5.5.6.50 Couple, 1 DSP Recipient, Partner Unemployed, Farm Producing No Income

Summary

This topic shows how the asset test hardship provisions apply to a homeowner couple with:

one partner receiving DSP,
a 13 year old child, and
the other partner was operating a farm producing NO income and is now unemployed.

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

Couple's financial details

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	220,000 10,000 8,000
TOTAL VALUE OF ASSETS	238,000
Asset Limit	178,500
Income	nil

One partner receives DSP under the assets test. Rate payable to this partner is based on the standard rate. Other partner is precluded from NSA under the assets test.

Inquiries show that the commercial lease value of the property is $2,600 a year.

Considerations

The value of the property can be disregarded IF the couple can show that:

the property is on the market at a reasonable price (with 10% of the AVO's valuation), AND
they are unable to borrow against it.
Example: The couple cannot meet the required repayments.

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 for a partnered couple and liquid assets are zero.

Notional ordinary income is assessed at the commercial lease value of the property ($2,600 a year or $100.00 a fortnight), as this amount is less than 2.5% of the net market value ($5,500).

Act reference: SSAct section 1130(5) Notional annual rate of ordinary income from unrealisable assets

Calculation of rate under the hardship provisions

The following table shows the rate calculation under the hardship provisions. Amounts are in dollars pf.

Step	Action	$
1	For unrealisable assets, calculate notional ordinary income: - Commercial lease value = $2,600 ÷ 26 - RESULT: NOTIONAL ORDINARY INCOME	100.00
2	Calculate any income received from exempt assets.	0.00
3	Calculate the deductions for assets that are NOT unrealisable or exempt.	0.00
4	Determine the rate payable: - Maximum annual rate of benefit = partnered NSA rate with children ÷ 2 = $587.60 - Less notional ordinary income (halved because partner is a DSP recipient) - Less other asset deductions - RESULT: RATE PAYABLE	293.80 50.00 0.00 243.80

Calculation check

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:

Calculation check	$
Rate payable to claimant Actual income	243.80 0.00
Rate payable to partner Explanation: The partner's rate of pension would also need to be reassessed under the hardship provisions.	251.60 (301.60 - 50.00)
RESULT	495.40

This amount is less than the maximum rate of $587.60 ($293.80 each) for a NSA couple with no children.

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Last reviewed: 30 April 2012

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