdivision A—Definitions                                                                                  330

63A....................... Definitions...................................................................... 330

Subdivision B—Eligibility for essential medical equipment payment     330

63B........................ Eligibility for essential medical equipment payment........ 330

63C........................ The medical needs requirement....................................... 332

63D....................... The concession requirement............................................ 333

63E........................ The energy account requirement..................................... 334

63F........................ Availability of payments................................................. 335

63G....................... Amount of payment........................................................ 335

63H....................... Debts arising in respect of essential medical equipment payments           336

Subdivision C—Claim for essential medical equipment payment             336

63J......................... Need for a claim.............................................................. 336

63K........................ Special requirements regarding claims for essential medical equipment payment     337

63L........................ Who can claim?............................................................... 337

63M....................... Making a claim............................................................... 337

63N....................... Claimant must be an Australian resident......................... 338

63P........................ Claim may be withdrawn................................................ 338

Subdivision D—Investigation of claim                                                             339

63Q....................... Secretary to investigate claim and submit it to Commission 339

Subdivision E—Consideration and determination of claim                       339

63R........................ Duties of Commission in relation to claim...................... 339

63S........................ Entitlement determination................................................ 340

63T........................ Date of effect of determination........................................ 340

Division 4—Review of decisions                                                                         341

64A....................... Review of certain decisions............................................ 341

64B........................ Application for review.................................................... 341

64C........................ Commission’s powers where request for review............ 341

64D....................... Date of effect of certain review decisions....................... 342

64E........................ Commission must make written record of review decision and reasons  342

64F........................ Person who requested review to be notified of decision. 342

64G....................... Powers of Commission to gather evidence..................... 343

64H....................... Withdrawal of request for review................................... 344

Division 5—Multiple entitlement exclusions                                                 346

65A....................... Multiple entitlement exclusions....................................... 346

Part IIIF—One‑off energy assistance payment                                               347

66.......................... One‑off energy assistance payment—this Act................ 347

67.......................... One‑off energy assistance payment—MRCA................ 348

67A....................... One‑off energy assistance payment—Safety, Rehabilitation and Compensation Act 1988      350

67B........................ More than one entitlement............................................... 350

67C........................ Claim not required for one‑off energy assistance payment 350

67D....................... Payment of one‑off energy assistance payment.............. 351

Part IIIG—2019 one‑off energy assistance payment                                   352

67E........................ One‑off energy assistance payment—this Act................ 352

67F........................ One‑off energy assistance payment—MRCA................ 353

67G....................... One‑off energy assistance payment—Safety, Rehabilitation and Compensation (Defence‑related Claims) Act 1988................................................................................ 355

67H....................... More than one entitlement............................................... 355

67J......................... Claim not required for one‑off energy assistance payment 355

67K........................ Payment of one‑off energy assistance payment.............. 356

Part IIIH—2020 economic support payment                                                    357

Division 1—First 2020 economic support payment                                  357

67L........................ First 2020 economic support payment............................ 357

67M....................... More than one entitlement............................................... 357

67N....................... Claim not required for first 2020 economic support payment  357

67P........................ Payment of first 2020 economic support payment.......... 358

Division 2—Second 2020 economic support payment                             359

67Q....................... Second 2020 economic support payment........................ 359

67R........................ More than one entitlement............................................... 359

67S........................ Claim not required for second 2020 economic support payment              359

67T........................ Payment of second 2020 economic support payment..... 360

Division 3—Eligibility                                                                                               361

67U....................... Purpose of this Division................................................. 361

67V....................... Payments under this Act................................................. 361

67W....................... Veterans’ Children Education Scheme............................ 362

67X....................... Seniors health card, gold card etc.................................... 363

67Y....................... MRCA............................................................................ 364

67Z........................ Education scheme under MRCA.................................... 365

67ZA..................... Safety, Rehabilitation and Compensation (Defence‑related Claims) Act 1988         365

67ZB..................... Residence requirement.................................................... 365

Part IIIJ—Additional economic support payments                                      366

Division 1—Additional economic support payment 2020                     366

67ZC..................... Additional economic support payment 2020................... 366

67ZD..................... More than one entitlement............................................... 366

67ZE...................... Claim not required for additional economic support payment 2020         367

67ZF...................... Payment of additional economic support payment 2020. 367

Division 2—Additional economic support payment 2021                     368

67ZG..................... Additional economic support payment 2021................... 368

67ZH..................... More than one entitlement............................................... 368

67ZI....................... Claim not required for additional economic support payment 2021         369

67ZJ...................... Payment of additional economic support payment 2021. 369

Division 3—Eligibility                                                                                               370

67ZK..................... Purpose of this Division................................................. 370

67ZL...................... Payments under this Act................................................. 370

67ZM.................... Seniors health card, gold card etc.................................... 371

67ZN..................... MRCA............................................................................ 373

67ZO..................... Safety, Rehabilitation and Compensation (Defence‑related Claims) Act 1988         374

Part IV—Pensions for members of Defence Force or Peacekeeping Force and their dependants         375

