Assessment of assets hardship 108-04120040
Before inviting a claim under assets hardship provisions, discuss with a Complex Assessment Officer (CAO) in the Asset Hardship Team.
This document outlines how to assess the financial circumstances of a customer claiming under the assets hardship provisions.
Assets test and hardship
The Assets test presumes that customers with substantial assets, apart from their own home, apply those assets to produce income for their own support. If assets held produce little or no income, the owners are expected to rearrange their finances before calling on the community for income support.
Sometimes a customer is unable to rearrange their financial affairs, or could not reasonably be expected to rearrange them due to particular circumstances. When customers are not able to rearrange their finances, they may be eligible for consideration under the Asset Hardship provisions. These special provisions ensure customers are not placed in severe financial hardship due to the normal application of the Assets test.
The hardship rules allow for the value of particular assets to be disregarded and for the rate of pension, allowance or benefit payable to be determined in a special manner. Assets which are disregarded for hardship purposes are called ‘unrealisable assets’. For these rules to apply, a customer must meet all of the following:
- income support payment is precluded or reduced (pensions) due to the assets test
- considered to be in severe financial hardship
- unable to sell or borrow against an asset (or in the case of pensioners, it is unreasonable to expect the person to sell or borrow against an asset)
- do not qualify for any other income support payment (allowance customers)
Different rules apply to asset hardship provisions for allowances. Note: Parenting Payment Single (PPS) is a pension under section 23(1) of the Social Security Act 1991, but for asset hardship purposes, PPS is treated the same as allowances.
Claim for consideration under hardship
Before inviting a claim under the asset hardship provisions, Service Officers must discuss the case with a CAO within the Asset Hardship Team. The CAO can tell the Service Officer of issues to consider and concessions that may be available to the customer. CAO contact details can be found in Office Locator. See the Resources page for instructions and a link. If CAO contact cannot be made send a Fast Note, see Process page for details.
Customers must complete a Claim for consideration under hardship form (SA233). On the claim they must indicate which asset(s) they wish to have disregarded.
If both members of a couple are applying for payment under hardship provisions, each person must lodge a claim. They have the option of lodging separate or combined claims.
Only a CAO can make the decision about qualification under the Asset Hardship provisions.
Severe financial hardship
Severe financial hardship for Asset Hardship purposes means a customer has limited financial means and there is no other course of action they could reasonably be expected to take to improve their financial position. This does not include selling the principal home.
There are 2 tests of severe financial hardship:
- readily available funds, and
- other income less than maximum fortnightly rate of payment
Unrealisable assets
An unrealisable asset is an asset that cannot be sold or borrowed against, or which a pensioner cannot be reasonably expected to sell or borrow against. See Unrealisable assets under the Asset Test hardship provisions.
A customer is required to note on the Claim for consideration under hardship form (SA233) which asset(s) they wish to have disregarded.
The CAO must consider if there are valid reasons why:
- the asset cannot be sold, or for pensioners, it is not reasonable to expect it to be sold, or
- it is unreasonable to sell or borrow against the asset
Notional income
All assets disregarded under the hardship provisions (except household contents, personal effects and one motor vehicle) is deemed to produce income. This is referred to as ‘notional income’. See Notional income on unrealisable assets.
Notional income is used to calculate a person’s rate under the asset hardship provisions.
Deprivation
Deprivation occurs when a customer destroys, disposes of or reduces the value of an asset or income without receiving adequate financial consideration in return.
A customer who has deprived themselves of assets and/or income would not normally be considered eligible under the hardship provisions. This includes where they are in severe financial hardship. Each case needs to be looked at to check for any unusual circumstances that warrant additional consideration.
Deprivation can be disregarded when:
- the severe financial hardship is not due to the disposal of assets and/or income but an unforeseen event out of the customer's control, and
- the customer would be qualified for the hardship provisions even if they had not disposed of the asset
If the deprivation can be disregarded, the deprived asset or income is added to the eligibility calculation. The customer must still meet all other criteria.
Other Commonwealth assistance
If a benefit or allowance customer is eligible for alternative Commonwealth assistance, they are not eligible for payments under hardship provisions.
For example:
- Department of Veterans' Affairs (DVA) pension
- Payments made by or on behalf of another government department
Home Equity Access Scheme (the Scheme)
It may be appropriate to investigate whether a customer has entitlement under the asset hardship provisions before proceeding with a request for loan payments under the Scheme. The 2 provisions are mutually exclusive and payment can only be made under one provision or the other.
Granting and backdating of claims
A decision under the asset hardship provisions takes effect from the lodgement day of a signed claim form. The Social Security Act 1991 (sections 1129, 1130B and 1131) contain provisions that allows a delegate to backdate a claim for payment under the asset hardship provisions for up to 6 months before the signed claim form was lodged. These backdating provisions do not mean that a claim must be lodged within 6 months after the rejection of claim for pension.
As most customers have limited knowledge of the asset hardship provisions, the CAO should favourably view a request to grant for an earlier period in most circumstances. This can be to the date the customer was first assessed or affected under the assets test. See Resources page for an example.
Changes to assets or income since payment was granted
If the customer or their partner has changes to their assets or income following the grant of their payment under the asset hardship provisions, a reassessment is required by a CAO. For example, notification of earnings via telephone or other contact.
An escalation for a CAO reassessment must be requested via a Fast Note. See Process page for details.
Asset hardship reviews
All asset hardship reviews must be completed by a CAO.
Reviews are required on a regular basis to adjust payment rates due to indexation or changes to customers circumstances, as well to ensure ongoing eligibility under the asset hardship provisions i.e. property settlement still pending or property still on the market at a reasonable price.
The Resources page contains examples of applying deprivation rules, an example for approving a claim, Q999 letter template, links to forms, Office Locator and how to contact an Assets Hardship CAO.
Related links
Assets hardship for income support payments
Identifying customer vulnerability and risk issues
Unrealisable assets under the Assets Test hardship provisions
Severe financial hardship under the Assets Test hardship provisions
Notional income on unrealisable assets
Deprivation effects on Centrelink payments