Deprivation related to the transfer of a farm to a close relative 108-06010030

Has the customer legally transferred ownership or effective control of a farm (or an interest in a farm) to a close relative as a gift, or sold for less than its market value? The customer may transfer ownership of different parts of the land over time.

Note: the customer can still operate as a farmer as they transfer parts of the farm over time.

• Yes, the transfer was to a close relative, go to Step 2
• No, the transfer was not to a close relative, go to Step 10

The legal transfer of the property must be verified by sighting a certificate of title or other relevant documents.

Request that all relevant documents such as the certificate of title are supplied.

Request that all relevant documents such as the certificate of title be supplied within 14 days.

If a CAO referral work item exists, place on hold for 22 days and close the RFI activity.

If there is no existing CAO referral work item, the RFI activity should be placed on hold for 22 days to ensure the review is completed. Note: for more information about timeframes for placing the activities on hold, see Requesting information (CLK).

Procedure ends here until the information has been provided and/or the referral work item becomes due.

Have all information and documents been received, as per CAO protocols?

• Yes, go to Step 5
• No, and 22 days have passed, for:
  • new claim referrals - complete the step as CAO assessment unable to be completed because the customer has failed to provide requested information
  • reassessment referrals - suspend payments Failed to reply to correspondence (FRC) and in Customer First, create a manual review on the Review Registration (RVR) screen and complete the fields as follows:
    Service Reason: customer's payment type
    Review Reason: FRC (Failed to Reply to Correspondence)
    Due Date: 13 weeks from date of suspension
    Source: INT
    Date of Receipt: today's date
    Notes: 'If documents not provided, cancel FRC. If documents have been provided, set up a new CAO referral.'
    Keywords: CAN13W
    Workgroup: leave blank
    Position: leave blank
    Transfer to Region: leave blank
    The review will mature on the Due Date coded in the RVR activity. Workload Management will allocate the review for manual action
    Go to Step 4

Has customer supplied information within 13 weeks of suspension?

• Yes, restore payments, go to Step 5
• No, cancel payments, reason FRC

Has a granny flat interest been included in the transfer of the farm?

• Yes, see Granny flat provisions to determine if a reasonableness test is required. When this has been finalised, go to Step 6
• No, go to Step 6

Note: if the relative has been a share-farmer or a partner in the farm business, forgone wages cannot be accepted for any periods where the relative was entitled to share in the farm profits.

Have any past contributions or caring responsibilities been made by a close relative to whom the farm is being transferred?

• Yes, go to Step 7
• No, go to Step 11

Where the customer's close relative, or partner of a close relative has forgone wages, a written statement must be recorded addressing the following:

• the period of time the close relative, or partner of a close relative was employed on the farm
• the average number of hours worked per week
• details of any wages paid
• details of any farm improvements paid for by the relative, for example, construction of fences, purchase of farm equipment

To assist in verifying contributions the following supporting documents will need to be sighted and verified:

• tax returns for the customer and their close relative
• tax returns and financial statements for the farm business
• wages records
• workers compensation records
• receipts for capital expenditure

Note: the above documents that require verification are requested via the QSS32 and QSS40 forms, which are archived templates on the CAO SharePoint page.

The net market value of the farm land being transferred must be established. A valuation will be required. See Valuation of real estate and other assets for more information.

Note: the value of the house and curtilage (as assessed under the Private land use test) is not included when considering forgone wages. For more detail on house and curtilage assessments, see Assessing house and curtilage.

For more information on asset value of real estate, see Assessment of sale of real estate and timeshare asset.

• The formula for calculating forgone wages is:
  • the Average Weekly Ordinary Time Earnings (AWOTE) figure for the equivalent period worked (up to the date the customer legally transferred ownership of the farm), less
  • an amount to cover a notional tax liability, less
  • an amount to cover notional incidentals for such things as board and lodgings, use of motor vehicles etc.
• There may be some adjustment required to the forgone wages calculations where some wages were paid or where the close relative worked part-time
• In applying the formula:
  • the notional tax liability is taken to be 20% of an amount over $10,000
  • notional incidentals is taken to be 10% of the AWOTE figure for a full-time employee

For more details about the AWOTE, see the link to the Social Security Guide on the References page.

The amount calculated is accepted as consideration and is deducted from the net value of the property in order to calculate any deprivation.

If a granny flat interest has been provided, details from the assessment will need to be applied to the calculations.

Is there any residual value of the property after the forgone wages/contribution/granny flat interest have been deducted?

• Yes, go to Step 10
• No, further assessment of deprivation is not required. Record the details of the assessment of forgone wages, including the fact that no deprivation has been maintained on a DOC. Procedure ends here

• Any residual value of the farm land being transferred (or deprivation) must be calculated and recorded on the Gift/Deprived Asset (GIFT) screen as per Assessing deprivation/gifting
• Record the details of the forgone wages and additional deprivation on a DOC

Procedure ends here.

• Gifting has occurred. The market value of the property transferred should be coded on the GIFT screen. See Assessing deprivation/gifting
• Record details on a DOC