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 217
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 220
54.......................... Secretary may require notification of an event or change of circumstances 220
54A....................... Secretary may require recipient to give information relevant to payment of service pension, income support supplement or veteran payment....................................... 222
54AA.................... Secretary may require recipient to give information, produce documents or appear before an officer 224
54B........................ Document served with a section 54 notice...................... 226
54BA..................... Secretary may require person or person’s partner to take action to obtain a comparable foreign pension........................................................................................ 226
54C........................ Interpretation................................................................... 227
Division 14—Pensioners in certain institutions 228
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 228
55A....................... Instalments may be redirected to partner or child............ 229
Division 15—Variation and termination 230
56.......................... Automatic termination or rate reduction—recipient complying with section 54 notification obligations 230
56A....................... Automatic termination—recipient not complying with section 54 notification obligations 231
56B........................ Automatic rate reduction—recipient not complying with section 54 notification obligations 232
56C........................ Rate increase determination............................................. 233
56D....................... Rate reduction determination........................................... 234
56DA.................... No rate increase or reduction for small amounts............. 234
56E........................ Cancellation or suspension determination—general........ 235
56EA..................... Cancellation or suspension determination for failure to comply with section 54A notice 235
56EB..................... Cancellation or suspension for failure to take action to obtain a comparable foreign pension 236
56EC..................... Cancellation determination where service pension, income support supplement or veteran payment not payable........................................................................................ 237
56F........................ Resumption of a payment after suspension..................... 237
56G....................... Date of effect of favourable determination...................... 238
56GA.................... Date of effect of determination under section 56C—dependent child 238
56H....................... Date of effect of adverse determination........................... 239
56J......................... Payment may be cancelled at recipient’s request............. 242
56K........................ Payment may be suspended if instalments not drawn..... 242
56L........................ Commission may end suspension................................... 243
56M....................... Effect of cancellation or suspension................................ 243
56N....................... Changes to payments by computer................................. 244
Division 16—Review of decisions 245
57.......................... Persons who may seek review of certain decisions........ 245
57A....................... Application for review.................................................... 246
57B........................ Commission’s powers where request for review............ 246
57C........................ Date of effect of certain review decisions....................... 247
57D....................... Commission must make written record of review decision and reasons 247
57E........................ Person who requested review to be notified of decision. 248
57F........................ Powers of Commission to gather evidence..................... 248
57G....................... Withdrawal of request for review................................... 250
57H....................... Commission may reimburse certain expenses................. 250
Division 17—Administration of payments 251
Subdivision A—General administration of payments 251
58.......................... Application of Subdivision............................................. 251
58A....................... Payment by instalments.................................................. 251
58C........................ Manner of payment......................................................... 255
58D....................... Agents............................................................................ 255
58E........................ Pension payday falling on public holiday etc.................. 256
58F........................ Payment into bank account etc........................................ 256
58J......................... Payments to Commissioner of Taxation or Child Support Registrar 257
Subdivision B—Payments outside Australia 258
58K........................ Age, invalidity and partner service pensions, income support supplement and veteran payment generally portable........................................................................... 258
58L........................ Manner of payment outside Australia............................. 258
58M....................... No portability if claim based on short‑term residence..... 258
58N....................... Transfer to portable pension........................................... 259
Division 18—Indexation 261
Subdivision A—Preliminary 261
59.......................... Analysis of Division....................................................... 261
59A....................... Indexed and adjusted amounts........................................ 261
Subdivision B—CPI indexation 267
59B........................ CPI Indexation Table...................................................... 267
59C........................ Indexation of amounts.................................................... 275
59D....................... Indexation factor............................................................. 276
59E........................ Rounding off indexed amounts....................................... 277
59EAA.................. Indexation using Pensioner and Beneficiary Living Cost Index 277
59EAB.................. Living cost indexation factor........................................... 278
59EAC.................. Rounding off amounts.................................................... 279
59EA..................... Certain indexed amounts to be increased in line with increases in Male Total Average Weekly Earnings........................................................................................ 280
Subdivision C—Adjustment of other rates 282
59G....................... Adjustment of single pension rate MBR amount............ 282
59GA.................... Adjustment of rent free area............................................ 282
59GB..................... Adjustment of adjusted income free area........................ 283
59H....................... Adjustment of pension single non‑property owner AVL 283
59J......................... Adjustment of special illness separated special resident AVL 283
59LA..................... Adjustment of ceiling rate............................................... 284
59LB..................... Adjustment of veteran payment maximum basic rates.... 285
Part IIIC—Compensation recovery 287
Division 1—General 287
59M....................... General effect of Part...................................................... 287
59N....................... Certain lump sums to be treated as though they were received as periodic payments 288
59O....................... Effect of certain State and Territory laws........................ 289
Division 2—Enforcement of compensation rights 290
59P........................ Commission may require person to take action to obtain compensation 290
Division 3—Receipt of compensation 292
59Q....................... Pension etc. not payable during lump sum preclusion period.. 292
59QA.................... Deemed lump sum payments arising from separate payments 295
59R........................ Person may have to repay amount where both lump sum and pension have been received 296
59S........................ Lump sum compensation not counted as ordinary income 297
59T........................ Effect of periodic compensation payments on rate of person’s compensation affected pension 297
59TA..................... Effect of periodic compensation payments on rate of partner’s compensation affected pension 298
59U....................... Claim for compensation affected pension granted to person qualified for compensation affected payment under Social Security Act......................................................... 299
59V....................... Rate reduction under both income/assets test and this Part 301
59W....................... Person may have to repay amount where both periodic compensation payments and pension have been received........................................................................... 301
59X....................... Periodic compensation payments not counted as ordinary income 303
Division 4—Compensation payers 304
59Y....................... Commission may send preliminary notice to potential compensation payer 304
59Z........................ Potential compensation payer must notify Department of liability 304
59ZA..................... Commission may send recovery notice to compensation payer 305
59ZB..................... Preliminary notice or recovery notice suspends liability to pay compensation 309
59ZC..................... Compensation payer’s payment to Commonwealth discharges liability to compensation recipient 309
59ZD..................... Offence to make compensation payment after receiving preliminary notice or recovery notice 309
Division 5—Insurers 311
59ZE...................... Commission may send preliminary notice to insurer...... 311
59ZF...................... Insurer must notify Department of liability..................... 311
59ZG..................... Commission may send recovery notice to insurer........... 312
59ZH..................... Preliminary notice or recovery notice to insurer suspends both insurer’s and compensation payer’s liability........................................................................................ 316
59ZI....................... Insurer’s payment to Commonwealth discharges liability 316
59ZJ...................... Offence to make compensation payment after receiving preliminary notice or recovery notice 316
Division 6—Miscellaneous 318
59ZK..................... Commission may give recovery notice either to compensation payer or to insurer but not to both 318
59ZL...................... Commission may disregard some payments................... 318
59ZM.................... Part to bind Crown......................................................... 319
Part IIID—Quarterly pension supplement 320
60.......................... When this Part applies.................................................... 320
60A....................... Quarterly pension supplement........................................ 320
60B........................ Rate of quarterly pension supplement............................. 321
60C........................ Payment of quarterly pension supplement...................... 321
Part IIIE—Clean energy payments 323
Division 2—Energy supplements 323
Subdivision A—Energy supplements for pensions under Parts II and IV 323
62A....................... Energy supplement for veterans and members of Defence Force or Peacekeeping Force 323
62B........................ Energy supplement for war widow/war widower pension 325
62C........................ Disregard nil rate in certain circumstances...................... 325
62D....................... Electing for quarterly payment of energy supplement for pension under Part II or IV 326
Subdivision B—Quarterly energy supplement for service pension 327
62E........................ Quarterly energy supplement for service pension........... 327
Division 3—Essential medical equipment payment 329
Subdivision A—Definitions 329
63A....................... Definitions...................................................................... 329
Subdivision B—Eligibility for essential medical equipment payment 329
63B........................ Eligibility for essential medical equipment payment........ 329
63C........................ The medical needs requirement....................................... 331
63D....................... The concession requirement............................................ 332
63E........................ The energy account requirement..................................... 333
63F........................ Availability of payments................................................. 334
63G....................... Amount of payment........................................................ 334
63H....................... Debts arising in respect of essential medical equipment payments 335
Subdivision C—Claim for essential medical equipment payment 335
63J......................... Need for a claim.............................................................. 335
63K........................ Special requirements regarding claims for essential medical equipment payment 336
63L........................ Who can claim?............................................................... 336
63M....................... Making a claim............................................................... 336
63N....................... Claimant must be an Australian resident......................... 337
63P........................ Claim may be withdrawn................................................ 337
Subdivision D—Investigation of claim 338
63Q....................... Secretary to investigate claim and submit it to Commission 338
Subdivision E—Consideration and determination of claim 338
63R........................ Duties of Commission in relation to claim...................... 338
63S........................ Entitlement determination................................................ 339
63T........................ Date of effect of determination........................................ 339
Division 4—Review of decisions 340
64A....................... Review of certain decisions............................................ 340
64B........................ Application for review.................................................... 340
64C........................ Commission’s powers where request for review............ 340
64D....................... Date of effect of certain review decisions....................... 341
64E........................ Commission must make written record of review decision and reasons 341
64F........................ Person who requested review to be notified of decision. 341
64G....................... Powers of Commission to gather evidence..................... 342
64H....................... Withdrawal of request for review................................... 343