Division 1—Interpretation                                                                                     375

68.......................... Interpretation................................................................... 375

69.......................... Application of Part to members of the Forces................. 380

69A....................... Application of Part to members of the Forces who render hazardous service          384

69B........................ Application of Part to persons who rendered British nuclear test defence service    384

Division 2—Eligibility for pension                                                                     387

70.......................... Eligibility for pension under this Part............................. 387

70A....................... Most defence‑caused injuries, diseases and deaths of members of the Defence Force no longer covered by this Act.................................................................................. 396

71.......................... Application of certain provisions of Part II..................... 397

72.......................... Dual entitlement to pension............................................. 399

Division 3—Rates of pension                                                                                401

73.......................... Application of Divisions 4 and 5 of Part II..................... 401

Division 4—Pension and other compensation                                              402

73A....................... This Division does not apply to certain payments........... 402

74.......................... Payments by way of compensation or damages.............. 402

75.......................... Proceedings against third party....................................... 408

76.......................... Payment of damages to Commonwealth......................... 410

77.......................... Discharge of liability of Commonwealth to pay damages 412

78.......................... Other payments of compensation.................................... 413

79.......................... Overpayments of pension............................................... 414

Part IVA—Advance payments of pension and income support supplement        416

Division 1—General                                                                                                  416

79A....................... Definition........................................................................ 416

Division 2—Eligibility for advance payment                                               417

79B........................ Eligibility for advance payment....................................... 417

Division 3—Applying for advance payment                                                 418

79C........................ Application..................................................................... 418

79D....................... Who can apply................................................................ 418

79E........................ Making an application..................................................... 418

79G....................... Applicant must be Australian resident and in Australia.. 418

79H....................... Application may be withdrawn....................................... 419

Division 4—Determination of application and payment of advance payment   420

79I......................... Commission to determine application............................. 420

79J......................... Payment of advance payment.......................................... 421

Division 5—Amount of advance payment                                                     422

79K........................ Amount of advance payment.......................................... 422

Division 6—Advance payment deductions                                                    424

79L........................ Advance payment deduction........................................... 424

79M....................... Amount of advance payment deduction—basic calculation 424

79N....................... Person may request larger advance payment deduction.. 424

79O....................... Reduction of advance payment deduction in cases of severe financial hardship       425

79P........................ The final advance payment deduction............................. 426

79Q....................... Payment rate insufficient to cover advance payment deduction                426

79R........................ Rounding of amounts..................................................... 426

79S........................ Unrepaid advance payments to deceased partner to be disregarded          427

Division 7—Review by Commission                                                                 428

79T........................ Request for review.......................................................... 428

79U....................... Commission’s powers.................................................... 428

79V....................... Commission must make written record of review decision and reasons  429

79W....................... Person who requested review to be notified of decision. 429

79X....................... Powers of Commission to gather evidence..................... 429

79Y....................... Withdrawal of request for review................................... 430

Part V—Medical and other treatment                                                                  432

80.......................... Interpretation................................................................... 432

81.......................... Application of Part V...................................................... 433

84.......................... Provision of treatment..................................................... 434

85.......................... Veterans eligible to be provided with treatment.............. 436

85A....................... Treatment under section 279 or 280 of the MRCA for aggravated injuries or diseases           442

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................................................ 442

86.......................... Dependants eligible to be provided with treatment.......... 443

88A....................... Commission may determine specified veterans and others are eligible to be provided with specified treatment........................................................................................ 446

88B........................ Provision of services under the Veteran Suicide Prevention pilot            446

89.......................... Treatment at hospitals and other institutions................... 447

90.......................... Treatment Principles....................................................... 447

90AA.................... Provision of services under the Coordinated Veterans’ Care mental health pilot     450

90A....................... Repatriation Private Patient Principles............................ 450

90B........................ Application of Repatriation Private Patient Principles..... 452

91.......................... Repatriation Pharmaceutical Benefits Scheme................. 453

92.......................... Counselling services and psychiatric assessment............ 455

93.......................... Recovery of cost of treatment......................................... 456

93A....................... Charges payable to Commonwealth................................ 459

93B........................ False statements relating to treatment.............................. 460

93C........................ Knowingly making false statements relating to treatment 462

93D....................... Bribery etc...................................................................... 463

93E........................ Prohibited practices in relation to the rendering of pathology services     467

93F........................ Offences against 2 or more provisions........................... 469

93G....................... Statements inadmissible in evidence............................... 470

93H....................... Recovery of amounts paid because of false statements... 470

93J......................... Prosecution of offences.................................................. 472

Part VA—Extension of Repatriation Pharmaceutical Benefits Scheme  473

Division 1—Definitions                                                                                            473

93K........................ Definitions...................................................................... 473

Division 2—Pharmaceutical benefits may be obtained                           474

93L........................ Certain veterans and mariners may obtain pharmaceutical benefits          474

Division 3—Eligibility for, and entitlement to, pharmaceutical benefits card    475

Subdivision A—Eligibility                                                                                   475

