Assessing deprivation/gifting 108-06010010

Discuss all of the income and assets updates the customer would like to make during their contact, including where the gift came from (for example, income stream, shares, foreign income). Only proceed with the coding if all updates required can be completed.

Note: if the customer has information that can be coded at point of contact and other information a processing team must code, send all information to the processing team to code on the customer's record.

If there are concerns with the legitimacy of the customer's information, see Coding income and assets for Centrelink payments and services.

Can the customer provide all the information required and are all updates for this contact able to be coded?

• Yes, go to Step 2
• No, go to Step 3

All Service Officers can process these updates at the point of contact for all payments, except where a CAO assessment is needed.

What must be coded or requested?

• Date of disposal
• Description of item
• Value or amount
• Percentage owned by the customer/partner
• Event date

Documents are not needed. Further contact is only required if the customer is unable to provide all information.

When documents may be required

If there are concerns with the legitimacy of the customer's information or it is significantly payment effecting, see Coding income and assets for Centrelink payments and services.

If the decision is to ask for documents, issue a request for the document(s). See Requesting information (CLK).

Note: do not proceed with the update if documents are requested.

Is the customer able to provide the required information?

• Yes, go to Step 4
• No, go to Step 3

If the customer is only able to provide part of the information, tell the customer all information is required before any change can be made to make sure they receive correct entitlement. Request all information they must provide. See Requesting information (CLK)

Procedure ends here until documents returned.

A customer may advise Services Australia they have disposed of an asset or income without receiving adequate financial consideration.

Income Support Payments and Low Income Health Care Card (LIC)

Although individual cases of deprivation may be less than the allowable yearly amount, when totalled they may exceed the gifting free areas. All assessable cases of gifting must be recorded. Assessable cases are all gifts made:

• while the customer and/or their partner are receiving an income support payment or Low Income Health Care Card (LIC) and
• in the 5 years immediately before claiming or becoming qualified (whichever is later).

Do not record gifts outside of this 5 year period as they will incorrectly be included in the calculation of the gifting free areas.

Customers who are claiming a Low Income Health Care Card (LIC) are not able to give away income or assets in excess of the gifting thresholds so they can receive a concession card. Even though the LIC is not asset tested, deemed income from the disposal of an asset can be included in the claimant's assessable ordinary income.

Special Disability Trust (SDT)

Different rules apply to an approved Special Disability Trust (SDT). Gifts to an SDT may be exempt from the deprivation provisions if the contributor is an immediate family member, of Age Pension age and the SDT concessional gifting cap is not used. This procedure does not contain information on gifting concessions to an SDT. Complete a referral to a CAO for Gifting concessions to a Special Disability Trust (SDT).

Is the customer advising of disposal of either income or assets for the first time?

• Yes, go to Step 5
• No, answers to frequently asked questions about existing deprivation assessment are contained on the Resources page.
  Go to Step 5

Obtain the following details:

• Date of disposal
• Description of item
• Value or amount
• Value or amount of consideration received for the item
• Percentage owned by the customer/partner

Section 1127 of the Social Security Act allows for disposals within 5 years of qualifying to be disregarded where the person could not reasonably have expected they would become qualified, for example, after the death of a partner, loss of employment or after an unexpected illness or incapacity.

Is this a gift that can be disregarded?

• Yes, record the details on a DOC or NOTES
• No, go to Step 6

Was the disposed item income (not cash) only?

Note: in order for a gift to be considered income only, the gift must not have any asset value, for example, some income stream products. See the Resources page for examples and explanation.

• Yes, go to Step 7
• No, see Step 3 in Table 2

If the customer or their partner disposed of income only, which had no asset value, (for example, a superannuation pension, foreign pension):

• The income continues to be included as the customer's and /or partner's income indefinitely
• For example, for a superannuation pension or foreign pension with a fixed term, this income would be assessed until the term expires. This is because this is the period of time the customer would have had access to income if they had not disposed of it

Is the disposed income a foreign income, foreign pension or foreign superannuation?

Details can be found on Foreign Income/Assets Detail (FID) or Foreign Pension Detail (FPD).

• Yes, see Step 2 in Table 2
• No, see Step 1 in Table 2

• If the income being disposed of is recorded on the customer’s and /or partner's record (for example an income stream), ensure that the income is updated/removed using the same date as the date of disposal recorded
• Code the disposed income amount on Other Income (OIN) using type DPI - Deprived Income in the Income Type field
• See Verifying and recording other income on the Other Income (OIN) screen for assistance with coding the Other Income (OIN) screen

Once all required updates are made, review the outcome of the activity on the Entitlements (ELD) or Assessment Results (AR) screen and finalise if correct. Record details on a Note or DOC on the customer’s record with details of the update.

