4.6.6.10 General provisions for valuation of assets

Summary

This topic contains information on:

• how to value an asset (1.1.A.290)
• the effect of new valuations, and
• valuation and revaluation of certain financial investments.

Valuing assets

Assets are generally assessed at their net market value (1.1.M.40). The net market value is the amount a person would expect to receive if they sold the asset on the open market, less any valid debts or encumbrances (1.1.E.108).

If the asset is owned with another person or persons, the asset value for each person is determined using the proportion of their interest (1.1.I.185) in the asset.

For some assets a valuation is required. Valuations are completed by a professionally qualified valuer appointed by Services Australia (Centrelink). For ALL other assets, the person's estimate is accepted as reasonable UNLESS it appears that the value has been understated AND the value is likely to affect the person's payment. A person is NOT expected to obtain professional valuations for any asset.

Actuarial valuations

Actuarial valuations are required where:

• a life interest is surrendered for disposal purposes, or
• a contingent interest, remainder interest, or reversionary interest is created by a person (1.1.I.185) OR is acquired for valuable consideration (1.1.V.25).

In these circumstances, the actuarial valuation is used to accurately value the life interest surrendered, and to assign an accurate value to the contingent, remainder or reversionary interest created by, or acquired by, the person.

Effect of new valuations

Where a valuation is higher than a previous valuation or a person's estimate, the new value applies from the first payday after it is received.

Exception: If there is evidence that the person deliberately misrepresented details of the asset, then the new value may be applied from a date earlier than the date of the valuation.

For a valuation that is lower than a previous valuation or person's estimate, the date of effect rules should be applied.

Valuation & revaluation of market-linked managed investments & listed securities

The valuation and revaluation of market-linked managed investments and listed securities is determined in accordance with the guidelines set out below. Market-linked managed investments are managed investments where the value of the investment fluctuates in line with market changes.

Initial valuation

When a person's new claim is determined, all of a person's and their partner's market-linked managed investments and listed securities are valued using the latest unit prices available to Services Australia (Centrelink).

Revaluation

The value of all of a person's listed securities and market-linked managed investments are revalued using the latest prices available to Centrelink on 20 March and 20 September each year.

A person's market-linked managed investments and listed securities are also revalued:

• when a person requests a revaluation of one or more of their market-linked managed investments or listed securities, and
• after a notifiable event that affects one or more of the person's market-linked managed investments or listed securities.

Additional revaluations of market-linked managed investments may also occur in exceptional economic circumstances (see Note).

When one or more of a person's market-linked managed investments and listed securities is revalued, all of the person's and their partner's market-linked managed investments and shares are revalued using the latest prices.

Note: An additional revaluation occurred in November 2008, during the global financial crisis.