Division 5—Multiple entitlement exclusions 345
65A....................... Multiple entitlement exclusions....................................... 345
Part IIIF—One‑off energy assistance payment 346
66.......................... One‑off energy assistance payment—this Act................ 346
67.......................... One‑off energy assistance payment—MRCA................ 347
67A....................... One‑off energy assistance payment—Safety, Rehabilitation and Compensation Act 1988 349
67B........................ More than one entitlement............................................... 349
67C........................ Claim not required for one‑off energy assistance payment 349
67D....................... Payment of one‑off energy assistance payment.............. 350
Part IIIG—2019 one‑off energy assistance payment 351
67E........................ One‑off energy assistance payment—this Act................ 351
67F........................ One‑off energy assistance payment—MRCA................ 352
67G....................... One‑off energy assistance payment—Safety, Rehabilitation and Compensation (Defence‑related Claims) Act 1988................................................................................ 354
67H....................... More than one entitlement............................................... 354
67J......................... Claim not required for one‑off energy assistance payment 354
67K........................ Payment of one‑off energy assistance payment.............. 355
Part IIIH—2020 economic support payment 356
Division 1—First 2020 economic support payment 356
67L........................ First 2020 economic support payment............................ 356
67M....................... More than one entitlement............................................... 356
67N....................... Claim not required for first 2020 economic support payment 356
67P........................ Payment of first 2020 economic support payment.......... 357
Division 2—Second 2020 economic support payment 358
67Q....................... Second 2020 economic support payment........................ 358
67R........................ More than one entitlement............................................... 358
67S........................ Claim not required for second 2020 economic support payment 358
67T........................ Payment of second 2020 economic support payment..... 359
Division 3—Eligibility 360
67U....................... Purpose of this Division................................................. 360
67V....................... Payments under this Act................................................. 360
67W....................... Veterans’ Children Education Scheme............................ 361
67X....................... Seniors health card, gold card etc.................................... 362
67Y....................... MRCA............................................................................ 363
67Z........................ Education scheme under MRCA.................................... 364
67ZA..................... Safety, Rehabilitation and Compensation (Defence‑related Claims) Act 1988 364
67ZB..................... Residence requirement.................................................... 364
Part IIIJ—Additional economic support payments 365
Division 1—Additional economic support payment 2020 365
67ZC..................... Additional economic support payment 2020................... 365
67ZD..................... More than one entitlement............................................... 365
67ZE...................... Claim not required for additional economic support payment 2020 366
67ZF...................... Payment of additional economic support payment 2020. 366
Division 2—Additional economic support payment 2021 367
67ZG..................... Additional economic support payment 2021................... 367
67ZH..................... More than one entitlement............................................... 367
67ZI....................... Claim not required for additional economic support payment 2021 368
67ZJ...................... Payment of additional economic support payment 2021. 368
Division 3—Eligibility 369
67ZK..................... Purpose of this Division................................................. 369
67ZL...................... Payments under this Act................................................. 369
67ZM.................... Seniors health card, gold card etc.................................... 370
67ZN..................... MRCA............................................................................ 372
67ZO..................... Safety, Rehabilitation and Compensation (Defence‑related Claims) Act 1988 373
Part IV—Pensions by way of compensation to members of Defence Force or Peacekeeping Force and their dependants 374
Division 1—Interpretation 374
68.......................... Interpretation................................................................... 374
69.......................... Application of Part to members of the Forces................. 379
69A....................... Application of Part to members of the Forces who render hazardous service 383
69B........................ Application of Part to persons who rendered British nuclear test defence service 383
Division 2—Eligibility for pensions by way of compensation to members of Defence Force or Peacekeeping Force and their dependants 386
70.......................... Eligibility for pensions by way of compensation to members of Defence Force or Peacekeeping Force and their dependants.............................................................. 386
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..................... 396
72.......................... Dual entitlement to pension............................................. 399
Division 3—Rates of pension 400
73.......................... Application of Divisions 4 and 5 of Part II..................... 400
Division 4—Pension and other compensation 401
73A....................... This Division does not apply to certain payments........... 401
74.......................... Payments by way of compensation or damages.............. 401
75.......................... Proceedings against third party....................................... 407
76.......................... Payment of damages to Commonwealth......................... 409
77.......................... Discharge of liability of Commonwealth to pay damages 411
78.......................... Other payments of compensation.................................... 412
79.......................... Overpayments of pension............................................... 413
Part IVA—Advance payments of pension and income support supplement 415
Division 1—General 415
79A....................... Definition........................................................................ 415
Division 2—Eligibility for advance payment 416
79B........................ Eligibility for advance payment....................................... 416
Division 3—Applying for advance payment 417
79C........................ Application..................................................................... 417
79D....................... Who can apply................................................................ 417
79E........................ Making an application..................................................... 417
79G....................... Applicant must be Australian resident and in Australia.. 417
79H....................... Application may be withdrawn....................................... 418
Division 4—Determination of application and payment of advance payment 419
79I......................... Commission to determine application............................. 419
79J......................... Payment of advance payment.......................................... 420
Division 5—Amount of advance payment 421
79K........................ Amount of advance payment.......................................... 421
Division 6—Advance payment deductions 423
79L........................ Advance payment deduction........................................... 423
79M....................... Amount of advance payment deduction—basic calculation 423
79N....................... Person may request larger advance payment deduction.. 423
79O....................... Reduction of advance payment deduction in cases of severe financial hardship 424
79P........................ The final advance payment deduction............................. 425
79Q....................... Payment rate insufficient to cover advance payment deduction 425
79R........................ Rounding of amounts..................................................... 425
79S........................ Unrepaid advance payments to deceased partner to be disregarded 426
Division 7—Review by Commission 427
79T........................ Request for review.......................................................... 427
79U....................... Commission’s powers.................................................... 427
79V....................... Commission must make written record of review decision and reasons 428
79W....................... Person who requested review to be notified of decision. 428
79X....................... Powers of Commission to gather evidence..................... 428
79Y....................... Withdrawal of request for review................................... 429
Part V—Medical and other treatment 431
80.......................... Interpretation................................................................... 431
81.......................... Application of Part V...................................................... 432
84.......................... Provision of treatment..................................................... 433
85.......................... Veterans eligible to be provided with treatment.............. 435
85A....................... Treatment under section 279 or 280 of the MRCA for aggravated injuries or diseases 441
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................................................ 441
86.......................... Dependants eligible to be provided with treatment.......... 442
88A....................... Commission may determine specified veterans and others are eligible to be provided with specified treatment........................................................................................ 445
88B........................ Provision of services under the Veteran Suicide Prevention pilot 445
89.......................... Treatment at hospitals and other institutions................... 446
90.......................... Treatment Principles....................................................... 446
90AA.................... Provision of services under the Coordinated Veterans’ Care mental health pilot 449
90A....................... Repatriation Private Patient Principles............................ 449
90B........................ Application of Repatriation Private Patient Principles..... 451
91.......................... Repatriation Pharmaceutical Benefits Scheme................. 452
92.......................... Counselling services and psychiatric assessment............ 454
93.......................... Recovery of cost of treatment......................................... 455
93A....................... Charges payable to Commonwealth................................ 458
93B........................ False statements relating to treatment.............................. 459
93C........................ Knowingly making false statements relating to treatment 461
93D....................... Bribery etc...................................................................... 462
93E........................ Prohibited practices in relation to the rendering of pathology services 466
93F........................ Offences against 2 or more provisions........................... 468
93G....................... Statements inadmissible in evidence............................... 469
93H....................... Recovery of amounts paid because of false statements... 469
93J......................... Prosecution of offences.................................................. 471
Part VA—Extension of Repatriation Pharmaceutical Benefits Scheme 472
Division 1—Definitions 472
93K........................ Definitions...................................................................... 472
Division 2—Pharmaceutical benefits may be obtained 473
93L........................ Certain veterans and mariners may obtain pharmaceutical benefits 473
Division 3—Eligibility for, and entitlement to, pharmaceutical benefits card 474
Subdivision A—Eligibility 474
93M....................... Who is eligible?.............................................................. 474
Subdivision B—Entitlement 475
93N....................... Entitlement to a pharmaceutical benefits card under this Part 475
Division 4—Claim for pharmaceutical benefits card under this Part 476
93P........................ Need for a claim.............................................................. 476
93Q....................... Who can claim?............................................................... 476
93R........................ Making a claim............................................................... 476
93T........................ Claimant must be an Australian resident and in Australia 477
93U....................... Claim may be withdrawn................................................ 477
Division 5—Investigation of claim 479
93V....................... Secretary to investigate claim and submit it to Commission 479
Division 6—Consideration and determination of claim 480
93W....................... Duties of Commission in relation to claim...................... 480
93X....................... Entitlement determination................................................ 480
93Y....................... Date of effect of determination........................................ 480
Division 7—Review of decisions 482
93Z........................ Review of certain decisions............................................ 482
93ZA..................... Application for review.................................................... 482
93ZB..................... Commission’s powers where request for review............ 482
93ZC..................... Date of effect of certain review decisions....................... 482
93ZD..................... Commission must make written record of review decision and reasons 483
93ZE...................... Person who requested review to be notified of decision. 483
93ZF...................... Powers of Commission to gather evidence..................... 484
93ZG..................... Withdrawal of request for review................................... 485
Part IIIB—Provisions applying to service pension, income support supplement and veteran payment
Division 1—Ordinary income concept
46 General meaning of ordinary income
A reference in this Act to a person’s ordinary income for a period is a reference to the person’s gross ordinary income from all sources for the period calculated without any reduction, other than a reduction under Division 2.
