5.5.6.10 Single Unemployed Farmer, No Dependants

Summary

This topic shows how the asset test hardship provisions apply to a single recipient who is an unemployed homeowner farmer with no dependants. General information on the method of calculating the rate of allowance paid under the hardship provisions, is contained 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).

This topic contains the following:

  • EXAMPLE 1 - recipient DOES NOT qualify under the hardship provisions, and
  • EXAMPLE 2 - recipient DOES qualify because property value is disregarded.

Policy reference: SS Guide 4.6.7 Asset Hardship Rules

Example 1 - recipient DOES NOT qualify

In this example, the recipient's financial details are as follows:

Assets $

Value of farm excluding home and curtilage

Value of other assets personal and household effects

Car

Insurance policy

Boat

Bank account

170,000.00

15,000.00

12,000.00

5,000.00

10,000.00

2,500.00

TOTAL VALUE OF ASSETS 214,500.00
Asset limit 125,750.00
Income $
Bank interest 5.00

Entitlement is precluded under the assets test.

Considerations

The recipient meets the test of severe financial hardship because their income is strictly limited and readily available funds are less than $6,000.00.

It is not clear whether the recipient could sell part of their property or borrow against it. They could, however, take immediate action to address the hardship that would increase readily available funds beyond the limits.

Example: Sell the boat or surrender an insurance policy.

In these circumstances, the recipient would NOT qualify for consideration under the hardship provisions at this time.

Example 2: recipient DOES qualify

In this example, the recipient's financial details are as follows:

Assets $

Value of farm excluding home and curtilage

Value of other assets personal and household effects

Car

Bank account

170,000.00

15,000.00

12,000.00

2,500.00

TOTAL VALUE OF ASSETS 199,500.00
Asset limit 125,750.00
Income $
Bank interest 5.00

Entitlement is precluded under the assets test.

Inquiries have shown that the commercial lease value of the farm is $5,000.00. The recipient has NO actual income from the farm.

Considerations

The recipient has the farm on the market at a reasonable price. The recipient meets the test of severe financial hardship because their income is strictly limited and readily available funds are less than $6,000.00.

The value of the property can be disregarded IF the recipient is unable to:

  • sell part of the property (e.g. it is not subdivisible), OR
  • Example: It may NOT be able to be subdivided.

  • borrow against it.
  • Example: The recipient cannot meet the required repayments.

The value of personal and household effects, and car are also disregarded.

Notional ordinary income is assessed at 2.5% of the net market value of the property ($4,250.00 a year or $163.46 a fortnight), as this amount is less than the commercial lease value ($5,000.00).

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 recipient's rate calculation under the hardship provisions. Amounts are in dollars pf.

Step Action $
1

For unrealisable assets, calculate notional ordinary income:

  • 2.5% of asset value = (2.5% × $170,000.00) ÷ 26 = $4,250.00 ÷ 26

RESULT: NOTIONAL ORDINARY INCOME

163.46

2 Calculate any income received from exempt assets. 0.00
3

Calculate the deductions for assets that are NOT unrealisable or exempt ($1.00 pf for each $250.00 in assets):

  • (Bank account balance ÷ $250.00) = ($2,500.00 ÷ $250.00)

RESULT: OTHER ASSET DEDUCTIONS

10.00

4

Determine the rate payable:

  • Maximum annual rate of benefit
  • Less notional ordinary income
  • Less other asset deductions

RESULT: RATE PAYABLE

325.70

163.46

10.00

152.24

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:

  $
Rate payable 152.24
Actual income 5.00
RESULT 157.24

This amount is less than the maximum rate of $325.70 for a single NSA recipient over 21.

Last reviewed: 7 November 2016