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5.5.6.30 Couple, 1 partner unemployed, other self-employed on a farm producing small income

Summary

This topic shows how the asset test hardship provisions apply to a homeowner couple with one partner unemployed and the other self-employed operating a farm that is producing a small income. General information on the method of calculating the rate of allowance paid under the hardship provisions is contained in the referenced section. All calculations are based on limits applying at 20 September 2019. Asset amounts are in dollars. Income amounts are in dollars per fortnight (pf).

Policy reference: SS Guide 4.6.7 Asset hardship rules

Couple's financial details

In this example, the couple's details are as follows:

Assets $
Value of farm excluding home and curtilage

Value of other assets personal and household effects

Car

Bank account

450,000

10,000

9,000

2,500
TOTAL VALUE OF ASSETS 471,500
Asset limit 394,500
Income $
Deemed income from financial assets ($2,500 @ 1% p.a.)

Farm income

$0.96 (($2,500 × 1%) ÷ 26 = $25 ÷ 26 = 0.96 pf)

100.00

Entitlement is precluded under the assets test.

Inquiries have shown that the commercial lease value of the farm is $9,000, which is LESS than 2.5% of the market value of the property.

Considerations

The value of the property can be disregarded because the property is on the market at a reasonable price (within 10% of Centrelink's valuation) (4.6.7.50).

The value of other assets that the couple could NOT be expected to sell or borrow against can also be disregarded.

Example: Their personal and household effects and their car.

They meet the test of severe financial hardship because their combined income is below the relevant limit ($26,655.20 for couples combined, see 4.6.7.60).

Notional ordinary income is assessed at the commercial lease value of the property ($9,000 a year or $346.15 a fortnight), as this amount is less than 2.5% of the net market value ($11,250).

Act reference: SSAct section 1132(5) Notional fortnightly rate of ordinary income from unrealisable assets

Calculation of rate under the hardship provisions

The following table shows the income support recipient's rate calculation under the hardship provisions.

Step Action $
1 For unrealisable assets, calculate deemed income:

  • Notional ordinary income = commercial lease value = $9,000 ÷ 26
  • Less actual income received

RESULT: DEEMED INCOME

346.15

100.00

246.15
2 Calculate any income received from exempt assets. 0.00
3 Calculate the deductions for assets that are NOT unrealisable or exempt ($1.00 pf for each $250 in assets):

  • (Bank account balance ÷ $250) = $2,500 ÷ $250)

RESULT: OTHER ASSET DEDUCTIONS

10.00
4 Determine the rate payable:

  • Maximum annual rate of benefit (JSP)
  • Less deemed income from unrealisable assets
  • Less other asset deductions
  • Less income received

RESULT: RATE PAYABLE

(504.70 + 7.90 (ES)) × 2 = 1,025.20

246.15

10.00

100.00

669.05

Calculation check

The calculation can be checked, by adding the rate payable (from the calculation) to the actual income earned. The result MUST be LESS than the maximum rate payable, as follows:

  $
Combined rate payable 669.05
Actual income 100.96
RESULT 770.01

This amount is less than the combined maximum rate of $1,025.20 ($512.60 each) for a JSP couple with no children.

Last reviewed: