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Assessing deprivation/gifting 108-06010010

This document outlines the assessment and coding when deprivation has occurred.

On this page:

Actioning notification of gifting/deprivation

Recording details and providing information

Actioning notification of gifting/deprivation

Table 1

Step	Action
1	Gifts to Special Disability Trusts (SDT) Different rules apply for gifts made to an approved Special Disability Trust (SDT). Gifts to an SDT may be exempt from the deprivation provisions if the contributor is an immediate family member, of Age Pension age and the SDT concessional gifting cap is not used. Was the gift made to a Special Disability Trust (SDT)? Yes: This procedure does not contain information on gifting concessions to an SDT Complete a referral to a CAO for Gifting concessions to a Special Disability Trust (SDT) Procedure ends here No, go to Step 2
2	Income and asset updates Discuss all of the income and assets updates the customer would like to make during their contact, including where the gift came from (for example, income stream, shares, foreign income). Only proceed with the coding if all updates required can be completed If the customer has information that can be coded at point of contact and other information a processing team must code, send all information to the processing team to code on the customer's record The Resources page contains answers to frequently asked questions about existing deprivation assessments. Whether verification is required depends on the changes advised. See Verifying income and assets and any relevant Operational Blueprint content. For example, if the customer has made a partial withdrawal of $50,000 from a unitised managed investment, Managed investments - updating existing investments confirms a statement showing a breakdown of the investment options and number of units owned is required to do the update. Can the customer provide all the information required and can all updates for this contact be coded? Yes, go to Step 3 No: Request the required information, see Requesting information (CLK) Procedure ends here until information is provided
3	What must be coded or requested All Service Officers can process these updates at the point of contact for all payments, except where a CAO assessment is needed. What information is required? Date of disposal Description of item Value of the item sold or disposed of (for cash gifts this is the amount of cash) Value or amount of consideration received, if any Percentage owned by the customer/partner When documents may be required Documents are not required unless there are concerns with the legitimacy of the customer's information or if supporting documentation is required to assist with coding. Note: do not proceed with the update if documents are requested. Can the customer provide the required information? Yes, go to Step 4 No: Request the required information, see Requesting information (CLK) Procedure ends here until information is provided
4	Disposal of income or asset A customer may advise Services Australia they have disposed of an asset or income without receiving adequate financial consideration. Although individual cases of deprivation may be less than the allowable yearly amount, when totalled they may exceed the gifting free areas. All assessable cases of gifting must be recorded. Assessable cases are all gifts made: while the customer and/or their partner are receiving an income support payment or Low Income Health Care Card (LIC), or self-funded retirees in home based or residential care (RCA/CUR), and in the 5 years immediately before claiming or becoming qualified (whichever is later) Do not record gifts outside of this 5 year period as they will incorrectly be included in the calculation of the gifting free areas. Note: even though the LIC is not asset tested, deemed income from the disposal of an asset can be included in the claimant's assessable ordinary income. Has an assessable gift been made? Yes, go to Step 5 No, procedure ends here
5	Disregarding deprivation Section 1127 of the Social Security Act allows for disposals within 5 years of qualifying to be disregarded where the person could not reasonably have expected they would become qualified, for example, after the death of a partner, loss of employment or after an unexpected illness or incapacity. Is this a gift that can be disregarded? Yes: Record details on a Note/DOC, follow instructions in Recording reasons for decisions Make any required updates to the customer’s income and assets Procedure ends here No, go to Step 6
6	Asset value of gift Was the disposed item income (not cash) only? Note: in order for a gift to be considered income only, the gift must not have any asset value, for example, some income stream products. See the Resources page for examples and explanation. Yes, go to Step 7 No, see Table 2 > Step 3
7	Disposal of income only If the customer or their partner disposed of income only, which had no asset value, (for example, a superannuation pension, foreign pension): The income continues to be included as the customer's and/or partner's income indefinitely For example, for a superannuation pension or foreign pension with a fixed term, this income would be assessed until the term expires. This is because this is the period of time the customer would have had access to income if they had not disposed of it Is the disposed income a foreign income, foreign pension or foreign superannuation? Details can be found on the Foreign Income/Assets Detail (FID) or Foreign Pension Detail (FPD) screens. Yes, see Table 2 > Step 2 No, see Table 2 > Step 1

Recording details and providing information

Table 2

Step	Action
1	Coding the disposed income amount If the income being disposed of is recorded on the customer’s and /or partner's record (for example an income stream), make sure the income is updated/removed using the same date as the date of disposal recorded Code the disposed income amount on the Other Income (OIN) screen using type DPI - Deprived Income in the Income Type field See Verifying and recording other income on the Other Income (OIN) screen for assistance with coding the Other Income (OIN) screen Code a Display on Access (DOA) DOC per Creating, reviewing and deleting documents (including Fast Notes and DOA DOCs) with details of the deprivation Once all required updates are made, review the outcome of the activity on the Entitlements (ELD) or Assessment Results (AR) screen and finalise if correct. Record details on a Note/DOC on the customer’s record with details of the update. Make sure the effect of any future disposal/gifts and the deprivation rules are explained to the customer. Go to Step 7.
2	Deprivation of a foreign income The foreign income continues to be assessed as the customer's and /or partner's income for the total period of entitlement for example, if the foreign income is a lifetime superannuation payment, the income is assessed for the customer's and /or partner's life. Do not remove the income from the customer's and /or partner's record. This will allow the system to adjust the exchange rate over the period of the income deprivation. Update as follows: Code a Display on Access (DOA) DOC per Creating, reviewing and deleting documents (including Fast Notes and DOA DOCs) with details of the deprivation Where a customer has been granted a foreign pension which they gift, investigation is required as deprivation may require more action under Section 66 of the Social Security Administration Act, 1999. If this is the case, contact Centrelink International Services for advice on how to action. Note: section 66 requires the customer to claim a Comparable Foreign Pension if entitlement exists Go to Step 7.
3	Disposal of cash only Is the disposed item cash only? Yes, go to Step 5 No, go to Step 4
4	Assets other than cash If the disposed item consists of assets other than cash (that is, forgone wages, real estate, granny flat interest, shares), the market value of the asset(s) must be determined and applied. A valuation is required for all gifting assessments involving real estate, except where the market value has recently been established, such as a person gifting a share of their newly bought home to their child and where evidence of the purchase price can be provided. This needs to be requested as at the date of the gift. See Table 1 > Step 15 in Valuation of real estate and other assets. If a customer or their partner surrenders a life interest, an actuarial valuation of the surrendered life interest (for example, in a house) will normally be calculated by The Australian Government Actuary (AGA). See the Resources page for details. Refer these cases to a Complex Assessment Officer (CAO) for calculation. For assistance with market value(s), see: Valuation of real estate and other assets Coding income and assets for Centrelink payments and services Granny flat provisions Revaluing managed investments, shares, securities For loans that have been 'written off' or forgiven because they were unrecoverable, see Loans. Once the market value of the asset has been determined, go to Step 5 to record the disposal details.
5	Record the asset on the Gifts and Deprived Asset Details (GIFT) screen For Process Direct: In the customer's record go to the Customer Summary Go to the START screen Search for and select the Income and Assets Update workflow Select Gifts and Deprived Assets (GIFTS). Note: any other income and asset types which require updating can be selected from the Task Selector at the same time Select Start For Customer First/Customer Record, use the Income/Assets Update and Reviews Script to update gifting. If the script is unavailable, code manually via the Gifted/Deprived Asset (GIFT) screen On the GIFT screen code: Gift Date/Start date: the date the asset was gifted/deprived Type of Gift/Deprivation Type: one of the following: 'VEH' for vehicle 'CSH' for cash 'HSE' for principal place of residence 'REE' for other property 'BUS' for business 'FRM' for a farm property 'LON' for forgiveness of a loan (waiving recovery) 'GRF' if Granny Flat right has been established 'LFI' if a Life Interest has been gifted 'OTH' if the gift does not fit one of the above categories Gift Value (AUD)/Deprivation Amount: This is the total market value of property/assets transferred, regardless of any consideration received. Cannot be set to zero once recorded Consideration Amount: This is the amount or value the customer/partner actually received or is deemed to have received including forgone wages or granny flat provisions. Will default to zero if nothing entered % owned Customer/Partner: These fields are to indicate who actually transferred the property/asset Note: if the asset being disposed of is recorded on the customer’s/partner's record (for example, real estate or savings), make sure the asset is updated/removed using the same date as the date of disposal recorded. Once all required updates are made, review the outcome of the activity on the Entitlements (ELD) screen in Process Direct or the Assessment Results (AR) screen in Customer First and finalise if correct. Record details on a Note/DOC on the customer’s record with details of the update.
6	Check if allowable disposal limit exceeded View the Gifted Assets Summary (GIFTS) screen. Check accumulated total of gifts in the Gifted amount in the income year field.
7	Provide information to customer Explain to the customer: The effect(s) on the customer's payments. For information on deeming, see Deeming provisions The length of time (five years from the date of disposal or longer if deprivation of income) for which deprivation is applied Explain the effect of deprivation and any future disposals to the customer Record details on a Note/DOC