22.214.171.124 Couple, 1 partner unemployed, other self-employed on a farm producing no income
This topic shows how the asset test hardship provisions apply to a homeowner couple with one partner unemployed and the other self-employed operating a farm that is producing NO income. General information on the method of calculating the rate of allowance paid under the hardship provisions is contained in the referenced section. All calculations are based on limits and rates applying at 20 September 2019. Asset amounts are in dollars. Income amounts are in dollars per fortnight (pf).
Policy reference: SS Guide 4.6.7 Asset hardship rules
Couple's financial details
In this example, the couple's details are as follows:
|Value of farm excluding home and curtilage
Value of other assets personal and household effects
|TOTAL VALUE OF ASSETS||432,700|
|Asset limit (homeowner couple)||394,500|
|Deemed income from financial assets ($4,200 @ 1% p.a.)||
($4,200 × 1% ÷ 26 = $42 ÷ 26 = $1.62 pf)
Entitlement is precluded under the assets test.
Inquiries have shown that the commercial lease value of the farm is $13,600. The couple have NO actual income from the farm.
The value of the property can be disregarded because the property is on the market at a reasonable price (within 10% of the Centrelink valuation) (126.96.36.199).
The value of other assets that the couple could NOT be expected to sell or borrow against can also be disregarded.
Example: Their personal and household effects and their car.
They meet the test of severe financial hardship because their combined income is below the relevant limit ($26,655.20 for couples combined, see 188.8.131.52).
Notional ordinary income is assessed at 2.5% of the net market value of the property ($10,250 a year or $394.23 a fortnight), as this amount is less than the commercial lease value ($13,600).
Act reference: SSAct section 1132(5) Notional fortnightly rate of ordinary income from unrealisable assets
Calculation of rate under the hardship provisions
The following table shows the income support recipient's rate calculation under the hardship provisions.
|1||For unrealisable assets, calculate notional ordinary income:
RESULT: NOTIONAL ORDINARY INCOME
|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 in assets):
RESULT: OTHER ASSET DEDUCTIONS
|4||Determine the rate payable:
RESULT: RATE PAYABLE
(504.70 + 7.90 (ES)) × 2
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:
|Combined rate payable||614.97|
This amount is less than the combined maximum rate of $1,025.20 ($512.60 each) for a JSP couple with no children.