5.5.6.40 Couple, 1 Partner Unemployed, Other Self-employed & Other Assets Owned

Summary

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 a small income. The couple also own a holiday home from which they receive rental 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 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).

Policy reference: SS Guide 4.6.7 Asset Hardship Rules

Couple's financial details

In this example, the couple'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

185,000.00

10,000.00

8,500.00

4,200.00

TOTAL VALUE OF ASSETS 207,700.00
Asset Limit 178,500.00
Income $

Bank interest

Rent from holiday home

Farm income

10.00

60.00

100.00

Entitlement is precluded under the assets test.

Inquiries have shown that the commercial lease value of the farm is $4,000.00, which is LESS than 2.5% of the market value of the property.

Considerations

The value of the properties can be disregarded IF the couple can show that:

  • BOTH properties are on the market at a reasonable price, AND
  • they are unable to borrow against the value of either property.
  • Example: The couple cannot meet the required repayments.

The value of other assets that they 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 income is below the rate of NSA plus PA for a partnered couple and liquid assets are less than $10,000.00.

Notional ordinary income is assessed at the commercial lease value of the property ($4,000.00 a year or $153.85 a fortnight), as this amount is less than 2.5% of the net market value ($4,625.00).

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 deemed income:
  • Notional ordinary income = commercial lease value = $4,000.00 ÷ 26
  • Less actual income received from farm

RESULT: DEEMED INCOME

153.85

100.00

53.85

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) = ($4,200.00 ÷ $250.00)

RESULT: OTHER ASSET DEDUCTIONS

16.80

4 Determine the rate payable:
  • Maximum annual rate of benefit
  • Less deemed income
  • Less other asset deductions
  • Less income received

RESULT: RATE PAYABLE

587.60

53.85

16.80

160.00

356.95

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:

  $
Combined rate payable

Actual income

356.95

170.00

RESULT 526.95

This amount is less than the combined maximum rate of $587.60 ($293.80 each) for a NSA couple with no children.

Last reviewed: 7 November 2016