Note 1: For ordinary income see subsection 5H(1).
Note 2: For other provisions affecting the amount of a person’s ordinary income see section 46AA (work bonus), sections 46B and 46C (business income), Division 3 (income from financial assets (including income streams (short term) and certain income streams (long term)) and Division 4 (income from income streams not covered by Division 3).
46A Certain amounts taken to be received over 12 months
If a person receives, whether before or after the commencement of this section, an amount that:
(a) is not income within the meaning of Division 3 or 4 of this Part; and
(b) is not:
(i) income in the form of periodic payments; or
(ii) ordinary income from remunerative work undertaken by the person; or
(iii) an exempt lump sum;
the person is, for the purposes of this Act, taken to receive one fifty‑second of that amount as ordinary income of the person during each week in the 12 months commencing on the day on which the person becomes entitled to receive that amount.
Division 1A—Work bonus
46AA Income concession
(1) This section applies to a person if:
(a) the person’s rate of service pension or income support supplement is calculated in accordance with the Rate Calculator; and
(b) the person has reached qualifying age.
Note: For qualifying age see section 5Q.
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 2—Business income
46B Ordinary income from a business—treatment of trading stock
(1) If:
(a) a person carries on a business; and
(b) the value of all the trading stock on hand at the end of a tax year is greater than the value of all the trading stock on hand at the beginning of that tax year;
the person’s ordinary income for that tax year in the form of profits from the business is to include the amount of the difference in values.
(2) If:
(a) a person carries on a business; and
(b) the value of all the trading stock on hand at the end of a tax year is less than the value of all the trading stock on hand at the beginning of that tax year;
the person’s ordinary income for that tax year in the form of profits from the business is to be reduced by the amount of the difference in values.
46C Permissible reductions of business income
(1) Subject to subsection (2), if a person carries on a business, the person’s ordinary income from the business is to be reduced by:
(a) losses and outgoings that relate to the business and are allowable deductions for the purposes of section 8‑1 of the Income Tax Assessment Act 1997; and
(ba) amounts that relate to the business and can be deducted for the decline in value of depreciating assets under Subdivision 40‑B of the Income Tax Assessment Act 1997; and
(c) amounts that relate to the business and are allowable deductions under section 290‑60 of the Income Tax Assessment Act 1997.
(2) If, under Division 3, a person is taken to receive ordinary income on a financial investment, that ordinary income is not to be reduced by the amount of any expenses incurred by the person because of that investment.
Note: For financial investment see subsection 5J(1).
(3) If a person’s ordinary income for a period includes rental income from a property that is not business income, the person’s ordinary income from that property is to be reduced by losses and outgoings that relate to the property and are allowable deductions for the purposes of section 8‑1 of the Income Tax Assessment Act 1997 for that period.
(4) If the amount of the allowable deductions relating to a property for a period under section 8‑1 of the Income Tax Assessment Act 1997 exceeds the amount of the rental income from that property for that period, the amount of the ordinary income from the property for that period is taken to be nil.
Division 3—Income from financial assets (including income streams (short term) and certain income streams (long term))
46D Deemed income from financial assets—persons other than members of couples
(1) This section applies to a person who is not a member of a couple.
(2) A person who has financial assets is taken, for the purposes of this Act, to receive ordinary income on those assets in accordance with this section.
(3) This is how to work out the ordinary income that the person is taken to receive:
Method statement
Step 1. Calculate the total value of the person’s financial assets and compare it with the person’s deeming threshold.
Note 1: For financial assets see subsection 5J(1).
Note 2: For deeming threshold see subsection 46H(1).
Step 2. This step applies only if the total value of the person’s financial assets is equal to or less than the person’s deeming threshold. Multiply the total value of the financial assets by the below threshold rate. The result represents the ordinary income that the person is taken to receive per year on his or her financial assets.
Note: For below threshold rate see subsection 46J(1).
Step 3. This step applies only if the total value of the person’s financial assets is higher than the person’s deeming threshold. Work out the person’s deemed income as follows:
(a) multiply the deeming threshold by the below threshold rate;
(b) subtract the deeming threshold from the total value of the person’s financial assets;
(c) multiply the remainder by the above threshold rate;
Note: For above threshold rate see subsection 46J(2).
(d) add up the amounts worked out at paragraph (a) and (c): the result represents the ordinary income that the person is taken to receive per year on his or her financial assets.
Example: How deemed income of a person who is not a member of a couple is worked out
Facts: Elaine, a single pensioner, has $36,500 worth of financial assets. $1,500 is in a cheque account not earning any interest. $25,000 is earning 6% in interest and $10,000 is earning 8% in interest. The below threshold rate is 5%. The above threshold rate is 7%.
Result:
Step 1. The total value of Elaine’s financial assets ($36,500) is higher than her deeming threshold ($30,000—see subsection 46H(1)). So, the deeming threshold is multiplied by the below threshold rate:
Step 2. Elaine’s deeming threshold of $30,000 is subtracted from the total value of her financial assets ($36,500). The remainder is $6,500.
Step 3. The amount of $6,500 is multiplied by the above threshold rate (7%):
Step 4. The amounts worked out at Steps 1 and 3 are added together:
The ordinary income that Elaine is deemed to receive from her financial assets is $1,955 per year.
(4) The person is taken, for the purposes of this Act, to receive one fifty‑second of the amount calculated under subsection (3) as ordinary income of the person during each week.
46E Deemed income from financial assets—members of a couple
(1) This section applies to the members of a couple.
(2) If one or both of the members of a couple have financial assets, the members of the couple are taken, for the purposes of this Act, to receive together ordinary income on those assets in accordance with this section.
(3) This is how to work out the ordinary income that the couple is taken to receive:
Method statement
Step 1. Calculate the total value of the couple’s financial assets and compare it with the couple’s deeming threshold.
Note 1: For financial assets see subsection 5J(1).
Note 2: For deeming threshold see subsection 46H(2).
Step 2. This step applies only if the total value of the couple’s financial assets is equal to or less than the couple’s deeming threshold. Multiply the total value of the financial assets by the below threshold rate. The result represents the ordinary income that the couple is taken to receive per year on their financial assets.
Note: For below threshold rate see subsection 46J(1).
Step 3. This step applies only if the total value of the couple’s financial assets is higher than the couple’s deeming threshold. Work out the couple’s deemed income as follows:
(a) multiply the deeming threshold by the below threshold rate;
(b) subtract the deeming threshold from the total value of the couple’s assets;
(c) multiply the remainder by the above threshold rate;
Note: For above threshold rate see subsection 46J(2).
(d) add up the amounts worked out at paragraph (a) and (c): the result represents the ordinary income that the couple is taken to receive per year on their financial assets.
Example: How deemed income of a couple is worked out
Facts: Maree and Peter, a couple, have $68,500 worth of financial assets. They have $3,500 in a savings account earning interest at 2.8% and deposits of $25,000 and $40,000 earning 5% p.a. and 8% p.a. in interest respectively. The below threshold rate is 5%. The above threshold rate is 7%.
Result:
Step 1. The total value of the couple’s financial assets ($68,500) is higher than their deeming threshold ($50,000—see subsection 46H(2)). So, the deeming threshold is multiplied by the below threshold rate:
Step 2. The couple’s deeming threshold of $50,000 is subtracted from the total value of their financial assets ($68,500). The remainder is $18,500.
Step 3. The amount of $18,500 is multiplied by the above threshold rate (7%):
Step 4. The amounts worked out at Steps 1 and 3 are added together:
The ordinary income that the couple is deemed to receive from their financial assets is $3,795 per year.
(4) Each member of the couple is taken, for the purposes of this Act, to receive, as ordinary income during each week, an amount calculated according to the formula:
46H Deeming threshold
(1) The deeming threshold for a person who is not a member of a couple is $30,000.
(2) The deeming threshold for a couple is $50,000.