93M....................... Who is eligible?.............................................................. 475

Subdivision B—Entitlement                                                                                476

93N....................... Entitlement to a pharmaceutical benefits card under this Part 476

Division 4—Claim for pharmaceutical benefits card under this Part 477

93P........................ Need for a claim.............................................................. 477

93Q....................... Who can claim?............................................................... 477

93R........................ Making a claim............................................................... 477

93T........................ Claimant must be an Australian resident and in Australia 478

93U....................... Claim may be withdrawn................................................ 478

Division 5—Investigation of claim                                                                     480

93V....................... Secretary to investigate claim and submit it to Commission 480

Division 6—Consideration and determination of claim                         481

93W....................... Duties of Commission in relation to claim...................... 481

93X....................... Entitlement determination................................................ 481

93Y....................... Date of effect of determination........................................ 481

Division 7—Review of decisions                                                                         483

93Z........................ Review of certain decisions............................................ 483

93ZA..................... Application for review.................................................... 483

93ZB..................... Commission’s powers where request for review............ 483

93ZC..................... Date of effect of certain review decisions....................... 483

93ZD..................... Commission must make written record of review decision and reasons  484

93ZE...................... Person who requested review to be notified of decision. 484

93ZF...................... Powers of Commission to gather evidence..................... 485

93ZG..................... Withdrawal of request for review................................... 486


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

Division 1Ordinary income concept

46  General meaning of ordinary income

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

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

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

46A  Certain amounts taken to be received over 12 months

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

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

                     (b)  is not:

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

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

                            (iii)  an exempt lump sum;

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

Division 1AWork bonus

46AA  Income concession

             (1)  This section applies to a person if:

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

                     (b)  the person has reached qualifying age.

Note:          For qualifying age see section 5Q.

Work bonus income greater than or equal to income concession amount

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

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

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

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

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

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

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

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

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

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

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

                   David’s unused concession balance is now nil.

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

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

                   Amy’s unused concession balance is now $900.

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

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

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

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

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

                   Assume Bill’s unused concession balance is $800.

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

                   Bill’s unused concession balance is now nil.

Work bonus income less than income concession amount

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

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

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

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

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

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

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

No work bonus income

          (4B)  If:

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

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

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

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

Definitions

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

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

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

Note:          For employment income, see section 46AB.

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

where:

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

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

Interpretation

             (5)  If the person is a member of a couple, apply this section in relation to the person, and to the person’s partner, before applying Point SCH6‑E3 of Schedule 6.

          (5A)  If:

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

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

then, in applying point 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 for remunerative work of the person as an employee in an employer/employee relationship; and

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

                              (i)  salary, wages, commissions and employment‑related fringe benefits; and

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

but does not include:

                     (c)  a superannuation payment to the person; or

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

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

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

                     (g)  a comparable foreign pension; or

                     (h)  an instalment of parental leave pay; 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.

46ABA  Meaning of gainful work

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

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

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

Disregard managing or administering family financial investments and real property

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

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

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

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

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

Disregard domestic duties

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

                     (a)  domestic tasks; or

                     (b)  household maintenance tasks; or

                     (c)  gardening tasks; or

                     (d)  similar tasks;

in relation to:

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

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

Definitions

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

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

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

             (5)  In this section:

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

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

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

                     (c)  both:

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

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

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

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

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

46AC  Unused concession balance

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 $7,800, that balance is instead taken to be $7,800.

Example:    John has an unused concession balance of $7,700. John has $100 of work bonus income in a pension period.

Instead of John’s unused concession balance increasing to $7,900 under subsection 46AA(4A), John’s unused concession balance increases to $7,800.

Effect of ceasing to receive service pension or income support supplement

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

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

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

Scope

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

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

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

Income reduction under section 46AA

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

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

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

Income reduction under section 115G

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

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

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

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

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

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

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

Division 2Business income

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

             (1)  If:

                     (a)  a person carries on a business; and

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

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

             (2)  If:

                     (a)  a person carries on a business; and

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

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

46C  Permissible reductions of business income

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

                     (a)  losses and outgoings that relate to the business and are allowable deductions for the purposes of section 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 3Income from financial assets (including income streams (short term) and certain income streams (long term))

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

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

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

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

Method statement

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

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

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

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

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

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

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

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

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

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

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

Example:    How deemed income of a person who is not a member of a couple is worked out

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 4Income from income streams not covered by Division 3

Subdivision BIncome streams that are not family law affected income streams

46SA  Scope of Subdivision

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

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

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

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

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

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

46T  Income from asset‑test exempt income stream

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

Note:          For asset‑test exempt income stream see sections 5JA, 5JB and 5JBA.

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

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

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

Note:          See section 46VA.

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

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

where:

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

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

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

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

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

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

where:

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

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

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

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

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

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

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

Recipient makes election

             (2)  If:

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

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

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

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

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

where:

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

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

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

Recipient does not make election

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

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

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

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

where:

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

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

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

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

Exception—income stream’s commencement day happens in June

             (5)  If:

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

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

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

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

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

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

46X  Income—asset‑tested income stream (long term) that is 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—asset‑tested income stream (long term) that 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.

