The Law Handbook 2024

318 Section 5: Managing your money A list of exempt income is in subsection 8(8) of the SS Act. A lottery win or a one-off gift are exempt. However, a periodical payment by way of a gift or allowance is generally not exempt. Income is defined as gross income without any reduction (s 1072) except where a person carries on a business when expenses involved in gaining that income may be deducted (ss 1074, 1075). Deeming rules apply to income from ‘financial investments’ (s 9), regardless of the actual income earned, unless a deeming exemption is obtained. Some financial investments may be exempt by the relevant government minister (s 1084). Generally, the values of all the person’s investments are added together and assessed in the following way (pt 3.10 SS Act): • the amount under the threshold is deemed to earn 0.25 per cent interest; and • the amount over the threshold is deemed to earn 2.25 per cent interest. NOTE: RATES AND THRESHOLDS The deeming rates and thresholds change periodically. Check with Centrelink for current rates. The assessed income fromapplication of the deeming rules is used in calculating the person’s pension rate; returns above the deeming rate are not counted as income. The deeming rules apply to pension, benefit and allowance payments. This is a complex area and any specific queries should be taken to a community legal centre, Victoria Legal Aid or a solicitor (see Chapter 2.4: Legal services that can help). Centrelink also offers a free confidential Financial Information Service. Assets test A pension is reduced under the assets test (s 11, pt 3.12 SS Act) if the total net value of the person’s property or assets (apart from their principal home) exceeds the relevant limit, which changes annually. For each $1000 of assets in excess of the limit, the fortnightly pension is reduced by $3 per fortnight (single and couple combined). A permanently blind person receives the Age Pension or the Disability Support Pension, regardless of their assets. The value of a permanently blind person’s assets is only relevant if they claim Rent Assistance. The value of a person’s assets is generally the current market value – the amount the asset could be sold for, less any debts owed on the asset – and is not the replacement value or the original cost. There are many things excluded from the assets test including the principal home (provided the person is living in it) and surrounding land of up to two hectares, provided the land is used primarily for private or domestic purposes. A person who has reached Age Pension age whose principal home includes adjacent land over two hectares that is on the same title may be eligible to have their principal home exempt if they satisfy the ‘extended land use test’. To satisfy this test, the person must have a 20-year continuous attachment to the land and the principal home. They must also have to be making ‘effective use of the land’, which means that if the land (or part of it) is productive, it is being used to generate income (s 11A(6) SS Act). A list of the assets exempt from the assets test is in section 1118. The value of an asset may be excluded under the ‘hardship provisions’ if the pensioner cannot sell the asset or use it as security for borrowing (or if it would be unreasonable to expect the pensioner to do so). For the hardship provisions to apply, a person must make a specific claim to Centrelink. Consideration is not automatic. (See ss 1123–1127A SS Act.) Even if the hardship provisions apply, the level of pension might still be reduced by the income that could be earned from the asset (ss 1129, 1130). This means that the value of the asset may still affect the rate of pension payable. (See also A Guide to Australian Government Payments for more information about income and assets tests for pensions.) Allowances and payments Austudy Eligibility To be eligible for Austudy (ss 7, pt 2.11A SS Act), a person must satisfy an activity test, be at least 25 years old, and be an Australian resident. Waiting periods may apply, including a preclusion period for seasonal workers. If, immediately before they turned 25, a person was receiving Youth Allowance and completing a course or apprenticeship, they will continue to