Ensure the effect of any future disposal/gifts and the deprivation rules are explained to the customer.

Go to Step 7.

The foreign income continues to be assessed as the customer's and /or partner's income for the total period of entitlement for example, if the foreign income is a lifetime superannuation payment, the income is assessed for the customer's and /or partner's life.

Do not remove the income from the customer's and /or partner's record. This will allow the system to adjust the exchange rate over the period of the income deprivation.

Update as follows:

• Code a Display on Access (DOA) DOC in Customer First with details of deprivation
• For a foreign pension, investigation is required as deprivation may require more action under Section 66 of the Social Security Act. Section 66 requires the customer to claim a Comparable Foreign Payment (CFP) if entitlement exists. If this is the case, contact Centrelink International Services for advice on how to action

Go to Step 7.

Is the disposed item cash only?

• Yes, go to Step 5
• No, go to Step 4

If the disposed item consists of assets other than cash (that is, forgone wages, real estate, granny flat interest, shares), the market value of the asset(s) must be determined and applied.

A valuation is required for all gifting assessments involving real estate. See Table 1, Step 10 in Valuation of real estate and other assets.

If a customer or their partner surrenders a life interest, an actuarial valuation of the surrendered life interest will normally be calculated by The Australian Government Actuary (AGA). Refer these cases to a Complex Assessment Officer (CAO) for calculation.

In some circumstances, if disposal occurred before a claim, and the customer did not expect they would be qualified to claim a pension, benefit or allowance, deprivation may be disregarded.

For assistance with market value(s), see:

• Valuation of real estate and other assets
• Coding income and assets for Centrelink payments and services
• Granny flat provisions
• Revaluing managed investments, shares, securities

If the customer or their partner has surrendered the value of a life interest (for example, in a house) the delegate must refer the case to the CAO, who will obtain a valuation from the AGA. See the Resources page for details.

For loans that have been 'written off' or forgiven because they were unrecoverable, see Loans.

Once the market value of the asset has been determined, go to Step 5 to record the disposal details.

• For Customer First/Customer Record, use the Income/Assets Update and Reviews Script to update gifting. If the script is unavailable, code manually via the Gifts and Deprivations (GIFT) screen
• For Process Direct, use the Task Selector to update gifting
• In the customer's record go to the Customer Summary
• Enter START into the Super Key
• Select Income and Assets Update from task selector options
• Select Gifts and Deprived Assets (GIFTS)
• Select Start

Note: any other income and asset types which require updating can be selected from the Task Selector at the same time

On the GIFT screen code:

• Gift Date/Start date: the date the asset was gifted/deprived
• Type of Gift/Deprivation Type: 1 of the following:
• 'VEH' for vehicle
• 'CSH' for cash
• 'HSE' for principal place of residence
• 'REE' for other property
• 'BUS' for business
• 'FRM' for a farm property
• 'LON' for forgiveness of a loan (waiving recovery)
• 'GRF' if Granny Flat right has been established
• 'LFI' if a Life Interest has been gifted
• 'OTH' if the gift does not fit 1 of the above categories
• Gift Value (AUD)/Deprivation Amount: This is the total market value of property/assets transferred, regardless of any consideration received. Cannot be set to zero once recorded
• Consideration Amount: This is the amount or value the customer/partner actually received or is deemed to have received including forgone wages or granny flat provisions. Will default to zero if nothing entered
• % owned Customer/Partner: These fields are to indicate who actually transferred the property/asset

Note: if the asset being disposed of is recorded on the customer’s/partner's record (for example, real estate or savings), ensure that the asset is updated/removed using the same date as the date of disposal recorded.

Once all required updates are made, review the outcome of the activity on the Entitlements (ELD) or Assessment Results (AR) screen and finalise if correct. Record details on a Note or DOC on the customer’s record with details of the update.

View the Gifted Assets Summary (GIFTS). Check accumulated total of gifts in the Gifted amount in the income year field.

Explain to the customer:

• The effect(s) on the customer's payments. For information on deeming, see Deeming provisions
• The length of time (five years from the date of disposal or longer if deprivation of income) for which deprivation is applied
• Explain the effect of deprivation and any future disposals to the customer
• Record the details on a DOC or NOTES