Note: The amounts fixed by subsections (1) and (2) are indexed every 1 July. See sections 59A to 59C.
46J Below threshold rate, above threshold rate
(1) For the purposes of this Division, the below threshold rate is the rate that is the below threshold rate for the purposes of Division 1B of Part 3.10 of the Social Security Act.
(2) For the purposes of this Division, the above threshold rate is the rate that is the above threshold rate for the purposes of Division 1B of Part 3.10 of the Social Security Act.
46K Actual return on financial assets not treated as ordinary income
(1) Subject to subsection (2), any return on a financial asset that a person actually earns, derives or receives is taken, for the purposes of this Act, not to be ordinary income of the person.
(2) If, because of:
(a) a determination under subsection 46L(1); or
(b) the operation of subsection 46L(1A);
a financial investment is not to be regarded as a financial asset for the purposes of section 46D or 46E, subsection (1) of this section does not apply to any return on the investment that the person actually earns, derives or receives.
46L Certain money and financial investments not taken into account
(1) The Minister may determine that:
(a) specified financial investments; or
(b) a specified class of financial investments;
are not to be regarded as financial assets for the purposes of section 46D or 46E.
(1A) If the Commission makes a determination under section 52Y in relation to a person, any unrealisable asset of the person or the person’s partner is not regarded as a financial asset for the purposes of section 46D or 46E.
(3) A determination under subsection (1) must be in writing.
(4) A determination under subsection (1) takes effect on the day on which it is made or on such other day (whether earlier or later) as is specified in the determination.
46M Valuation and revaluation of certain financial investments
The total value of a person’s listed securities and managed investments (being listed securities and managed investments that fluctuate depending on the market) (the relevant investments) is determined in accordance with the following:
(a) an initial total valuation is to be given to the relevant investments on 1 July 1996, or when a new claim is determined, by the method set out in departmental guidelines;
(b) that total valuation continues in effect until the relevant investments are revalued by the method set out in departmental guidelines, and that revaluation must occur:
(i) on 20 March in each calendar year after 1996; and
(ii) on 20 September in each calendar year after 1996; and
(iii) when the person requests a revaluation of one or more of the person’s listed securities and managed investments; and
(iv) following an event that affects the relevant investments and is the subject of a recipient notification notice.
Division 4—Income from income streams not covered by Division 3
Subdivision B—Income streams that are not family law affected income streams
46SA Scope of Subdivision
(1) This Subdivision applies to income streams that are not family law affected income streams.
(2) However, this Subdivision does not apply to:
(a) an asset‑tested income stream (long term) that is an account‑based pension within the meaning of the Superannuation Industry (Supervision) Regulations 1994; or
(b) an asset‑tested income stream (long term) that is an annuity (within the meaning of the Superannuation Industry (Supervision) Act 1993) provided under a contract that meets the requirements determined in an instrument under subsection 5J(1G) of this Act.
Note 1: For treatment of an income stream mentioned in subsection (2), see Division 3.
Note 2: Part 2 of Schedule 11 to the Social Services and Other Legislation Amendment Act 2014 preserves the rules in this Subdivision for a certain kind of income stream that was being provided to a person immediately before 1 January 2015 where the person was receiving an income support payment immediately before that day provided that, since that day, that income stream has been provided to the person and the person has been continuously receiving an income support payment.
46T Income from asset‑test exempt income stream
(1) For the purpose of working out the annual rate of ordinary income of a person from an asset‑test exempt income stream to which this Subdivision applies, the person is taken to receive from that income stream each year the amount worked out under section 46U or 46V.
Note: For asset‑test exempt income stream see sections 5JA, 5JB and 5JBA.
(2) Sections 46U and 46V do not apply if:
(a) the income stream is covered by subsection 5JBA(1); or
(b) on the income stream’s commencement day, there was a reasonable likelihood that the income stream would have been covered by subsection 5JBA(1), but the income stream is no longer covered by that subsection.
Note: See section 46VA.
46U Income—income stream not a defined benefit income stream
If the asset‑test exempt income stream to which this Subdivision applies is not a defined benefit income stream, the amount that the person is taken to receive from the income stream each year is worked out as follows:
where:
annual payment means the amount payable to the person for the year under the income stream.
purchase price has the meaning given by subsection 5J(1).
relevant number has the meaning given by subsection 5J(1).
Example: Mark is 65 years old and single. He purchases an annuity for $100,000 with a term based on life expectancy (i.e. 15.41 years, which he chooses to round up to 16 years). The annuity has all the revised characteristics listed in the legislation. His annual payment from the annuity totals $9,895. Mark’s assessable income from this income stream is:
46V Income—income stream is a defined benefit income stream
If the asset‑test exempt income stream to which this Subdivision applies is a defined benefit income stream, the amount that the person is taken to receive from the income stream each year is worked out as follows:
where:
annual payment means the amount payable to the person for the year under the income stream.
deductible amount has the meaning given by subsection 5J(1).
46VA Income from market‑linked asset‑test exempt income stream
(1) If either of the following conditions is satisfied in relation to the asset‑test exempt income stream to which this Subdivision applies:
(a) the income stream is covered by subsection 5JBA(1);
(b) on the income stream’s commencement day, there was a reasonable likelihood that the income stream would have been covered by subsection 5JBA(1), but the income stream is no longer covered by that subsection;
the annual rate of ordinary income of a person from the income stream is worked out under whichever of subsections (2) and (3) is applicable.
Recipient makes election
(2) If:
(a) the person has elected that a particular amount is to be the payment, or the total of the payments, to be made under the income stream in respect of a period (the payment period) that:
(i) consists of the whole or a part of a particular financial year; and
(ii) begins on or after the income stream’s commencement day; and
(b) the election is in force on a particular day in the payment period;
the annual rate of ordinary income of the person from the income stream on that day is worked out using the following formula:
where:
purchase price has the meaning given by subsection 5J(1).
relevant number has the meaning given by subsection 5J(1).
total payments means the payment, or the total of the payments, to be made under the income stream in respect of the payment period.
Recipient does not make election
(3) If the person has not elected that a particular amount is to be the payment, or the total of the payments, to be made under the income stream in respect of a period (the payment period) that:
(a) consists of the whole or a part of a particular financial year; and
(b) begins on or after the income stream’s commencement day;
the annual rate of ordinary income of the person from the income stream on each day during the payment period is worked out using the following formula:
where:
default amount means 100% of the amount worked out for the financial year using the formula in subsection 5JBA(5) (for pro‑rating, see subsection (4)).
purchase price has the meaning given by subsection 5J(1).
relevant number has the meaning given by subsection 5J(1).
(4) If the income stream’s commencement day is not a 1 July, the default amount (within the meaning of subsection (3)) for the financial year starting on the preceding 1 July must be reduced on a pro‑rata basis by reference to the number of days in the financial year that are on and after the commencement day.
Exception—income stream’s commencement day happens in June
(5) If:
(a) the income stream’s commencement day happens in June; and
(b) no payment is made under the income stream for the financial year in which the commencement day happens;
subsections (2), (3) and (4) do not apply in working out the annual rate of ordinary income of the person from the income stream on a day in that financial year.
46W Income from asset‑tested income stream (long term)
(1) For the purpose of working out the annual rate of ordinary income of a person from an asset‑tested income stream (long term) to which this Subdivision applies, the person is taken to receive from that income stream each year the amount worked out under section 46X or 46Y.
(2) Sections 46X and 46Y do not apply to an income stream if section 46YA applies to the income stream.
46X Income—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 C—Family law affected income streams
46Z Scope of Subdivision
(1) This Subdivision applies to family law affected income streams.
(2) However, this Subdivision does not apply to:
(a) an asset‑tested income stream (long term) that is an account‑based pension within the meaning of the Superannuation Industry (Supervision) Regulations 1994; or
(b) an asset‑tested income stream (long term) that is an annuity (within the meaning of the Superannuation Industry (Supervision) Act 1993) provided under a contract that meets the requirements determined in an instrument under subsection 5J(1G) of this Act.
Note 1: For treatment of an income stream mentioned in subsection (2), see Division 3.
Note 2: Part 2 of Schedule 11 to the Social Services and Other Legislation Amendment Act 2014 preserves the rules in this Subdivision for a certain kind of income stream that was being provided to a person immediately before 1 January 2015 where the person was receiving an income support payment immediately before that day provided that, since that day, that income stream has been provided to the person and the person has been continuously receiving an income support payment.
46ZA Income from asset‑test exempt income streams
(1) For the purpose of working out the annual rate of ordinary income of a person from an asset‑test exempt income stream to which this Subdivision applies, the person is taken to receive from that income stream each year:
(a) if the income stream is not a defined benefit income stream—the amount determined by the Commission under this paragraph; or
(b) if the income stream is a defined benefit income stream—the amount determined by the Commission under this paragraph.
(2) In making a determination under paragraph (1)(a) or (b), the Commission must comply with any relevant decision‑making principles in force under section 46ZC.
