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4.6.7.90 Notional ordinary income - non-farm property & other assets

Summary

This topic discusses the notional ordinary income calculation for:

  • unrealisable assets including property, and
  • unrealisable property occupied by
    • a near relative (1.1.N.20) or long term tenant with a low income, and
    • one partner (1.1.P.85) of a separated couple.

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

Notional income for assets

Notional income for an asset (1.1.A.290), is the LOWER of:

  • 2.5% of its value, OR
  • its commercial lease value (1.1.C.207).

Exception: Where the unrealisable asset is a property occupied by a near relative or a long term tenant with a low income the commercial lease value is calculated as 20% of the total income of the occupant and other adults residing at the property. The commercial lease value calculated in this way should not exceed the market rate of rent for the property. Total income includes all social security income support payments, including supplements that are included as part of the calculation of a person’s rate (for example, pension supplement, Rent Assistance), and family payments for example, FTB. If the property does not have a commercial lease value, then notional income CANNOT be assessed.

Notional income for separated couples

The table below shows the notional ordinary income calculation for a person who is separated from their partner WHEN a partner is occupying an unrealisable property.

If the occupying partner …then notional income is …
IS paying rent to the non-occupier

the LESSER of:

  • 2.5% of the person's interest (1.1.I.185) in the property, OR
  • the amount of the rent MINUS all reasonable expenses.

If the property does not have a commercial lease value, then notional income CANNOT be assessed.

Example: Bank charges are a reasonable expense.

does NOT have a rental agreement with the non-occupier

the LESSER of:

  • 2.5% of the person's interest in the property, OR
  • the person's share of the commercial lease value.

Example: A person who has a 50% interest in the home is taken to receive 50% of the commercial lease value.

If the property does not have a commercial lease value, then notional income CANNOT be assessed.

REFUSES to pay rent to the non-occupying partner, pending property settlementnot calculated.

A person MUST produce clear evidence that an occupying partner refuses to pay rent.

Example: A letter from a partner's solicitor.

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

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