Assessment of assets (CLK) 108-04020000

When calculating a customer's entitlement to a payment under the Social Security Act 1991, qualification, eligibility and payability is tested under various rules. This is done to ensure that financial assistance is directed to those members of the community most in need.

The Assets Test is based on the principle that customers with substantial assets, apart from their principal home, should use these assets to produce income for their own support.

On 1 July each year, assets thresholds are indexed to the Consumer Price Index (CPI) along with deeming thresholds and Income Test free areas.

The type of payment a customer is applying for or receiving determines which Assets Test to apply. A customer can also apply under hardship provisions if necessary.

For Disability Support Pension (DSP) customers aged under 21, the allowable assets thresholds for full pension are the same, but the cut off limits for part pension will be lower due to the lower maximum rate of payment.

Section 11 of the Social Security Act 1991 defines an asset as 'property'. Property is not defined in the Act, but has an established common law meaning - any possession, belongings or property owned solely or partly, including beneficial interests, and/or debts owed to a person. Some assets are exempt under the Social Security Act 1991, section 1118.

Assets are assessed at their net market value. Net market value is not the replacement value or the amount it is insured for - it is the amount likely to be received by selling the asset. The market value of an asset can be reduced if there is an encumbrance or unsecured loan against it.

If the asset is owned with another person, the asset value for a customer is determined using their proportion of their interest in the asset.

Property settlement pending: The percentage of ownership the person has before they are separated remains after the separation until any property settlement is finalised. If the customer asserts a beneficial or trust ownership different to the legal ownership of an asset, the trust and companies provisions are applied to determine existence of a trust and attribution of income and assets.

If proceeds from the sale of the customer’s principal home (exempt asset) are in a solicitor’s trust account pending the resolution of a property settlement, see Sale of principal home.

Example: A couple sell their principal home on 1 February 2023 and separate. The division of property through the court occurs on 1 November 2024:

• if applicable the home sale proceeds exemption provisions apply from the date of sale for 24 months (or up to 36 months) as the date of sale was after 1 January 2023. See Note below
• as the funds were inaccessible due to legal proceedings, the exemption starts from when the funds become available for the balance of the 24 month exemption period
• each member of the couple have 3 months (of the 24) left of their home sales proceeds exemption. However if they meet the requirements:
• they can apply for an extension of up to 36 months from the date of sale for the home sales proceeds exemption, and
• they could have up to 15 months in total

Deeming only applies once the division of property is known, so in the above example, the sales proceeds would be deemed from 1 November 2024. For sales finalised on/after 1 January 2023, only the lower deeming rate applies to the portion of the sale proceeds the customer intends to spend on their new home.

For sales finalised before 1 January 2023, the sale of home provisions apply for 12 months from the date of sale, with a possible extension of up to an additional 12 months (for a total maximum of up to 24 months) in certain circumstances.

Note: In all cases, consider if the property sold is the customer’s principal home. If the customer(s) have vacated the property and established a new principal home, the sale of home provisions do not apply.

If the customer has advised they have separated and their former partner still resides in the principal home, the percentage of the property the customers owns becomes an assessable asset. (For example, if they were joint owners they would be considered to be 50% owners of the net asset value calculated by assessing the market value reduced by any loans or liabilities secured against the property). If the customer is affected by the assets test, the property may be disregarded under the assets test hardship provisions if the asset cannot be sold (unrealisable asset).

When a jointly owned assessable asset (e.g. rental property) is sold and the funds are held in a solicitor’s trust account pending a property settlement between a separated couple:

• the percentage of ownership the person has before they are separated remains until any property settlement is finalised
• the proceeds held in the solicitor’s trust account are deemed

Property settlement finalised:

• The outstanding balance of a property settlement is an asset
• If the court order allows for income to be paid on the outstanding balance, it is assessed as income
• Financial assets are deemed
• The trust and company rules apply to any trust created or declared by a court, tribunal or arbitrator as a result of a property settlement, or created as a result of a property settlement

Deprivation: When a person gives away assets as a result of a court order or property settlement following a relationship breakdown, it is not regarded as deprivation for Social Security purposes. Satisfying the demands of a court order or property settlement is considered adequate consideration for the asset.

An amount lent by a customer is an assessable asset and is assessed as a financial investment subject to the deeming provisions. A customer may apply through the Financial Information Service (FIS) Officer to the Minister for Social Services to exempt investments and loans from the deeming provisions.

If a customer’s assets are stolen, including in cases of elder abuse, refer the case to the Level 2 Policy Helpdesk for advice. Document the customer’s record with the details of the situation and the date referred.

Note: before referring, ensure the customer has provided any available evidence to verify that theft has occurred. Suitable evidence could be a police report or similar document verifying the circumstances.

To work out the total net value of a customer's assets, the primary production aggregation rules are applied.

Real estate, businesses, trusts and companies are assessed as primary production assets or a non-primary production asset so that negative net primary production assets can be offset against other primary production assets.