46YB  Income—asset‑tested income stream (lifetime)

                   If the income stream is an asset‑tested income stream (lifetime), 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.

Subdivision CFamily law affected income streams

46Z  Scope of Subdivision

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

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

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

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

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

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

46ZA  Income from asset‑test exempt income streams

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

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

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

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

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

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

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

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

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

46ZBA  Income from asset‑tested income stream (lifetime)

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

             (2)  In making a determination under subsection (1), the Commission must comply with any relevant 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); or

                     (e)  subsection 46ZBA(1).

Division 6Income tests—conversion of foreign currency amounts

47  Application of Division

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

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

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

47A  Conversion of foreign currency amounts

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

                     (a)  if section 47C applies—the 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 7Income tests—disposal of ordinary income

48  Disposal of ordinary income

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

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

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

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

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

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

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

Note:          For amount of disposition see section 48A.

             (2)  Subsection (1) does not apply to a course of conduct consisting of the provision of 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, income support supplement or a veteran payment; or

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

Division 9New Enterprise Incentive Scheme

50  General effect of Division

                   This Division adjusts the service pension rate, income support supplement rate or veteran payment rate of a person who is receiving, or whose partner is receiving, payments under 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, income support supplement or veteran payment 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 or veteran payment 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 or veteran payment in respect of the person is payable to the person’s partner during a pension period;

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

             (3)  If:

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

                     (b)  NEIS is payable to the person during that pension period; and

                     (c)  an instalment of:

                              (i)  age service pension; or

                             (ii)  invalidity service pension; or

                            (iii)  veteran payment;

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

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

50B  Rate reduction under this Division

             (1)  Subject to subsection (2), if a person’s rate of payment under Part III or IIIA, or rate of veteran payment, is to be reduced under this Division because of a 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, or rate of veteran payment, 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, or rate of veteran payment, 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, or rate of veteran payment, is not to be reduced below nil under subsection (1) or (2).

Division 11General provisions relating to the assets test

Subdivision AValue of person’s assets

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

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

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

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

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

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

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

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

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

                     (d)  the value of any 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

                          (iiia)  an ATO small superannuation account;

                            until the person:

                            (iv)  reaches pension age; or

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

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

                    (fa)  if:

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

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

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

                            the value of the granny flat interest;

                    (fb)  if:

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

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

                            the value of the granny flat interest;

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

                    (fc)  if:

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

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

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

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

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

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

                      (j)  the value of:

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

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

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

Note:       For exempt funeral investment see section 5PC.

                     (k)  if:

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

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

                            the value of the property;

                      (l)  if:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Definitions

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

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

             (2)  The Minister may specify:

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

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

in a determination.

             (3)  A determination must be in writing.

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

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

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

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

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

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

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

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

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

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.

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

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

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

where:

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

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

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

52BAA  Value of asset‑tested income streams (lifetime) that are managed investments

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

Note:          For asset‑tested income stream (lifetime), see subsection 5J(1).

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

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

Value of income stream

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

Purchase amount

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

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

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

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

where:

compounded amount for the relevant adjustment day means:

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

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

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

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

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

relevant adjustment day means each of the following:

                     (a)  the relevant payment day;

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

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

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

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

52BAB  Value of asset‑tested income streams (lifetime) that are not managed investments

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

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

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

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

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

Value of income stream

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

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

                           

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

                           

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

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

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

Assessment day

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

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

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

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

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

                     (b)  otherwise:

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

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

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

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

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

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

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

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

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

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

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

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

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

Note:          For qualifying age, see section 5Q.

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

Threshold day

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

Method statement

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

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

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

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

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

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

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

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

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

           (11)  If:

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

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

then:

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

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

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

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

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

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

Purchase amount

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

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

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

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

                            less any commuted amounts; or

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

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

where:

compounded amount for the relevant adjustment day means:

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

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

relevant above threshold rate for the relevant adjustment day means:

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

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

                           

relevant adjustment day means each of the following:

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

                     (b)  the person’s assessment day.

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

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

                     (a)  beginning on the day after:

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

                             (ii)  otherwise—the relevant payment day; and

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

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

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

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

52BA  Value of 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.

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

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

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

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

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

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

Exception for an 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).

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

             (4)  Where:

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

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

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

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

             (5)  If:

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

                     (b)  either:

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

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

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

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

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

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

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

                     (a)  the person is:

                              (i)  a primary producer; or

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

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

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

then:

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

                     (e)  those assets are taken to be a single asset (the primary production asset); and

                      (f)  the value of that single asset is worked out under subsection (2).

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

             (2)  The value of a person’s primary production asset is worked out in the following way:

Method statement

Step 1.   Add together the value of the assets referred to in paragraph (1)(b): the result is called the unencumbered value.

Step 2.   Add together the value of the liabilities referred to in paragraph (1)(c): the result is called the total liability.

Step 3.   Take the total liability away from the unencumbered value: the result is the value of the person’s primary production asset.

