4.6.8.50 General Provisions for the Extended Land Use Test

Summary

This topic discusses the:

  • rationale for the extended land use test,
  • what is the extended land use test,
  • whom the extended land use test applies to,
  • who is not eligible to have the extended land use test applied,
  • long term (20-year) continuous attachment to land,
  • treatment of partners,
  • business assets not included in value of land exempted under the extended land use test,
  • effective use of the land,
  • basic steps for assessing eligibility for the extended land exemption, and
  • review procedures.

Rationale for the extended land use test

Up until 1 January 2007, only a person's principal home and adjacent land of up to 2 hectares was exempt from the assets test even though the land in excess of 2 hectares may be held on the same title document. The Australian Government does not believe that older Australians on farms and rural residential areas should be forced to move from their principal home, where they have lived for a long period of time, to gain an adequate retirement income.

The extended land use test is designed to enable people of age pension age with a long-term attachment to their land and principal home to stay in their home into their retirement. To do this, the person must make effective use of productive land to generate an income, given their capacity.

What is the extended land use test

If a person is eligible to have the extended land use test applied they can have the area of land adjacent to the principal home, that is more than 2 hectares and held on one title document, exempt from the assets test provided they are making effective use of the land.

Act reference: SSAct section 11A(6) Extended land use test, section 11A(1) Principal home

Whom the extended land use test applies to

The extended land use test applies to a person if:

  • the person has reached pension age,
  • the person is qualified for Age or CP and that pension or payment is payable to the person, and
  • the dwelling-house has been the person's principal home for 20 years or more continuously.

Act reference: SSAct section 11A(4) To whom does the extended land use test apply?, section 23(5A) A man born during the period specified…, section 23(5D) A woman born during the period specified…, section 43 Qualification for Age, section 198 Qualification-disabled adult or disabled adult and dependent child

Who is not eligible to have the extended land use test applied

The extended land use test is restricted to age pensioners and CP recipients of age pension age, and their partners.

CP recipients under age pension age can have their entitlements assessed under the private land use test.

Recipients of other income support payments of age pension age can only have their entitlements assessed under the private land use test. If a recipient of another income support payment is of age pension age then they may choose to receive Age instead of their current income support payment to access the concession.

Example: Disability support pensioners.

Long term (20-year) continuous attachment to land

SS Guide 4.6.8.60 discusses the long term (20-year) continuous attachment to land and the principal home.

Treatment of partners

The treatment of partners of age pensioners or CP recipients to whom the extended land use test applies is outlined below.

Both members are of age pension age & qualify for Age or CP

For couples, where both parties are of age pension age and qualify for Age or CP, one or both members of the couple are required to have a long-term (20-year) continuous attachment to the property to gain the assets test exemption.

One member is of age pension age & qualifies for Age or CP

For couples, where the extended land use test applies to one partner (age pension age partner who qualifies for Age or CP) it also applies to the other partner, even if the other partner is a social security income support recipient or a Department of Veterans' Affairs income support recipient that is under age pension age or service pension age. This means the extended land use test applies to both members of the couple.

The age pensioner or CP recipient of age pension age is required to be the person who has the long-term (20-year) continuous attachment to the land, not the under age pension age or service pension age partner.

Qualifying age pensioner separates or dies

If the extended land use test applies to the under age pension age partner because of their age pension partner's qualification, then following bereavement or separation the extended land use test continues to apply to the under age pension age partner, as long as the partner continues to live in the same principal home and they are making effective use of the land (4.6.8.70).

Under age pension age partner re-partners

If the under age pension age partner (person B) is a person whom the extended land use test applies because of their previous partner's (person A) qualification, and person B re-partners, then the new partner (person C) of person B is also a person to whom the extended land use test applies. This is regardless of the age of the new partner. If the relationship between person B and person C ends, but person C re-partners, then their new partner (person D), is also a person to whom the extended land use test applies and so on.

This may continue for as long as the person continues to live in the same principal home and they are making effective use of the land (4.6.8.70).

Act reference: SSAct section 11A(5) Where a person (the first person) to whom the extended land use test applies…

Business assets not included in value of land exempted under the extended land use test

To avoid all doubt, the assets test exemption of land under the extended land use test does not include the value of commercial or business assets, structures and improvements, such as plant, stock, machinery, equipment, machinery sheds etc.

Policy reference: SS Guide 4.7 Business Structures, Primary Production & pre-01/01/2002 Assessment of Trusts & Private Companies

Effective use of the land

SS Guide 4.6.8.70 discusses the effective use of the land.

Basic steps for assessing eligibility for the extended land exemption

The following table shows the steps taken in assessing if an income support recipient is able to have the area of land adjacent to the principal home, that is over 2 hectares and held on one title document, exempt from the assets test.

Step Assessment questions Action, if yes Action, if no
1 Does the income support recipient, or their partner, currently own land over 2 hectares that is on the one title document? MAY be eligible. Go to Step 2.
2 Has the delegate decided that the area of land adjacent to the principal home should be considered as if it were held on one title document? MAY be eligible. NOT eligible.
3 Is the income support recipient of age pension age, and do they qualify for CP or Age? MAY be eligible. Go to Step 5. NOT eligible. Partners MAY be eligible. Go to Step 4.
4 Is the income support recipient a partner of a person who is of age pension age and qualifies for CP or Age? MAY be eligible. Go to Step 5. NOT eligible.
5 Does the income support recipient of age pension age have a 20-year continuous attachment to the land and principal home? MAY be eligible. Go to Step 6. NOT eligible.
6 Does the income support recipient and their partner currently live in the principal home? MAY be eligible. Go to Step 7. NOT eligible - unless the income support recipient is temporarily absent from the home for up to 12 months or in a care situation for up to 2 years.
7 Has the income support recipient satisfied the effective land use test? Would benefit from the extended land use exemption. NOT eligible.

Review procedures

Once an income support recipient becomes eligible for the exemption they will be reviewed in line with the criteria outlined in 4.6.8.70.

Last reviewed: 2 July 2018