Assets hardship for income support payments 108-04120000

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.

If substantial assets are held, but they produce little or no income, the owners are expected to rearrange their financial affairs before calling on the community for income support through the social security system.

Where a customer is in long term hardship, the customer should seek to borrow against any assets they want disregarded (for example, a loan or reverse mortgage on a holiday home or investment property). Customers in long term hardship do not have to obtain a loan secured against their principal home but borrowing should be expected against the asset being considered for exemption, but only when the customer can afford to repay the debt. In these cases all options should be investigated.

Sometimes a customer is unable to rearrange financial affairs, or, in the case of pensions, could not reasonably be expected to rearrange them because of particular circumstances.

For the hardship rules to apply, a customer will be considered to be in severe financial hardship if:

• their available money is less than the readily available funds limit. Note: from 3 August 2007 the limits vary depending on the customer's income support payment, and
• they have no other course of action which they could reasonably be expected to take to alleviate that hardship

An asset is said to be unrealisable if the customer cannot sell it or:

• For pension recipients, it would seem unreasonable to expect them to sell or realise the asset. The asset is also said to be unrealisable if the customer cannot or could not reasonably be expected to use the asset as a security for borrowing
• For a customer claiming an allowance, they must have applied for and been deemed not eligible for payment under the assets test, plus meet other basic qualifications
• Parenting Payment Single (PPS) is a pension under section 23(1) of the Social Security Act 1991, however for assets hardship purposes PPS is treated the same as allowances

The hardship provisions do not apply to Family Tax Benefit (FTB) Part A, FTB Part B, Maternity Allowance (MAT) and Child Care Subsidy (CCS) because there is no assets test for these payments.

Where both members of a couple are applying for payment under the hardship provisions, each person must lodge a claim, this can be done by completing separate forms or one claim form with both partner's details.

The Scheme does not preclude customers from consideration under the hardship provisions. It may be appropriate to investigate whether a customer has entitlement under the hardship provisions before proceeding with a request for loan payments under the Scheme. The two provisions are mutually exclusive and that payment can only be made under one or the other provision.

An assets hardship claim may be lodged following the rejection, cancellation or rate reduction of an income support payment.

The Social Security Act allows a delegate to backdate a claim for assets hardship for up to 6 months before the signed claim form was lodged. As most customers have limited knowledge of the assets hardship provisions the CAO should view favourably a request to grant for an earlier period in most circumstances.

Example - a customer makes claim for Age Pension in July and is rejected under the assets test in August. They become aware of the assets hardship provisions via their rejection letter and obtain a claim form and apply for assets hardship as soon as practicable in September. In this case the delegate has the discretion to pay assets hardship from July if all the criteria are met from that time.

Before inviting a claim under the assets hardship provisions, Service Officers are advised to discuss the case with a Complex Assessment Officer (CAO) in the Asset Hardship Team who can advise the Service Officer of the issues to be considered and other concessions that may be available to the customer.

The customer’s eligibility for assets hardship, under provisions for pensions, or allowances, is to be checked before contacting a CAO.

The delegation to make decisions under the assets hardship provisions lies with the CAO.