Exempt Funeral Investments (Funeral Bonds) 108-04080030

Item

Description

1

Funeral investments for members of a couple

• Each member of a couple may invest up to the Indexed Funeral Bond Allowable Limit (IFBAL) in a funeral investment. This means that if each member of a couple has an individual investment costing the IFBAL amount, then both are exempt assets for the couple
• If a couple invest in a joint funeral bond, the total amount invested must be no more than the IFBAL for the funeral bond to qualify as an exempt funeral investment

2

Where a funeral bond and pre-paid funeral plan purchased

Where a person purchases a funeral bond and pre-pays their contractually arranged funeral expenses, all funeral bonds are assessable.

This is because the provisions of subsection 23(1) of the Social Security Act defines an exempt funeral bond as one that does not relate to a funeral for which another bond or a pre-paid funeral plan has been purchased.

3

Amount invested is more than the IFBAL

If the amount invested by the customer exceeds the IFBAL, the whole amount of that bond is assessed as an asset and deemed. However, any increase in the value of an exempt funeral bond due to investment earnings only is disregarded.

Note: if Services Australia is advised the investment has increased due to interest paid and is now over the IFBAL, the investment value is not changed.

4

More than one funeral bond is purchased

Where a person purchases more than one funeral bond investment to cover expenses of their funeral, but they cannot all be exempt (because there are more than 2 or cost more than the IFBAL), then the customer can choose to exempt whichever one or 2 eligible bonds they wish. Any others are assessed as financial investments.

For example, Betty has:

• an individually owned bond that cost 110% of the IFBAL and is now worth 120% of the IFBAL
• an individually owned bond that cost 80% of the IFBAL and is now worth 85% of the IFBAL, and
• a jointly owned bond that cost a total of 60% of the IFBAL and which is now worth 90% of the IFBAL

Bond one cost more than the Funeral Bond Allowable Limit so cannot be exempt.

Bonds 2 and 3 each cost less than the IFBAL but together cost 40% more than this. The full cost of the jointly held share is used for this comparison, not Betty's 50% share. Only bond 2 or 3 can therefore be exempt from the assets test and the other 2 bonds will be counted as assets and the deemed income applies.

Betty should exempt the eligible bond that would otherwise affect the assessable assets the most. In the above example, Betty's share of the 2 bonds that can be exempt would be assessed as 85% of the IFBAL or 45% of the IFBAL (half of total bond 3 value) respectively so Betty should choose to have bond 2 exempt.

Note: the fact that Betty only has a 50% share of bond 3 is taken into consideration at this stage.

5

Customer can change the exempt bonds

The customer can choose to change the exempt bonds at any time provided they are eligible for the measure. This may happen when the IFBAL increases and allows a more advantageous combination of bonds.

For example, in the case above:

• when the IFBAL reaches the amount Betty paid for bond one, then Betty would be better to select this as it exempts 120% of the IFBAL
• when the IFBAL is at least the sum of the amounts paid for bonds 2 and 3, it may be better to exempt these

Note: customers may also wish to change exempt bonds if assessable values change due to earned interest.

Date

Exempt funeral investment threshold

From 1 July 2024

$15,500

From 1 July 2023 to 30 June 2024

$15,000

From 1 July 2022 to 30 June 2023

$14,000

From 1 July 2021 to 30 June 2022

$13,500

1 July 2020 to 30 June 2021

$13,500

1 July 2019 to 30 June 2020

$13,250

1 July 2018 to 30 June 2019

$13,000

1 July 2017 to 30 June 2018

$12,750

1 July 2016 to 30 June 2017

$12,500

1 July 2015 to 30 June 2016

$12,250

1 July 2014 to 30 June 2015

$12,000

1 July 2013 to 30 June 2014

$11,750

1 July 2012 to 30 June 2013

$11,500

1 July 2011 to 30 June 2012

$11,250

1 July 2010 to 30 June 2011

$11,000

1 July 2009 to 30 June 2010

$10,750

1 July 2008 to 30 June 2009

$10,250

1 January 2008 to 30 June 2008

$10,000