4.6.7.60 Determining Severe Financial Hardship - Readily Available Funds

Summary

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

The readily available funds limits for Age, DSP, CP, associated DSS closed payments (e.g. WidB), YA (student), Austudy and, ABSTUDY are:

  • 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.

The readily available funds limits for NSA, PPP, YA (other), SA, WA and PA are:

  • for a single person with no dependant children, the annual MBR of NSA, (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 NSA, (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 NSA, (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

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

Permanent hardship

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
  • boat.

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

Last reviewed: 2 January 2015