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This topic shows how the asset test hardship provisions apply to a homeowner couple with one partner unemployed and the other self-employed operating a farm that is producing NO income. General information on the method of calculating the rate of allowance paid under the hardship provisions is contained in the referenced section. All calculations are based on limits applying at 1 July 1998 and benefit rates as at 20 March 1999. Asset amounts are in dollars. Income amounts are in dollars per fortnight (pf).
Policy reference: SS Guide 4.6.7 Asset Hardship Rules
In this example, the couple's financial details are as follows:
|
Assets |
$ |
|
Value of farm excluding home and curtilage Value of other assets personal and household effects Car Bank account |
246,000 10,000 8,500 4,200 |
|
TOTAL VALUE OF ASSETS |
268,700 |
|
Asset limit |
178,500 |
|
Income |
$ |
|
Bank interest |
10.00 |
Entitlement is precluded under the assets test.
Inquiries have shown that the commercial lease value of the farm is $13,600. The couple have NO actual income from the farm.
The value of the property can be disregarded IF the couple can show that:
The value of other assets that they could NOT be expected to sell or borrow against can also be disregarded.
Example: Their personal and household effects and their car.
They meet the test of severe financial hardship because their income is below the rate of NSA plus PA for a partnered couple and liquid assets are less than $10,000.
Notional ordinary income is assessed at 2.5% of the net market value of the property ($6,150 a year or $236.54 a fortnight), as this amount is less than the commercial lease value ($13,600).
Act reference: SSAct section 1130(5) Notional annual rate of ordinary income from unrealisable assets
The following table shows the customer's rate calculation under the hardship provisions. Amounts are in dollars pf.
|
Step |
Action |
$ |
|
1 |
For unrealisable assets, calculate notional ordinary income:
|
236.54 |
|
2 |
Calculate any income received from exempt assets. |
0.00 |
|
3 |
Calculate the deductions for assets that are NOT unrealisable or exempt. ($1.00 pf for each $250 in assets):
|
16.00 |
|
4 |
Determine the rate payable:
|
587.60 236.54 16.00 334.26 |
The calculation can be checked, by adding the rate payable (from the calculation) to the actual income earned. The result MUST be LESS than the maximum rate payable, as follows:
|
|
$ |
|
Combined rate payable |
334.26 |
|
Actual income |
10.00 |
|
RESULT |
344.26 |
This amount is less than the combined maximum rate of $587.60 ($293.80 each) for a NSA couple with no children.
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Last reviewed: 4 May 1999