46ZB Income from asset‑tested income stream (long term)
(1) For the purpose of working out the annual rate of ordinary income of a person from an asset‑tested income stream (long term) to which this Subdivision applies, the person is taken to receive from that income stream each year:
(a) if the income stream is not a defined benefit income stream—the amount determined by the Commission under this paragraph; or
(b) if the income stream is a defined benefit income stream—the amount determined by the Commission under this paragraph.
(2) In making a determination under paragraph (1)(a) or (b), the Commission must comply with any relevant decision‑making principles in force under section 46ZC.
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 6—Income tests—conversion of foreign currency amounts
47 Application of Division
(1) The Commission may determine in writing that this Division applies in relation to a foreign currency.
(2) This Division applies in relation to a foreign currency in relation to which a determination under subsection (1) is in force.
(3) This Division applies for the purposes of the Rate Calculator.
47A Conversion of foreign currency amounts
The value in Australian currency of a payment received by a person in foreign currency is to be worked out using:
(a) if section 47C applies—the re‑assessed exchange rate; or
(b) in any other case—the base exchange rate (see section 47B).
47B Base exchange rate
The base exchange rate for a foreign currency for a foreign exchange period is the average (calculated to 4 decimal places) of the actual market exchange rates available on each working day of the first month of the year to start during the immediately preceding foreign exchange period.
47C Re‑assessed exchange rate
(1) If for 10 consecutive working days:
(a) starting after a month of the year in relation to which section 47B operates; and
(b) ending before the next month of the year in relation to which section 47B operates;
the actual market exchange rate available differs, by at least 10%, from:
(c) unless paragraph (d) applies—the base exchange rate for the next foreign exchange period; or
(d) if a re‑assessed exchange rate has already been worked out under this subsection for the purposes of the next foreign exchange period—the last re‑assessed exchange rate so worked out;
the re‑assessed exchange rate for a foreign currency is the average (calculated to 4 decimal places) of the actual market exchange rates available on those consecutive working days.
(2) Subsection (1) does not apply to a working day if the actual market exchange rate available on that day has been used to work out a re‑assessed exchange rate in a previous application of that subsection.
47D Applicability of re‑assessed exchange rate
(1) The Commission must determine in writing the day on which a re‑assessed exchange rate becomes applicable.
(2) The day determined under subsection (1) is to be no later than 6 weeks after the tenth consecutive working day covered by subsection 47C(1).
(3) A re‑assessed exchange rate:
(a) becomes applicable on the day determined under subsection (1), unless a new re‑assessed exchange rate has already become applicable; and
(b) remains applicable until:
(i) a new re‑assessed exchange rate becomes applicable; or
(ii) the commencement of the next exchange period the base exchange rate for which has been worked out by reference to working days later than those by reference to which the re‑assessed exchange rate was worked out.
47E Rounding off exchange rates
If an exchange rate worked out under this Division would, if it were calculated to 5 decimal places, end in a number greater than 4, the rate worked out is to be taken to be the rate calculated to 4 decimal places and increased by 0.0001.
Division 7—Income tests—disposal of ordinary income
48 Disposal of ordinary income
(1) For the purposes of this Act, a person disposes of ordinary income of the person if the person engages in a course of conduct that diminishes, directly or indirectly, the rate of the person’s ordinary income and either:
(a) the person receives no consideration in money or money’s worth for the diminution; or
(b) the person receives inadequate consideration in money or money’s worth for the diminution; or
(c) the Commission is satisfied that the purpose, or the dominant purpose, of the person in engaging in that course of conduct was:
(i) to obtain or enable the person’s partner to obtain a service pension, income support supplement, 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 9—New 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 11—General provisions relating to the assets test
Subdivision A—Value of person’s assets
52 Certain assets to be disregarded in calculating the value of a person’s assets
(1) In calculating the value of a person’s assets for the purposes of this Act (other than sections 52G, 52H, 52JA, 52JB, 52JC, 52JD, 52ZA and 52ZCA), disregard the following:
(a) if the person is not a member of a couple—the value of any right or interest of the person in the person’s principal home that is a right or interest that gives the person reasonable security of tenure in the home;
(b) if the person is a member of a couple—the value of any right or interest of the person in one residence that is the principal home of the person, of the person’s partner or of both of them that is a right or interest that gives the person or the person’s partner reasonable security of tenure in the home;
(c) the value of any life interest of the person other than:
(i) a life interest in the principal home of the person, of the person’s partner or of both of them; or
(ii) a life interest created by the person, by the person’s partner or by both of them; or
(iii) a life interest created on the death of the person’s partner;
Note: The exclusion from paragraph (1)(c) of the value of a person’s life interest mentioned in subparagraph (i), (ii) or (iii) does not result in the value of the interest being included in the person’s assets if the interest falls within paragraph (1)(a) or (b).
(d) the value of any asset‑test exempt income stream of the person, other than a partially asset‑test exempt income stream;
(daa) half of the value of any partially asset‑test exempt income stream of the person;
Note: For partially asset‑test exempt income stream, see subsection (1AA).
(da) the value of any foreign superannuation pension of the person;
(e) any amount that is:
(i) received by the person within the immediately preceding period of 90 days; and
(ii) is excluded from the definition of income in subsection 5H(1) by subsection 5H(4) or (5);
(f) the value of the person’s investment in:
(i) a superannuation fund; or
(ii) an approved deposit fund; or
(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 B—Dispositions of assets (general provisions)
52E Disposal of assets
For the purposes of this Act, a person disposes of assets of the person if the person engages in a course of conduct that diminishes, directly or indirectly, the value of the person’s assets and:
(a) the person receives no consideration in money or money’s worth for the diminution in the value of the person’s assets; or
(b) the person receives inadequate consideration in money or money’s worth for the diminution in the value of the person’s assets; or
(c) the Commission is satisfied that the purpose, or the dominant purpose, of the person in engaging in that course of conduct was:
(i) to obtain or enable the person’s partner to obtain a service pension, income support supplement, 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 BA—Dispositions of assets before 1 July 2002
52FAA Application
This Subdivision applies only to dispositions of assets that took place before 1 July 2002.
52FA Disposal of assets in pre‑pension years—not a member of a couple
(1) If:
(a) a person is not a member of a couple when the person claims a service pension, an income support supplement or a social security pension; and
(b) the person disposes of an asset of the person during a pre‑pension year of the person; and
(c) the amount of that disposition, or the sum of that amount and of the amounts (if any) of other dispositions of assets previously made by the person during that pre‑pension year, exceeds $10,000;
then, for the purposes of determining whether the pension is payable to the person, there is to be included in the value of the person’s assets for the period of 5 years that starts on the day on which the disposition took place:
(d) the amount by which the sum of the amount of the first‑mentioned disposition of assets and of the amounts (if any) of other dispositions of assets previously made by the person during that pre‑pension year exceeds $10,000; or
(e) the amount of the first‑mentioned disposition;
whichever is the lesser amount.
Note 1: For disposes of assets see section 52E.
Note 2: For amount of disposition see section 52F.
Note 3: If a pension is payable to the person, section 52G operates to determine the rate of payment and section 52FA ceases to apply to the person.
52G Disposal of assets in pension years—not a member of a couple
(1) If, on or after 1 March 1986 and before 1 July 2002:
(a) a person who is not a member of a couple has, during a pension year of the person, disposed of assets of the person; and
(b) the amount of that disposition of assets, or the sum of that amount and of the amounts (if any) of other dispositions of assets previously made by the person during that pension year, exceeds $10,000;
then, for the purposes of this Act, there is to be included in the value of the person’s assets for the period of 5 years that starts on the day on which the disposition takes place:
(c) the amount by which the sum of the amount of the first‑mentioned disposition of assets, and of the amounts (if any) of other dispositions of assets previously made by the person during that pension year, exceeds $10,000; or
(d) the amount of the first‑mentioned disposition of assets;
whichever is the lesser amount.
52GA Disposal of assets in pre‑pension years—members of couples
(1) Subject to subsections (3), (4) and (5), if:
(a) a person disposes of an asset; and
(b) the person is a member of a couple when the person or the person’s partner claims a service pension, an income support supplement or a social security pension; and
(c) the person disposes of the asset:
(i) during a pre‑pension year of the person; or
(ii) if the person does not claim a service pension, an income support supplement or a social security pension but the person’s partner claims such a pension—during a pre‑pension year of the person’s partner; and
(d) the amount of that disposition, or the sum of that amount and the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during that pre‑pension year, exceeds $10,000;
then, for the purposes of determining whether the pension is payable to the person:
(e) there is to be included in the value of the person’s assets for the period of 5 years that starts on the day on which the disposition took place:
(i) 50% of the amount by which the sum of the amount of the first‑mentioned disposition and of the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during that pre‑pension year exceeds $10,000; or
(ii) 50% of the amount of the first‑mentioned disposition;
whichever is the lesser amount; and
(f) there is to be included in the value of the assets of the person’s partner for the period of 5 years that starts on the day on which the disposition took place:
(i) 50% of the amount by which the sum of the amount of the first‑mentioned disposition and of the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during that pre‑pension year exceeds $10,000; or
(ii) 50% of the amount of the first‑mentioned disposition;
whichever is the lesser amount.