             (3)  If the result under Step 3 of the Method statement is less than nil, the value of the primary production asset is taken to be nil.

52CB  Value of life policy

             (1)  This section applies in relation to a person and a day (the assessment day) if:

                     (a)  the person has reached:

                              (i)  pension age; or

                             (ii)  in relation to income support supplement—qualifying age; and

                     (b)  the person is the owner (within the meaning of subsection 10(2) of the Life Insurance Act 1995) of a life policy covered by paragraph 9(1)(a) or (b) of that Act; and

                     (c)  the person became the owner of the policy after the person reached that age; and

                     (d)  the sum of each amount paid for the policy (regardless of who paid the amount) in any period of 12 months exceeds 15% of the maximum death benefit that would be payable in the event of the death of the person whose life is insured on the assessment day.

Note:          For pension age and qualifying age, see section 5Q.

             (2)  The value of the life policy on the assessment day is, for the purposes of the assets test, the higher of the following:

                     (a)  the amount that would be payable to the person covered by paragraph (1)(b) if the policy were surrendered on that day;

                     (b)  the sum of each amount paid for the policy by the person covered by paragraph (1)(b), less any commuted amounts.

52D  Loans

                   If a person lends an amount after 22 May 1986, the value of the assets of the person for the purposes of this Act includes so much of that amount as remains unpaid but does not include any amount payable by way of interest under the loan.

Subdivision BDispositions of assets (general provisions)

52E  Disposal of assets

                   For the purposes of this Act, a person disposes of assets of the person if the person engages in a course of conduct that diminishes, directly or indirectly, the value of the person’s assets and:

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

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

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

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

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

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

Note:          Under Subdivision B of Division 11A of Part IIIB, certain transfers of assets to special disability trusts can be taken not to be disposals of the assets (but this can be subject to a limit on the aggregate value of the transfers).

52F  Amount of disposition

                   Where a person disposes of assets, the amount of the disposition is:

                     (a)  if the person receives no consideration for the diminution in the value of the assets—an amount equal to the amount of the diminution in the value of the assets; or

                     (b)  if the person receives consideration for the diminution in the value of the assets—an amount equal to the amount of the diminution in the value of the assets less the amount of the consideration received by the person in respect of the diminution.

Note:          If subsection 52ZZZWM(2) applies in relation to the transfer of an asset to a special disability trust, that subsection has the effect of reducing the amount of the disposal or disposition.

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

                   If:

                     (a)  a person, or a person’s partner, has:

                              (i)  acquired an asset; or

                             (ii)  received consideration that is not inadequate consideration for an asset; and

                     (b)  the value of the asset is included in the value of the person’s assets by Subdivision BA or BB because of a previous disposition of the asset; and

                     (c)  the person has, by document lodged at an office of the Department in Australia in accordance with section 5T, notified the Department of the circumstances covered by paragraphs (a) and (b);

whichever of Subdivisions BA and BB is applicable ceases, from the start of the day on which the document is lodged, to apply in respect of that disposition of the asset.

Subdivision BADispositions of assets before 1 July 2002

52FAA  Application

                   This Subdivision applies only to dispositions of assets that took place before 1 July 2002.

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

             (1)  If:

                     (a)  a person is not a member of a couple when the person claims a service pension, an income support supplement or a social security pension; and

                     (b)  the person disposes of an asset of the person during a pre‑pension year of the person; and

                     (c)  the amount of that disposition, or the sum of that amount and of the amounts (if any) of other dispositions of assets previously made by the person during that pre‑pension year, exceeds $10,000;

then, for the purposes of determining whether the pension is payable to the person, there is to be included in the value of the person’s assets for the period of 5 years that starts on the day on which the disposition took place:

                     (d)  the amount by which the sum of the amount of the first‑mentioned disposition of assets and of the amounts (if any) of other dispositions of assets previously made by the person during that pre‑pension year exceeds $10,000; or

                     (e)  the amount of the first‑mentioned disposition;

whichever is the lesser amount.

Note 1:       For disposes of assets see section 52E.

Note 2:       For amount of disposition see section 52F.

Note 3:       If a pension is payable to the person, section 52G operates to determine the rate of payment and section 52FA ceases to apply to the person.

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

             (1)  If, on or after 1 March 1986 and before 1 July 2002:

                     (a)  a person who is not a member of a couple has, during a pension year of the person, disposed of assets of the person; and

                     (b)  the amount of that disposition of assets, or the sum of that amount and of the amounts (if any) of other dispositions of assets previously made by the person during that pension year, exceeds $10,000;

then, for the purposes of this Act, there is to be included in the value of the person’s assets for the period of 5 years that starts on the day on which the disposition takes place:

                     (c)  the amount by which the sum of the amount of the first‑mentioned disposition of assets, and of the amounts (if any) of other dispositions of assets previously made by the person during that pension year, exceeds $10,000; or

                     (d)  the amount of the first‑mentioned disposition of assets;

whichever is the lesser amount.

