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.

4.6.7.60 Determining severe financial hardship - readily available funds

Summary

Readily available funds are assets (1.1.A.290) that can be converted to cash. To be in severe financial hardship (1.1.S.120), a person's readily available funds MUST be equal to or lower than the allowable limit.

This topic explains:

  • the readily available funds allowable limit for single people and people who are members of a couple (1.1.M.120)
  • assets that ARE considered readily available funds
  • assets that are NOT considered to be readily available funds
  • special provisions for assessing superannuation assets, and
  • special provisions for assessing a person suffering permanent hardship (1.1.P.205).

Readily available funds - allowable limits

The readily available funds limits for Age, DSP, CP, YA (student), Austudy and, ABSTUDY are:

  • for a single person, the annual MBR of age pension, (plus pension supplement and ES) payable to a single person
  • for a member of a couple, twice the annual MBR of age pension, (plus pension supplement and ES) payable to a partnered person.

The readily available funds limits for JSP, PPP and YA (other) are:

  • for a single person with no dependant children, the annual MBR of JSP, (plus ES) payable to a person who is single with no children
  • for a single person with a dependent child or children, or who is aged 60 years or older and has been on income support for more than 9 months, the annual MBR of JSP, (plus ES) payable to a person who is single with dependent children or aged over 60 with 9 months on income support
  • for a member of a couple, twice the annual MBR of JSP, (plus ES) payable to a partnered person.

The readily available funds limit for PPS is the annual MBR of PPS plus pension supplement basic amount and ES.

Exception: Readily available funds MAY be 10% above these limits IF:

  • a person has imminent expenses, and
  • these expenses will reduce readily available funds to below the limit.

A delegate MUST review the case in 3 months to ensure that readily available funds are under the limit.

Readily available funds inclusions & values

A person's readily available funds comprise:

  • proceeds from the sale of non-liquid assets, including proceeds from the sale of the principal home
  • cash (1.1.C.63) on hand, (including amounts that would otherwise be considered exempt assets under the assets test)
  • amounts deposited with a bank, building society, credit union or other financial institution
  • fixed deposits
  • bonds, shares in public companies (1.1.C.220), debentures or other investments
  • loans made BY the person, and
  • SOME superannuation assets (see following).

The value of an asset is the value if a person were to convert it to cash, even if the value is reduced by doing so.

Readily available funds exclusions

A person's readily available funds does NOT include:

  • shares held by a primary producer (1.1.P.389) in a primary producer's co-operative

    • Explanation: A person must own the shares for primary production (1.1.P.390).
  • shares in private companies
  • working capital

  • inaccessible overseas funds, accounts or investments

    • Example: Foreign exchange regulations or civil disturbances MAY make a person's funds, accounts or investments inaccessible.
  • legally irrecoverable loans or debts (1.1.L.66)
  • accounts or investments with liquidated companies or institutions that have frozen access to funds
  • whole of life insurance and term policies, and
  • investments in unlisted property trusts.

Exception: Shares ARE readily available funds IF the Articles of Association or memorandum allow a share holder to sell their shares.

Exception: Working capital IS a readily available fund if expenditure is NOT essential OR regular.

Superannuation assets

Superannuation assets are NOT readily available funds for a person:

  • UNDER preservation age, or
  • OVER preservation age WHEN assets are inaccessible.

Exception: Where a person has been granted early release of their superannuation, funds available will be included when calculating readily available funds for the assets hardship provisions.

Policy reference: SS Guide 1.1.P.377 Preservation age

Permanent hardship

Readily available funds for a person with permanent hardship MAY include the value of a:

  • life assurance policy
  • second car
  • caravan, and
  • boat.

Exception: A life assurance policy that benefits a person's partner (1.1.P.85) or children is NOT a readily available fund.

These items are ONLY assessed IF converting them to cash will EXCEED the readily available funds limit. The following table shows examples of this provision.

If a pensioner has …and an insurance policy worth …then converting the policy provides the person with readily available funds of …
$2,000$40,000$42,000. The policy IS a readily available fund.
$2,000$2,000$4,000. The policy is NOT a readily available fund.

Act reference: SSAct section 1129 Access to financial hardship rules—pensions, section 1130B Access to financial hardship rules—pension PPS, section 1131 Access to financial hardship rules—benefits

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