Note 1: For disposes of assets see section 52E.
Note 2: For amount of disposition see section 52F.
Note 3: If a pension is payable to the person, section 52H operates to determine the rate of payment and section 52GA ceases to apply to the person.
(3) If:
(a) amounts are included under subsection (1) in the value of the assets of a person who is a member of a couple and in the value of the assets of the person’s partner because of a disposition of an asset by the person; and
(b) the person and the person’s partner cease to be members of the same couple;
any amount that was included in the value of the person’s former partner’s assets because of that disposition is to be included in the value of the person’s assets.
(4) If:
(a) an amount is included under subsection (1) in the value of the assets of a person who is a member of a couple and in the value of the assets of the person’s partner because of a disposition of an asset by the person; and
(b) the person dies;
an amount is not to be included in the value of the assets of the person’s partner because of that disposition.
(5) If:
(a) an amount is included under subsection (1) in the value of the assets of a person who is a member of a couple and in the value of the assets of the person’s partner because of a disposition of an asset by the person; and
(b) the partner dies;
any amount that would, if the partner had not died, be included in the value of the partner’s assets because of the disposition is to be included in the value of the person’s assets.
52H Disposal of assets in pension years—members of couples
(1) Subject to subsections (3) and (4), where, on or after 1 March 1986 and before 1 July 2002:
(a) a person who is a member of a couple has disposed of assets of the person:
(i) during a pension year of the person; or
(ii) if the person is not receiving a service pension, income support supplement or a social security pension but the person’s partner is receiving such a pension—during a pension year of the person’s partner; and
(b) the amount of that disposition of assets, or the sum of that amount and the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during that pension year, exceeds $10,000;
then, for the purposes of this Act:
(c) there is to be included in the value of the person’s assets for the period of 5 years that starts on the day on which the disposition takes effect:
(i) 50% of the amount by which the sum of the amount of the first‑mentioned disposition of the assets and of the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during the pension year exceeds $10,000; or
(ii) 50% of the amount of the first‑mentioned disposition of assets;
whichever is the lesser amount; and
(d) there is to be included in the value of the assets of the person’s partner for the period of 5 years that starts on the day on which the disposition takes place:
(i) 50% of the amount by which the sum of the amount of the first‑mentioned disposition of the assets and of the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during the pension year exceeds $10,000; or
(ii) 50% of the amount of the first‑mentioned disposition of assets;
whichever is the lesser amount.
(3) Where:
(a) amounts are included under subsection (1) in the value of a person’s assets who is a member of a couple and in the assets of the person’s partner because of a disposition of assets by the person; and
(b) the person and the person’s partner cease to be members of the same couple;
any amount that was included in the value of the person’s former partner’s assets because of that disposition is to be included in the value of the person’s assets.
(4) Where:
(a) an amount is included under subsection (1) in the value of the assets of a person who is a member of a couple and the value of the assets of the person’s partner because the person has disposed of an asset; and
(b) the person dies;
no amount is to be included in the value of the assets of the person’s partner because of that disposition.
(5) Where:
(a) an amount is included under subsection (1) in the value of the assets of a person who is a member of a couple and in the value of the assets of the person’s partner because the person has disposed of an asset; and
(b) the person’s partner dies;
any amount that would, if the person’s partner had not died, be included in the value of the assets of the person’s partner because of the disposition is to be included in the value of the person’s assets.
52J Dispositions more than 5 years old to be disregarded
This Subdivision does not apply to a disposition of assets that took place:
(a) more than 5 years before the time when:
(i) the person who disposed of those assets; or
(ii) if that person was, at the time when that disposition took place, a member of a couple—that person’s partner;
became eligible to receive a service pension or income support supplement; or
(b) less than 5 years before the time referred to in paragraph (a) and before the time when the Commission is satisfied that the person who disposed of those assets could reasonably have expected that the person or the person’s partner would become eligible to receive a service pension or income support supplement.
Subdivision BB—Dispositions of assets on or after 1 July 2002
52JA Disposition of assets in tax year—individuals
Dispositions to which section applies
(1) This section applies to a disposition (the relevant disposition) on or after 1 July 2002 of an asset by a person who is not a member of a couple at the time of the relevant disposition.
Increase in value of assets
(2) If the amount of the relevant disposition, or the sum of that amount and the amounts (if any) of other dispositions of assets previously made by the person during the tax year in which the relevant disposition took place, exceeds $10,000, then, for the purposes of this Act, the lesser of the following amounts is to be included in the value of the person’s assets for the period of 5 years starting on the day on which the relevant disposition took place:
(a) the amount of the relevant disposition;
(b) the amount by which the sum of the amount of the relevant disposition and the amounts (if any) of other dispositions of assets previously made by the person during the tax year in which the relevant disposition took place, exceeds $10,000.
Previous joint dispositions
(3) If, during the tax year in which the relevant disposition took place but before the time of the relevant disposition, the person was a member of a couple who jointly disposed of an asset, a reference in subsection (2) to the amounts (if any) of other dispositions of assets previously made by the person during that tax year includes a reference to one‑half of the amount of the joint disposition.
52JB Dispositions of assets in 5 year period—individuals
Disposition to which section applies
(1) This section also applies to a disposition (the relevant disposition) on or after 1 July 2002 of an asset by a person who is not a member of a couple at the time of the relevant disposition.
Increase in value of assets
(2) If:
(a) the sum of the amount of the relevant disposition and the amounts of any previous dispositions of assets made during the rolling period by the person;
less
(b) the sum of any amounts included in the value of the person’s assets during the rolling period under section 52JA, 52JC or 52JD or any previous application or applications of this section;
exceeds $30,000, then, for the purposes of this Act, the lesser of the following amounts is to be included in the value of the person’s assets for the period of 5 years starting on the day on which the relevant disposition took place:
(c) an amount equal to the excess;
(d) the amount of the relevant disposition.
Previous joint dispositions
(3) If, during the rolling period but before the time of the relevant disposition, the person was a member of a couple who jointly disposed of an asset, the reference in paragraph (2)(a) to the amounts of any previous dispositions during the rolling period of assets by the person includes a reference to one‑half of the amount of the joint disposition.
Rolling period
(4) For the purposes of this section, the rolling period is the period comprising the tax year in which the relevant disposition took place and such (if any) of the 4 previous tax years as occurred after 30 June 2002.
52JC Disposition of assets in tax year—members of couples
Dispositions to which section applies
(1) If there is a disposition (the relevant disposition) on or after 1 July 2002 of an asset by:
(a) a person who, at the time of the relevant disposition, is a member of a couple; or
(b) the person referred to in paragraph (a) and the person who is, at that time, the partner of the person referred to in that paragraph;
subsection (2) has effect.
Increase in value of assets
(2) Subject to this section, if the amount of the relevant disposition, or the sum of that amount and the amounts (if any) of other dispositions of assets previously made by the person, the person’s partner, or the person and the person’s partner, during the tax year in which the relevant disposition took place (whether before or after they became members of the couple), exceeds $10,000, then, for the purposes of this Act, the lesser of the following amounts is to be included in the value of the assets of the person and in the value of the assets of the partner for the period of 5 years starting on the day on which the relevant disposition took place:
(a) one‑half of the amount of the relevant disposition;
(b) one‑half of the amount by which the sum of the amount of the relevant disposition, and the amounts (if any) of other dispositions of assets previously made by the person, the partner, or the person and the partner, during the tax year in which the relevant disposition took place, exceeds $10,000.
Effect of ceasing to be member of couple
(3) If, after the disposition referred to in paragraph (1)(a), the person and the person’s partner cease to be members of the same couple:
(a) no amount is to be included after the cessation in the value of the assets of the former partner because of that disposition; and
(b) any amount that would, apart from this subsection, have been so included is to be included in the value of the assets of the person.
Effect of death of person
(4) If, after the disposition referred to in paragraph (1)(a), the person dies, no amount is to be included in the value of the assets of the person’s partner because of that disposition.
Effect of death of partner
(5) If, after the disposition referred to in paragraph (1)(a), the person’s partner dies, any amount that, if the partner had not died, would have been included in the value of the assets of the partner because of that disposition is to be included in the value of the assets of the person.
52JD Disposition of assets in 5 year period—members of couples
Dispositions to which section applies
(1) If there is a disposition (the relevant disposition) on or after 1 July 2002 of an asset by:
(a) a person who, at the time of the relevant disposition, is a member of a couple; or
(b) the person referred to in paragraph (a) and the person who is, at that time, the partner of the person referred to in that paragraph;
subsection (2) has effect.