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

             (1)  Subject to subsections (3), (4) and (5), if:

                     (a)  a person disposes of an asset; and

                     (b)  the person is a member of a couple when the person or the person’s partner claims a service pension, an income support supplement or a social security pension; and

                     (c)  the person disposes of the asset:

                              (i)  during a pre‑pension year of the person; or

                             (ii)  if the person does not claim a service pension, an income support supplement or a social security pension but the person’s partner claims such a pension—during a pre‑pension year of the person’s partner; and

                     (d)  the amount of that disposition, or the sum of that amount and the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during that pre‑pension year, exceeds $10,000;

then, for the purposes of determining whether the pension is payable to the person:

                     (e)  there is to be included in the value of the person’s assets for the period of 5 years that starts on the day on which the disposition took place:

                              (i)  50% of the amount by which the sum of the amount of the first‑mentioned disposition and of the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during that pre‑pension year exceeds $10,000; or

                             (ii)  50% of the amount of the first‑mentioned disposition;

                            whichever is the lesser amount; and

                      (f)  there is to be included in the value of the assets of the person’s partner for the period of 5 years that starts on the day on which the disposition took place:

                              (i)  50% of the amount by which the sum of the amount of the first‑mentioned disposition and of the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during that pre‑pension year exceeds $10,000; or

                             (ii)  50% of the amount of the first‑mentioned disposition;

                            whichever is the lesser amount.

Note 1:       For disposes of assets see section 52E.

Note 2:       For amount of disposition see section 52F.

Note 3:       If a pension is payable to the person, section 52H operates to determine the rate of payment and section 52GA ceases to apply to the person.

             (3)  If:

                     (a)  amounts are included under subsection (1) in the value of the assets of a person who is a member of a couple and in the value of the assets of the person’s partner because of a disposition of an asset by the person; and

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

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

             (4)  If:

                     (a)  an amount is included under subsection (1) in the value of the assets of a person who is a member of a couple and in the value of the assets of the person’s partner because of a disposition of an asset by the person; and

                     (b)  the person dies;

an amount is not to be included in the value of the assets of the person’s partner because of that disposition.

             (5)  If:

                     (a)  an amount is included under subsection (1) in the value of the assets of a person who is a member of a couple and in the value of the assets of the person’s partner because of a disposition of an asset by the person; and

                     (b)  the partner dies;

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

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

             (1)  Subject to subsections (3) and (4), where, on or after 1 March 1986 and before 1 July 2002:

                     (a)  a person who is a member of a couple has disposed of assets of the person:

                              (i)  during a pension year of the person; or

                             (ii)  if the person is not receiving a service pension, income support supplement or a social security pension but the person’s partner is receiving such a pension—during a pension year of the person’s partner; and

                     (b)  the amount of that disposition of assets, or the sum of that amount and the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during that pension year, exceeds $10,000;

then, for the purposes of this Act:

                     (c)  there is to be included in the value of the person’s assets for the period of 5 years that starts on the day on which the disposition takes effect:

                              (i)  50% of the amount by which the sum of the amount of the first‑mentioned disposition of the assets and of the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during the pension year exceeds $10,000; or

                             (ii)  50% of the amount of the first‑mentioned disposition of assets;

                            whichever is the lesser amount; and

                     (d)  there is to be included in the value of the assets of the person’s partner for the period of 5 years that starts on the day on which the disposition takes place:

                              (i)  50% of the amount by which the sum of the amount of the first‑mentioned disposition of the assets and of the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during the pension year exceeds $10,000; or

                             (ii)  50% of the amount of the first‑mentioned disposition of assets;

                            whichever is the lesser amount.

             (3)  Where:

                     (a)  amounts are included under subsection (1) in the value of a person’s assets who is a member of a couple and in the assets of the person’s partner because of a disposition of assets by the person; and

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

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

             (4)  Where:

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

                     (b)  the person dies;

no amount is to be included in the value of the assets of the person’s partner because of that disposition.

             (5)  Where:

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

                     (b)  the person’s partner dies;

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

52J  Dispositions more than 5 years old to be disregarded

                   This Subdivision does not apply to a disposition of assets that took place:

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

                              (i)  the person who disposed of those assets; or

                             (ii)  if that person was, at the time when that disposition took place, a member of a couple—that person’s partner;

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

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

Subdivision BBDispositions of assets on or after 1 July 2002

52JA  Disposition of assets in tax year—individuals

Dispositions to which section applies

             (1)  This section applies to a disposition (the relevant disposition) on or after 1 July 2002 of an asset by a person who is not a member of a couple at the time of the relevant disposition.

Increase in value of assets

             (2)  If the amount of the relevant disposition, or the sum of that amount and the amounts (if any) of other dispositions of assets previously made by the person during the tax year in which the relevant disposition took place, exceeds $10,000, then, for the purposes of this Act, the lesser of the following amounts is to be included in the value of the person’s assets for the period of 5 years starting on the day on which the relevant disposition took place:

                     (a)  the amount of the relevant disposition;

                     (b)  the amount by which the sum of the amount of the relevant disposition and the amounts (if any) of other dispositions of assets previously made by the person during the tax year in which the relevant disposition took place, exceeds $10,000.

