18.104.22.168 Determining severe financial hardship - readily available funds
Readily available funds are assets (1.1.A.290) that can be converted to cash. To be in severe financial hardship (1.1.S.120), a person's readily available funds MUST be equal to or lower than the allowable limit.
This topic explains:
- the readily available funds allowable limit for single people and people who are members of a couple (1.1.M.120)
- assets that ARE considered readily available funds
- assets that are NOT considered to be readily available funds
- special provisions for assessing superannuation assets, and
- special provisions for assessing a person suffering permanent hardship (1.1.P.205).
Readily available funds - allowable limits
- for a single person, the annual MBR of age pension, (plus pension supplement and ES) payable to a single person
- for a member of a couple, twice the annual MBR of age pension, (plus pension supplement and ES) payable to a partnered person.
- for a single person with no dependant children, the annual MBR of JSP, (plus ES) payable to a person who is single with no children
- for a single person with a dependent child or children, or who is aged 60 years or older and has been on income support for more than 9 months, the annual MBR of JSP, (plus ES) payable to a person who is single with dependent children or aged over 60 with 9 months on income support
- for a member of a couple, twice the annual MBR of JSP, (plus ES) payable to a partnered person.
The readily available funds limit for PPS is the annual MBR of PPS plus pension supplement basic amount and ES.
Exception: Readily available funds MAY be 10% above these limits IF:
- a person has imminent expenses, AND
- these expenses will reduce readily available funds to below the limit.
A delegate MUST review the case in 3 months to ensure that readily available funds are under the limit.
Readily available funds inclusions & values
A person's readily available funds comprise:
- proceeds from the sale of non-liquid assets, AND
- cash (1.1.C.63) on hand, AND
- amounts deposited with a bank, building society, credit union or other financial institution, AND
- fixed deposits, AND
- bonds, shares in public companies (1.1.C.220), debentures or other investments, AND
- loans made BY the person, AND
- SOME superannuation assets (see following).
The value of an asset is the value if a person were to convert it to cash, even if the value is reduced by doing so.
Readily available funds exclusions
A person's readily available funds does NOT include:
- shares held by a primary producer (1.1.P.389) in a primary producer's co-operative
- Explanation: A person must own the shares for primary production (1.1.P.390).
- shares in private companies, OR
- working capital, OR
- inaccessible overseas funds, accounts or investments
- Example: Foreign exchange regulations or civil disturbances MAY make a person's funds, accounts or investments inaccessible.
- legally irrecoverable loans or debts (1.1.L.66), OR
- accounts or investments with liquidated companies or institutions that have frozen access to funds, OR
- whole of life insurance and term policies, AND
- investments in unlisted property trusts.
Exception 1: Shares ARE readily available funds IF the Articles of Association or memorandum allow a share holder to sell their shares.
Exception 2: Working capital IS a readily available fund if expenditure is NOT essential OR regular.
Superannuation assets are NOT readily available funds for a person:
- UNDER preservation age, OR
- OVER preservation age WHEN assets are inaccessible.
Policy reference: SS Guide 1.1.P.377 Preservation age
Readily available funds for a person with permanent hardship (1.1.P.205) MAY include the value of a:
- life assurance policy, AND
- second car, AND
- caravan, AND
Exception: A life assurance policy that benefits a person's partner (1.1.P.85) or children is NOT a readily available fund.
These items are ONLY assessed IF converting them to cash will EXCEED the readily available funds limit. The following table shows examples of this provision.
|If a pensioner has …||and an insurance policy worth …||then converting the policy provides the person with readily available funds of …|
|$2,000||$40,000||$42,000. The policy IS a readily available fund.|
|$2,000||$2,000||$4,000. The policy is NOT a readily available fund.|
Act reference: SSAct section 1129 Access to financial hardship rules - pensions, section 1130B Access to financial hardship rules - pension PP (single), section 1131 Access to financial hardship rules - benefits