Increase in value of assets
(2) Subject to this section, if:
(a) the sum of the amount of the relevant disposition and the amounts of any previous dispositions of assets made during the rolling period by the person, the person’s partner or the person and the person’s partner;
less
(b) the sum of any amounts included in the value of the assets of the person or of the partner during the rolling period under section 52JA, 52JB or 52JC or any previous application or applications of this section;
exceeds $30,000, then, for the purposes of this Act, the lesser of the following amounts is to be included in the value of the assets of the person and in the value of the assets of the partner for the period of 5 years starting on the day on which the relevant disposition took place:
(c) an amount equal to one‑half of the excess;
(d) one‑half of the amount of the relevant disposition.
Effect of ceasing to be member of couple
(3) If, after the disposition referred to in paragraph (1)(a), the person and the person’s partner cease to be members of the same couple:
(a) no amount is to be included after the cessation in the value of the assets of the former partner because of that disposition; and
(b) any amount that would, apart from this subsection, have been so included is to be included in the value of the assets of the person.
Effect of death of person
(4) If, after the disposition referred to in paragraph (1)(a), the person dies, no amount is to be included in the value of the assets of the person’s partner because of that disposition.
Effect of death of partner
(5) If, after the disposition referred to in paragraph (1)(a), the person’s partner dies, any amount that, if the partner had not died, would have been included in the value of the assets of the partner because of that disposition is to be included in the value of the assets of the person.
Rolling period
(6) For the purposes of this section, the rolling period is the period comprising the tax year in which the relevant disposition took place and such (if any) of the 4 previous tax years as occurred after 30 June 2002.
52JE Certain dispositions to be disregarded
This Subdivision does not apply to a disposition of assets that took place:
(a) more than 5 years before the time when:
(i) the person who disposed of those assets; or
(ii) if that person was, at the time when that disposition took place, a member of a couple—that person’s partner;
became eligible to receive a service pension, 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 C—Provisions relating to special residences and special residents
52KA Application of Subdivision to granny flat residents
This Subdivision applies to a granny flat resident only if the resident acquired or retained the person’s granny flat interest in the person’s principal home on or after 22 August 1990.
52L Basis for different treatment
This Subdivision’s operation on a special resident depends on:
(a) whether the resident is:
(i) not a member of a couple; or
(ii) a member of an ordinary couple; or
(iii) a member of an illness separated couple; or
(iv) a member of an ordinary couple with different principal homes; and
(b) the resident’s entry contribution; and
(c) the resident’s extra allowable amount.
52M Entry contribution
(1) A special resident’s entry contribution is:
(a) if the resident is not a member of a couple—the resident’s individual residence contribution; or
(b) if the resident is a member of a couple, shares the resident’s principal home with the resident’s partner and is not a member of an illness separated couple—an amount equal to 50% of the resident’s individual residence contribution and of the partner’s individual residence contribution; or
(c) if the resident is a member of an illness separated couple—the resident’s individual residence contribution; or
(d) if:
(i) the resident is a member of an ordinary couple with different principal homes; and
(ii) the principal home of the resident’s partner is not a special residence;
the resident’s individual residence contribution; or
(e) if:
(i) the resident is a member of an ordinary couple with different principal homes; and
(ii) the principal home of the resident’s partner is also a special residence;
an amount equal to 50% of the resident’s individual residence contribution and of the partner’s individual residence contribution.
(1A) A special resident’s entry contribution is the resident’s individual residence contribution plus the amount paid, or agreed to be paid, for the resident’s current right (if any) to share the resident’s principal home with a partner if:
(a) the resident was a member of a couple at the time when the resident took up residence in the retirement village or granny flat; and
(b) the resident has ceased to be a member of a couple.
(1B) A special resident’s entry contribution is the resident’s individual residence contribution if:
(a) the resident was a member of a couple at the time when the sale leaseback agreement was entered into; and
(b) the resident has ceased to be a member of a couple.
(1C) For the purposes of this Division, the individual residence contribution is:
(a) for a retirement village resident—the total amount paid, or agreed to be paid, for the resident’s current right to live in the retirement village; and
(b) for a granny flat resident—the total amount paid, or agreed to be paid, for the resident’s current right to live in the granny flat; and
(c) for a sale leaseback resident—the deferred payment amount.
Note: For deferred payment amount see section 5MB.
(1D) For the purposes of paragraph (1C)(b):
(a) the total amount paid to obtain a person’s current right to live in a granny flat is the amount equal to the value of the person’s granny flat interest; and
(b) the value of a person’s granny flat interest is:
(i) unless subparagraph (ii) applies—the amount paid, or agreed to be paid, for the interest; or
(ii) if the Commission considers that, for any special reason in any particular case, that value should be another amount—that other amount.
(2) An amount that is rent or a residential care charge for the purposes of this Act is to be disregarded in applying subsections (1), (1A) and (1B).
Note: For residential care charge, see subsection 5N(1).
52N Extra allowable amount
Retirement village residence taken up before 12 June 1989
(1) If a retirement village resident became entitled to take up residence in the retirement village before 12 June 1989, the resident’s extra allowable amount is:
(a) if the resident is not a member of a couple—$64,000; or
(b) if the resident is a member of an illness separated couple—$64,000; or
(c) in any other case—$32,000.
Retirement village residence taken up on or after 12 June 1989
(2) If a retirement village resident became entitled to take up residence in the retirement village on or after 12 June 1989, the resident’s extra allowable amount is:
(a) if the resident is not a member of a couple—the amount that, as at the time when the person becomes entitled to take up that residence, is the difference between the single property owner AVL and the single non‑property owner AVL; or
(b) if the resident is a member of an illness separated couple—the amount that, as at the time when the person becomes entitled to take up that residence, is the difference between the single AVL and the single non‑property owner AVL; or
(c) in any other case—the amount that, as at the time when the person becomes entitled to take up that residence, is the difference between the partnered property owner AVL and the partnered non‑property owner AVL.
Granny flat residence
(2A) A granny flat resident’s extra allowable amount is:
(a) if the resident is not a member of a couple—the amount that, as at the time when the resident becomes entitled to the granny flat interest, is the difference between the pension single property owner AVL and the pension single non‑property owner AVL; or
(b) if the resident is a member of an illness separated couple—the amount that, as at the time when the resident becomes entitled to the granny flat interest, is the difference between the pension single property owner AVL and the pension single non‑property owner AVL; or
(c) in any other case—the amount that, as at the time when the resident becomes entitled to the granny flat interest, is the difference between the pension partnered property owner AVL and the pension partnered non‑property owner AVL.
Sale leaseback home
(2B) A sale leaseback resident’s extra allowable amount is:
(a) if the resident is not a member of a couple—the amount that, as at the time when the sale leaseback agreement is entered into, is the difference between the pension (single) property owner AVL and the pension (single) non‑property owner AVL; or
(b) if the resident is a member of an illness separated couple—the amount that, as at the time when the sale leaseback agreement is entered into, is the difference between the pension (single) property owner AVL and the pension (single) non‑property owner AVL; or
(c) in any other case—the amount that, as at the time when the sale leaseback agreement is entered into, is the difference between the pension (partnered) property owner AVL and the pension (partnered) non‑property owner AVL.
(3) For the purposes of this section, a person becomes entitled to take up residence in a retirement village when the person becomes entitled to take up residence in a retirement village pursuant to the agreement under which the person’s current right to live in the retirement village arises.
(4) In this section, pension “single” property owner AVL, pension “single” non‑property owner AVL, pension “partnered” property owner AVL and pension “partnered” non‑property owner AVL have the same meaning as in Division 18.
52P Renegotiation of retirement village agreement
If a person who has a right to live in a retirement village under an agreement enters into a new agreement under which the person obtains a right to live in the retirement village, then, for the purposes of this Division, the total amount paid, or agreed to be paid, for the person’s current right to live in the retirement village is the sum of the following amounts:
(a) the total amount paid under the new agreement for that right;
(b) so much (if any) of:
(i) any amount paid under an earlier agreement to obtain a right for the person to live in the retirement village; and
(ii) any amount that was, or would have been, payable to the person upon the termination of an earlier agreement;
as ought, in the Commission’s opinion, to be attributed to the cost of the person’s current right to live in the retirement village.
52Q Residents who are not members of a couple
(1) This section applies to a special resident who is not a member of a couple.
Entry contribution more than extra allowable amount
(2) Where:
(a) this section applies to a special resident; and
(b) the person’s entry contribution was more than the extra allowable amount;
the person is to be taken, for the purposes of this Act, to be a property owner.
Entry contribution equal to or below extra allowable amount
(3) Where:
(a) this section applies to a special resident; and
(b) the person’s entry contribution was equal to or less than the extra allowable amount;
then, for the purposes of this Act:
(c) the person is to be taken not to have a right or interest in relation to the person’s principal home; and
(d) the person’s assets are to be taken to include an asset the value of which is equal to the amount of the person’s entry contribution; and
(e) subsection 52(1) and sections 52G, 52JA and 52JB do not apply to an asset that the person is, because of paragraph (d) of this subsection, to be taken to have.
