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.

4.6.7.80 Notional ordinary income - overview

Summary

A person's unrealisable assets are deemed to produce a notional income.

This topic discusses the:

  • notional ordinary income calculation
  • notional ordinary income calculation when a person receives income from an unrealisable asset
  • notional income for multiple unrealisable assets, and
  • special treatment for DVA pensioners.

Act reference: SSAct section 11(1)-'unrealisable asset', section 8(1)-'income'

Notional ordinary income calculation

A person's unrealisable assets are deemed to have a notional income of the LOWER of:

  • 2.5% of the asset's value, OR
  • the commercial lease value (1.1.C.207).

Exception: Where the unrealisable asset is a farm being worked to its full capacity solely by the person or partner, notional income is not assessed. In this situation only the actual income derived from the property is taken into account.

Special provisions apply if the asset (1.1.A.290) is a farm or a farm operated by a family member.

Policy reference: SS Guide 4.1 Deprivation of income & assets, 4.6.7.110 Notional ordinary income - person's farm used by a family member, 4.6.7.120 Notional ordinary income - other farming situations

Person receives income from an asset

If a person receives income from an unrealisable asset THEN notional ordinary income is:

  • the LOWER of 2.5% of the asset's value OR the commercial lease value, MINUS
  • actual income received.

Exception: The actual income received is used to calculate the rate under hardship provisions IF the:

  • actual income received is, GREATER THAN
  • calculated notional ordinary income.

More than one asset unrealisable

Notional ordinary income is assessed separately for each unrealisable asset.

Exception: Special provisions apply to when:

  • a residential property is occupied by a family member (1.1.N.20), OR
  • a farm is operated by a family member, OR
  • it is NOT reasonable to expect the property to be used for any other purpose.

Act reference: SSAct section 23(14) For the purpose of this Act …

Policy reference: SS Guide 4.6.7.90 Notional ordinary income - non-farm property & other assets, 4.6.7.110 Notional ordinary income - person's farm used by a family member, 4.6.7.120 Notional ordinary income - other farming situations

Person's whose partner is a DVA pensioner

If a person's partner (1.1.P.85) is a DVA pensioner, a delegate MUST contact DVA to ensure the notional income provision is applied in the same way in both departments.

Explanation: DVA legislation has a similar notional income provision.

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

Policy reference: SS Guide 4.1.1 General provisions of deprivation, 4.1.9 Deprivation disregarded

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