Previous joint dispositions

             (3)  If, during the tax year in which the relevant disposition took place but before the time of the relevant disposition, the person was a member of a couple who jointly disposed of an asset, a reference in subsection (2) to the amounts (if any) of other dispositions of assets previously made by the person during that tax year includes a reference to one‑half of the amount of the joint disposition.

52JB  Dispositions of assets in 5 year period—individuals

Disposition to which section applies

             (1)  This section also applies to a disposition (the relevant disposition) on or after 1 July 2002 of an asset by a person who is not a member of a couple at the time of the relevant disposition.

Increase in value of assets

             (2)  If:

                     (a)  the sum of the amount of the relevant disposition and the amounts of any previous dispositions of assets made during the rolling period by the person;

less

                     (b)  the sum of any amounts included in the value of the person’s assets during the rolling period under section 52JA, 52JC or 52JD or any previous application or applications of this section;

exceeds $30,000, then, for the purposes of this Act, the lesser of the following amounts is to be included in the value of the person’s assets for the period of 5 years starting on the day on which the relevant disposition took place:

                     (c)  an amount equal to the excess;

                     (d)  the amount of the relevant disposition.

Previous joint dispositions

             (3)  If, during the rolling period but before the time of the relevant disposition, the person was a member of a couple who jointly disposed of an asset, the reference in paragraph (2)(a) to the amounts of any previous dispositions during the rolling period of assets by the person includes a reference to one‑half of the amount of the joint disposition.

Rolling period

             (4)  For the purposes of this section, the rolling period is the period comprising the tax year in which the relevant disposition took place and such (if any) of the 4 previous tax years as occurred after 30 June 2002.

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

Dispositions to which section applies

             (1)  If there is a disposition (the relevant disposition) on or after 1 July 2002 of an asset by:

                     (a)  a person who, at the time of the relevant disposition, is a member of a couple; or

                     (b)  the person referred to in paragraph (a) and the person who is, at that time, the partner of the person referred to in that paragraph;

subsection (2) has effect.

Increase in value of assets

             (2)  Subject to this section, if the amount of the relevant disposition, or the sum of that amount and the amounts (if any) of other dispositions of assets previously made by the person, the person’s partner, or the person and the person’s partner, during the tax year in which the relevant disposition took place (whether before or after they became members of the couple), exceeds $10,000, then, for the purposes of this Act, the lesser of the following amounts is to be included in the value of the assets of the person and in the value of the assets of the partner for the period of 5 years starting on the day on which the relevant disposition took place:

                     (a)  one‑half of the amount of the relevant disposition;

                     (b)  one‑half of the amount by which the sum of the amount of the relevant disposition, and the amounts (if any) of other dispositions of assets previously made by the person, the partner, or the person and the partner, during the tax year in which the relevant disposition took place, exceeds $10,000.

Effect of ceasing to be member of couple

             (3)  If, after the disposition referred to in paragraph (1)(a), the person and the person’s partner cease to be members of the same couple:

                     (a)  no amount is to be included after the cessation in the value of the assets of the former partner because of that disposition; and

                     (b)  any amount that would, apart from this subsection, have been so included is to be included in the value of the assets of the person.

Effect of death of person

             (4)  If, after the disposition referred to in paragraph (1)(a), the person dies, no amount is to be included in the value of the assets of the person’s partner because of that disposition.

Effect of death of partner

             (5)  If, after the disposition referred to in paragraph (1)(a), the person’s partner dies, any amount that, if the partner had not died, would have been included in the value of the assets of the partner because of that disposition is to be included in the value of the assets of the person.

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

Dispositions to which section applies

             (1)  If there is a disposition (the relevant disposition) on or after 1 July 2002 of an asset by:

                     (a)  a person who, at the time of the relevant disposition, is a member of a couple; or

                     (b)  the person referred to in paragraph (a) and the person who is, at that time, the partner of the person referred to in that paragraph;

subsection (2) has effect.

Increase in value of assets

             (2)  Subject to this section, if:

                     (a)  the sum of the amount of the relevant disposition and the amounts of any previous dispositions of assets made during the rolling period by the person, the person’s partner or the person and the person’s partner;

less

                     (b)  the sum of any amounts included in the value of the assets of the person or of the partner during the rolling period under section 52JA, 52JB or 52JC or any previous application or applications of this section;

exceeds $30,000, then, for the purposes of this Act, the lesser of the following amounts is to be included in the value of the assets of the person and in the value of the assets of the partner for the period of 5 years starting on the day on which the relevant disposition took place:

                     (c)  an amount equal to one‑half of the excess;

                     (d)  one‑half of the amount of the relevant disposition.

Effect of ceasing to be member of couple

             (3)  If, after the disposition referred to in paragraph (1)(a), the person and the person’s partner cease to be members of the same couple:

                     (a)  no amount is to be included after the cessation in the value of the assets of the former partner because of that disposition; and

                     (b)  any amount that would, apart from this subsection, have been so included is to be included in the value of the assets of the person.

