Primary production aggregation for partnerships 043-04100020

If the customer's farm property (and house and curtilage) has been brought into the partnership as a partnership asset, the partnership balance sheet has to be adjusted to arrive at a capital account figure for aggregation purposes.

The steps involved are:

• Calculate the primary production portion of liability related to the mixed asset
• Adjust the partnership balance sheet in accordance with the result of this calculation
• The resulting balance in the customer's partnership capital account is his/her net primary production asset or liability from the partnership. It is to be aggregated with any other primary production assets or liabilities in which the person may have an attributable/identifiable/assessable interest (for example a separate primary production sole trader business or attributed interest in a primary production private company or trust business)

A mixed asset is an asset used for both primary production and non-primary production purposes, for example, a farm property which includes the customer's normal house and curtilage.

If the customer has an asset which is for both primary production and non-primary production use, and which is encumbered, the value of the liability which relates to the non-primary production part of that asset should not be included in the aggregation exercise (unless the liability can be identified as being solely for primary production purposes).

To do this, the partnership balance sheet has to be adjusted to arrive at a primary production capital account figure for aggregation purposes. This needs to be done whether or not the customer's capital account has a negative or positive value.

Sometimes a partner's additional equity in partnership assets is represented by a loan account in the liabilities on the balance sheet of the partnership. This account may have been recorded to represent additional capital introduced (for example, plant and equipment purchased by the partner, for the partnership). These loans are not regarded as a liability of the partnership.

For Centrelink assessment purposes, these loans are not recorded as loans on the Direct Investments (SVDI) screen. The value of the loan account should be added back to the equity (capital account) of the person.

Such loans are not financial assets and are not subject to deeming assessments. For more information, see Assessing partnership assets.

If a farming partnership, code 'FPT' in the Type of business: field.

When coding Net Assets Customer $: field the amount calculated as the Net Asset value for the customer may be a negative figure. If this is the case, key a leading '-' (minus) when recording the asset value. The negative value of the partnership primary production net assets will be offset against the positive value of any other primary production business belonging to the customer.

When a partnership has real estate as part of the business, a link must be coded on the BUS screen. The figure on the Value on Net Assets Customer $: field will be used by the system to assess the value of a partnership business.

Estimated Value $: field on the RE screen must be coded accurately. When the valuation is returned, the valuation figure will be inserted in the Current Market Value: field on the RE screen and the asset value of the business will be automatically adjusted by the difference between the valuation and the original estimate.