(4) Subsection (3) applies:
(a) whether or not the person actually has any right or interest in the person’s principal home; and
(b) whatever the value of any right or interest that the person does have in the person’s principal home.
52R Members of couples
(1) This section applies to a special resident if:
(a) the resident is a member of a couple; and
(b) the resident shares the person’s principal home with the resident’s partner.
Entry contribution more than extra allowable amount
(2) Where:
(a) this section applies to a special resident; and
(b) the person’s entry contribution was more than the extra allowable amount;
the person is to be taken, for the purposes of this Act, to be a property owner.
Entry contribution equal to or below extra allowable amount
(3) Where:
(a) this section applies to a special resident; and
(b) the person’s entry contribution was equal to or less than the extra allowable amount;
then, for the purposes of this Act:
(c) the person is to be taken not to have a right or interest in relation to the person’s principal home; and
(d) the person’s assets are to be taken to include an asset the value of which is equal to the amount of the person’s entry contribution; and
(e) subsection 52(1) and section 52H do not apply to an asset that the person is, because of paragraph (d) of this subsection, to be taken to have.
(4) Subsection (3) applies:
(a) whether or not the person actually has any right or interest in the person’s principal home; and
(b) whatever the value of any right or interest that the person does have in the person’s principal home.
52S Members of illness separated couple (both in special residences)
(1) This section applies to a special resident if:
(a) the resident is a member of an illness separated couple; and
(b) the principal home of the resident’s partner is also a special residence.
Both entry contributions above extra allowable amount
(2) Where:
(a) this section applies to a special resident; and
(b) the person’s entry contribution, and the entry contribution of the person’s partner, were each more than the extra allowable amount concerned;
then, for the purposes of this Act:
(c) the person is to be taken to be a property owner; and
(d) any right or interest of the person in the principal home of the person’s partner is to be disregarded in calculating the actual value of the person’s assets; and
(e) any right or interest of the person’s partner in his or her principal home, or in the person’s principal home, is to be disregarded in calculating the actual value of the partner’s assets.
Both entry contributions equal to or below extra allowable amount
(3) Where:
(a) this section applies to a special resident; and
(b) the person’s entry contribution, and the entry contribution of the person’s partner, were each equal to or less than the extra allowable amount concerned;
then, for the purposes of this Act:
(c) the person is to be taken not to have a right or interest in relation to the person’s principal home; and
(d) the person’s assets are to be taken to include an asset the value of which is equal to the amount of the person’s entry contribution; and
(e) subsection 52(1) and section 52H do not apply to the asset that the person is, because of paragraph (d) of this subsection, taken to have.
(4) Subsection (3) applies:
(a) whether or not the person actually has any right or interest in the person’s principal home; and
(b) whatever the value of any right or interest that the person does have in the person’s principal home.
Person’s entry contribution above extra allowable amount/partner’s entry contribution equal to or below extra allowable amount
(5) Where:
(a) this section applies to a special resident; and
(b) the person’s entry contribution was more than the extra allowable amount; and
(c) the person’s partner’s entry contribution was equal to or less than the extra allowable amount;
the following provisions apply for the purposes of the application of this Act to the person and to the person’s partner:
(d) the person is to be taken to be a property owner;
(e) both the person, and the person’s partner, are taken not to have a right or interest in relation to the partner’s principal home;
(ea) the assets of the person’s partner are taken to include an asset whose value is equal to the amount of the partner’s entry contribution;
(eb) subsection 52(1) and section 52H do not apply to the asset that the person’s partner is, because of paragraph (ea), taken to have;
(f) any right or interest of the person’s partner in the person’s principal home is to be disregarded in calculating the actual value of the partner’s assets;
(g) the assets value limit for the person and the person’s partner is to be taken to be $237,500.
Note: The amount in paragraph (g) is adjusted annually (see section 59J).
(6) Subsection (5) applies:
(a) whether or not the person’s partner actually has any right or interest in the partner’s principal home; and
(b) whatever the value of any right or interest that the partner does have in the partner’s principal home.
52T Members of illness separated couple (partner not in special residence and partner property owner)
(1) This section applies to a special resident if:
(a) the resident is a member of an illness separated couple; and
(b) the principal home of the resident’s partner is not a special residence; and
(c) the right or interest of the resident’s partner in the partner’s principal home is to be disregarded because of paragraph 52(1)(b).
Entry contribution more than extra allowable amount
(2) Where:
(a) this section applies to a special resident; and
(b) the person’s entry contribution was more than the extra allowable amount;
then:
(c) for the purposes of this Act, the person is to be taken to be a property owner; and
(d) any right or interest of the person in the principal home of the person’s partner referred to in paragraph (1)(c) is to be disregarded in calculating the actual value of the person’s assets for the purposes of this Act; and
(e) any right or interest of the person’s partner in the person’s principal home is also to be disregarded in calculating the actual value of the assets of the person’s partner for the purposes of this Act.
Entry contribution equal to or below extra allowable amount
(3) Where:
(a) this section applies to a special resident; and
(b) the person’s entry contribution was equal to or less than the extra allowable amount;
the following provisions apply for the purposes of the application of this Act to the person and to the person’s partner:
(c) both the person, and the person’s partner, are taken not to have a right or interest in relation to the person’s principal home;
(ca) the person’s assets are taken to include an asset whose value is equal to the amount of the person’s entry contribution;
(cb) subsection 52(1) and section 52H do not apply to the asset that the person is, because of paragraph (ca), taken to have;
(d) any right or interest of the person in the principal home of the person’s partner referred to in paragraph (1)(c) is to be disregarded in calculating the actual value of the person’s assets;
(e) the assets value limit of the person and the person’s partner is to be taken to be $237,500.
Note: The amount in paragraph (e) is adjusted annually (see section 59J).
(4) Subsection (3) applies:
(a) whether or not the person actually has any right or interest in the person’s principal home; and
(b) whatever the value of any right to interest that the person does have in the person’s principal home.
52U Members of illness separated couple (partner not in special residence and partner not property owner)
(1) This section applies to a special resident if:
(a) the resident is a member of an illness separated couple; and
(b) the principal home of the resident’s partner is not a special residence; and
(c) the resident’s partner does not have a right or interest in the partner’s principal home that is to be disregarded because of paragraph 52(1)(b).
Entry contribution more than extra allowable amount
(2) Where:
(a) this section applies to a special resident; and
(b) the person’s entry contribution was more than the extra allowable amount;
the following provisions apply for the purposes of the application of this Act to the person and to the person’s partner:
(c) the person is to be taken to be a property owner;
(d) any right or interest of the person’s partner in the person’s principal home is to be disregarded in calculating the actual value of the partner’s assets;
(e) the assets value limit of the person and the person’s partner is to be taken to be $237,500.
Note: The amount in paragraph (e) is adjusted annually (see section 59J).
(3) Subsection (2) applies:
(a) whether or not the person actually has any right or interest in the person’s principal home; and
(b) whatever the value of any right or interest that the person does have in the person’s principal home.
Entry contribution equal to or below extra allowable amount
(4) Where:
(a) this section applies to a special resident; and
(b) the person’s entry contribution was equal to or less than the extra allowable amount;
then, the following provisions apply for the purposes of the application of this Act to the person and to the person’s partner:
(c) both the person, and the person’s partner, are to be taken not to have a right or interest in relation to the person’s principal home;
(d) the person’s assets are to be taken to include an asset the value of which is equal to the amount of the person’s entry contribution;
(e) subsection 52(1) and sections 52G, 52H, 52JA, 52JB, 52JC and 52JD do not apply to the asset that the person is, because of paragraph (d) of this subsection, taken to have.
52V Members of ordinary couple with different principal homes (both in special residences)
(1) This section applies to a special resident if:
(a) the resident is a member of an ordinary couple with different principal homes; and
(b) the principal home of the resident’s partner is also a special residence.
Both entry contributions above extra allowable amount
(2) If:
(a) this section applies to a special resident; and
(b) the resident’s entry contribution, and the partner’s entry contribution, were each more than the extra allowable amount concerned;
then, for the purposes of this Act:
(c) the resident and the partner are each to be taken to be property owners; and
(d) the value of the resident’s principal home is taken to be the resident’s individual residence contribution; and
(e) the value of the partner’s principal home is taken to be the partner’s individual residence contribution; and
(f) any right or interest of the resident in:
(i) the more valuable of the two principal homes; or
(ii) where the value of the two principal homes is the same—the principal home of the younger person;
(the more valuable principal home) is to be disregarded in calculating the actual value of the resident’s assets; and
(g) any right or interest of the partner in the more valuable principal home is to be disregarded in calculating the actual value of the partner’s assets; and
(h) the assets of the person whose principal home is not the more valuable principal home are to be taken to include an asset the value of which is equivalent to the amount of that person’s entry contribution.
Both entry contributions equal to or below extra allowable amount
(3) If:
(a) this section applies to a special resident; and
(b) the resident’s entry contribution, and the part