Unrealisable assets under the Assets Test hardship provisions 108-04120050

Customers must complete a Claim for consideration under hardship form (SA233). On the claim they must indicate which assets they wish to have disregarded. Services Australia will consider the reasons why the asset cannot be sold, or why it would be unreasonable to expect the customer to sell or borrow against the asset.

If a customer asks for the asset value of a loan (that is, a loan made by the customer) to be disregarded due to the inability of the debtor to repay the loan, the circumstances should be examined to see if the loan is irrecoverable.

If a customer questions the valuation of real estate and can provide evidence that will affect the value of the property, they can apply for a formal review of the valuation decision.

Note: downturn in rural economy is not adequate evidence if there has been a recent property valuation, as this would have been considered.

It can be accepted that a customer is unable to sell or borrow against an asset where:

• the property/asset is on the market but cannot attract a buyer and the asking price is no more than 10% above the assessed current market value, or
• the customer has been found eligible for Farm Household Allowance (FHA), or
• there is a legal restriction or court order which prevents the property/asset from being sold or used as security for borrowing, or the property/asset is subject to a pending property settlement, or
• the asset is a jointly owned home, and the claimant has fled the home because of domestic violence, or
• the property/asset is owned jointly with another person and that person refuses to agree to the sale of the property/asset or
• the property/asset is owned as tenants-in-common, and the practical effect of the ownership is that the asset would be unsaleable

The asset hardship rules for pension claimants include a test of whether it is unreasonable to expect the asset to be sold. It can be accepted that it is unreasonable to expect the asset to be sold if:

• the asset is a property, and the claimant has lived there for at least 20 years, and the property cannot be subdivided to allow the claimant to retain the portion their home is on, or
• the asset is a farm, and the claimant has been a farmer for at least 20 years (not necessarily on the same farm), and the claimant is working the farm, and they could not sell some of the land without affecting the viability of the farm and/or significantly affecting their income from the farm, or
• the asset is a farm, and a family member is working the farm to capacity, and has been working the farm for at least 10 years (a slightly shorter period can be accepted if the family member has worked the farm continuously since leaving school), and the farm is the main source of the family member’s livelihood, or
• the asset is a farm or some other business, and there is a temporary but substantial reduction in the business income due to circumstances beyond the claimant’s control, or
• the asset is a house occupied by a near relative, and the near relative has lived in the house for at least 10 years, or the near relative has previously provided care for the claimant in the property (which was previously the claimant’s home), or the near relative is a handicapped child of the claimant and the claimant is providing the property to promote the child’s independent living, or the near relative has dependent children and the family income of the near relative does not exceed the Family Tax Benefit (FTB) income ceiling
• the asset is the person’s principal home, the person is temporarily overseas, and the person has been unable to return to Australia for reasons beyond their control

Note: in the first 2 scenarios, a period of less than 20 years can be accepted if there are unforeseen circumstances.

Where an asset is considered unable to be sold and the claimant is in temporary hardship (that is, their situation is likely to improve in the near future), they may be able to borrow against their assets in order to alleviate their hardship. When assessing a customer's ability to borrow against assets, the following factors are considered:

• their ability to meet periodic repayments
• the type of assets involved
• whether their financial position is likely to improve in the future

The Process page contains more detail.