Effect of death of person

             (4)  If, after the disposition referred to in paragraph (1)(a), the person dies, no amount is to be included in the value of the assets of the person’s partner because of that disposition.

Effect of death of partner

             (5)  If, after the disposition referred to in paragraph (1)(a), the person’s partner dies, any amount that, if the partner had not died, would have been included in the value of the assets of the partner because of that disposition is to be included in the value of the assets of the person.

Rolling period

             (6)  For the purposes of this section, the rolling period is the period comprising the tax year in which the relevant disposition took place and such (if any) of the 4 previous tax years as occurred after 30 June 2002.

52JE  Certain dispositions to be disregarded

                   This Subdivision does not apply to a disposition of assets that took place:

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

                              (i)  the person who disposed of those assets; or

                             (ii)  if that person was, at the time when that disposition took place, a member of a couple—that person’s partner;

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

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

Subdivision CProvisions relating to special residences and special residents

52KA  Application of Subdivision to granny flat residents

                   This Subdivision applies to a granny flat resident only if the resident acquired or retained the person’s granny flat interest in the person’s principal home on or after 22 August 1990.

52L  Basis for different treatment

                   This Subdivision’s operation on a special resident depends on:

                     (a)  whether the resident is:

                              (i)  not a member of a couple; or

                             (ii)  a member of an ordinary couple; or

                            (iii)  a member of an illness separated couple; or

                            (iv)  a member of an ordinary couple with different principal homes; and

                     (b)  the resident’s entry contribution; and

                     (c)  the resident’s extra allowable amount.

52M  Entry contribution

             (1)  A special resident’s entry contribution is:

                     (a)  if the resident is not a member of a couple—the resident’s individual residence contribution; or

                     (b)  if the resident is a member of a couple, shares the resident’s principal home with the resident’s partner and is not a member of an illness separated couple—an amount equal to 50% of the resident’s individual residence contribution and of the partner’s individual residence contribution; or

                     (c)  if the resident is a member of an illness separated couple—the resident’s individual residence contribution; or

                     (d)  if:

                              (i)  the resident is a member of an ordinary couple with different principal homes; and

                             (ii)  the principal home of the resident’s partner is not a special residence;

                            the resident’s individual residence contribution; or

                     (e)  if:

                              (i)  the resident is a member of an ordinary couple with different principal homes; and

                             (ii)  the principal home of the resident’s partner is also a special residence;

                            an amount equal to 50% of the resident’s individual residence contribution and of the partner’s individual residence contribution.

          (1A)  A special resident’s entry contribution is the resident’s individual residence contribution plus the amount paid, or agreed to be paid, for the resident’s current right (if any) to share the resident’s principal home with a partner if:

                     (a)  the resident was a member of a couple at the time when the resident took up residence in the retirement village or granny flat; and

                     (b)  the resident has ceased to be a member of a couple.

          (1B)  A special resident’s entry contribution is the resident’s individual residence contribution if:

                     (a)  the resident was a member of a couple at the time when the sale leaseback agreement was entered into; and

                     (b)  the resident has ceased to be a member of a couple.

          (1C)  For the purposes of this Division, the individual residence contribution is:

                     (a)  for a retirement village resident—the total amount paid, or agreed to be paid, for the resident’s current right to live in the retirement village; and

                     (b)  for a granny flat resident—the total amount paid, or agreed to be paid, for the resident’s current right to live in the granny flat; and

                     (c)  for a sale leaseback resident—the deferred payment amount.

Note:          For deferred payment amount see section 5MB.

          (1D)  For the purposes of paragraph (1C)(b):

                     (a)  the total amount paid to obtain a person’s current right to live in a granny flat is the amount equal to the value of the person’s granny flat interest; and

                     (b)  the value of a person’s granny flat interest is:

                              (i)  unless subparagraph (ii) applies—the amount paid, or agreed to be paid, for the interest; or

                             (ii)  if the Commission considers that, for any special reason in any particular case, that value should be another amount—that other amount.

             (2)  An amount that is rent or a residential care charge for the purposes of this Act is to be disregarded in applying subsections (1), (1A) and (1B).

Note:          For residential care charge, see subsection 5N(1).

52N  Extra allowable amount

Retirement village residence taken up before 12 June 1989

             (1)  If a retirement village resident became entitled to take up residence in the retirement village before 12 June 1989, the resident’s extra allowable amount is:

                     (a)  if the resident is not a member of a couple—$64,000; or

                     (b)  if the resident is a member of an illness separated couple—$64,000; or

                     (c)  in any other case—$32,000.

Retirement village residence taken up on or after 12 June 1989

             (2)  If a retirement village resident became entitled to take up residence in the retirement village on or after 12 June 1989, the resident’s extra allowable amount is:

                     (a)  if the resident is not a member of a couple—the amount that, as at the time when the person becomes entitled to take up that residence, is the difference between the single property owner AVL and the single 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