4.6.8.50 General provisions for the extended land use test

Summary

This section contains information on:

• the rationale for the extended land use test
• the extended land use test
• who the extended land use test applies to
• who is not eligible for the application of the extended land use test
• the long-term (20-year) continuous attachment to land requirement
• the application of the extended land use assets test to partners
• business assets are excluded from the extended land use exemption
• effective use of the land
• basic steps for assessing eligibility for the application of the extended land use test exemption
• review of land use test exemptions that have been granted.

Rationale for the extended land use test

Up until 1 January 2007, only a person's principal home and adjacent land of up to 2 hectares in total, was exempt from the assets test. This applied even where the adjacent land in excess of 2 hectares was held on the same title document as the principal home.

The Australian Government does not believe that older Australians on farms and rural residential areas should be forced to move from their principal home where they have lived for a long period of time.

The extended land use test is therefore designed to enable people of age pension age who are receiving Age or CP, and who have a long-term continuous attachment to their land and principal home, to stay in their home into their retirement. For this exemption to apply, the person must make effective use of productive land to generate an income, given their capacity.

What is the extended land use test

If a person is eligible to have the extended land use test applied, the area of land adjacent to their principal home that is more than 2 hectares and also held on the same title document, is exempt from the assets test, provided they are making effective use of the land.

Who the extended land use test applies to

The extended land use test applies to a person if:

• the person has reached Age pension age
• the person is qualified for Age or CP and that pension or payment is payable to the person
• the dwelling-house has been the person's principal home for 20 years or more continuously.

Who is not eligible for the application of the extended land use test

Unless a person meets the criteria above, or is the partner of such income support recipient, they will not be eligible for the application of the extended land use test. The private land use test will instead be applied.

Long-term (20-year) continuous attachment to land

A person must have a long-term (20-year) continuous attachment to their principal home (and adjacent land) for the extended land use test to apply.

Application of the extended land use test to partners

The information below outlines how the extended land use test applies to partners of relevant income support recipients.

Both members of a couple are of age pension age, qualify for Age or CP, and are payable for the pension or payment

For couples, where both partners are of age pension age and qualify for Age or CP and are payable for the respective pension or payment, at least one member of the couple is required to have a long-term (20-year) continuous attachment to the property to have the extended land use exemption applied.

One member of the couple is of age pension age, qualifies for Age or CP and is payable for the pension or payment

For couples, where the extended land use test applies to one partner (age pension age partner who qualifies for Age or CP and that pension or payment is payable to them), it also applies to the other partner, even if the other partner receives income support and is under age pension age. This means the extended land use test applies to both members of the couple.

The age pensioner or CP recipient of age pension age is required to have the long-term (20-year) continuous attachment to the land, not the partner who is under age pension age or under service pension age.

Qualifying partner separates or dies

Following separation from, or the death of, a qualifying partner, the extended land use test continues to apply to the partner who is under age pension age, as long as that partner continues to live in the same principal home and is making effective use of the land.

Partner who is under age pension age re-partners

If the partner who is under age pension age (person B) is a person to whom the extended land use test applies because of their previous partner's (person A) qualification, and person B re-partners, then the new partner of person B (person C) is also a person to whom the extended land use test applies. This is regardless of the age of the new partner (person C). If the relationship between person B and person C ends, but person C re-partners, then their new partner (person D) is also a person to whom the extended land use test applies.

This result may continue for as long as the person continues to live in the same principal home and they are making effective use of the land (4.6.8.70).

Business assets not included in value of land exempted under the extended land use test

For the avoidance of doubt, the exemption of land from the assets test as a result of the application of the extended land use test does not extend to or include the value of any commercial or business assets, structures and improvements, such as plant, stock, machinery, equipment, machinery sheds, that may be associated with or located on that exempt land.

Effective use of the land

The person seeking the application of the extended land use exemption must be making effective use of the land.

Basic steps for assessing eligibility for the application of the extended land use exemption

The following table outlines the steps to be taken in assessing whether a person is eligible for the extended land use test to be applied. If the extended land use test exemption applies, the area of land adjacent to the principal home that is over 2 hectares, if held on the same title document, can be exempted from the assets test.

Review of ongoing eligibility for the extended land use exemption

Effective land use determinations should be reviewed annually. In general, once a person has been granted the extended land use assets test exemption, their ongoing eligibility for the exemption will therefore also be reviewed regularly.