The Guides to Social Policy Law is a collection of publications designed to assist decision makers administering social policy law. The information contained in this publication is intended only as a guide to relevant legislation/policy. The information is accurate as at the date listed at the bottom of the page, but may be subject to change. To discuss individual circumstances please contact Services Australia. Notional Ordinary Income - Person's Farm Used by a Family Member

Notional ordinary income - person's farm used by family member

Notional ordinary income for a person's farm that is an unrealisable asset is the LOWER of:

  • 2.5% of its value, OR
  • the commercial lease value (1.1.C.207), OR
  • the rent that the family member can reasonably be expected to pay (reasonable rent) MINUS any rent actually received by the person from the family member.

'Reasonable rent' is:

  • income, MINUS MAXIMUM FTB free area for the family member and their partner (1.1.P.85),

Note: Reasonable Rent = (Income - FTB free area) ÷ 2

Examples: A person's son and his wife are sole occupants of the farm. The annual net farm income is $19,500. The wife's annual salary is $6,000. Therefore their total income is $25,500. The maximum family income free area is, for example, $23,400 for one child. Reasonable rent is calculated as ($25,500 - $23,400) ÷ 2 which gives a result of $1,050 in reasonable rent.

  • The farm is valued at $240,000. Therefore 2.5% of $240,000 = $6,000.
  • The commercial lease value of the farm is $8,000 per annum.
  • Reasonable rent is $1,050.
  • Therefore notional ordinary income for the property is $1,050.

Act reference: SSAct section 1129 Access to financial hardship rules - pensions, section 1130B Access to financial hardship rules - pension PP (single), section 1131 Access to financial hardship rules - benefits, section 11(1)-'unrealisable asset', section 23(14) For the purposes of this Act other than…, section 8(1)-'income'

Policy reference: SS Guide Notional Ordinary Income - Net Value of a Farm

Last reviewed: