4.6.6.10 General Provisions for Valuation of Assets

Summary

This topic discusses:

  • how to value an asset (1.1.A.290),
  • the effect of new valuations, and
  • valuation and revaluation of certain financial investments.

Valuing assets

Assets are generally assessed at their net market value (1.1.M.40). The net market value is the amount a person would expect to receive if they sold the asset on the open market, less any valid debts or encumbrances (1.1.E.108).

If the asset is owned with another person, the asset value for a person is determined using their proportion of their interest (1.1.I.185) in the asset.

Example: A person has a 40% interest in an asset with a market value of $100. The asset value for the person is $40 ($100 Ă— 40%).

For some assets a valuation is required. Valuations are completed by a professionally qualified valuer appointed by Centrelink. For ALL other assets, the person's estimate is accepted as reasonable UNLESS it appears that the value has been understated AND the value is likely to affect the person's payment. A person is NOT expected to obtain professional valuations for any asset.

Policy reference: SS Guide 4.6.6.30 Encumbrances & loans against assets

Actuarial valuations

Actuarial valuations are required where:

  • a life interest is surrendered for disposal purposes, OR
  • a contingent interest, remainder interest, or reversionary interest is created by a person OR is acquired for valuable consideration (1.1.V.25).

In these circumstances the actuarial valuation is used to accurately value the life interest surrendered, and to assign an accurate value to the contingent, remainder or reversionary interest created by, or acquired by, the person.

Effect of new valuations

A valuation that is higher than a previous valuation or a person's estimate applies from the first payday after it is received.

Exception: If there is evidence that the person deliberately misrepresented details of the asset, then the value may be applied from a date earlier than the date of the valuation.

For a valuation that is lower than a previous valuation or person's estimate, the date of effect rules should be applied.

Act reference: SSAct section 23(1)-'payday', section 1118 Certain assets to be disregarded in calculating the value of a person's assets

Policy reference: SS Guide 8.6.1 Date of Effect of Determinations - Summary of Legislation

Valuation & revaluation of market linked managed investments & listed securities

The valuation and revaluation of market linked managed investments and listed securities is determined in accordance with the guidelines set out below. Market linked managed investments are managed investments where the value of the investment fluctuates in line with market changes.

Initial valuation

When a person's new claim is determined, all of a person's market linked managed investments and listed securities are valued using the latest unit prices available to Centrelink.

Revaluation

The value of all of a person's listed securities and market linked managed investments are revalued using the latest prices available to Centrelink on 20 March and 20 September each year.

The value of a person's market linked managed investments and listed securities are also revalued:

  • when a person requests a revaluation of one or more of their market linked managed investments or listed securities, and
  • after a notifiable event that affects one or more of the person's market linked managed investments or listed securities.

When one or more of a person's market linked managed investments and listed securities are revalued, all of the person's market linked managed investments and shares are revalued using the latest prices.

Explanation: This ensures that deeming is applied to the current market value of all financial investments.

Example: If a person advises that they have sold some shares, all of the person's market linked managed investments and listed securities are updated using the latest prices.

Act reference: SSAct section 1084A Valuation and revaluation of certain financial investments

Last reviewed: 11 August 2014