What is an asset?
An asset is any property or item of value you or your partner own or have an interest in, including those held outside Australia. Assets used to calculate your Australian Government income support payment are known as assessable assets.
Assessable assets include:
• the current value of your cash and financial investments. These include bank, building society and credit union accounts, term deposits, bonds, debentures, friendly society investments, shares and unit trusts. • superannuation/rollover investments held by people over age pension age • some income stream products • real estate including vacant land and holiday homes • farms and businesses, including goodwill • loans, including interest free loans to private companies/businesses, family trusts etc • motor vehicles, boats and caravans, unless used as your principal home • household contents and personal effects • surrender value of life insurance policies • antiques, paintings, coins, collections or any other items of value • gifts of money or other assets of more than $10 000 in any year and more than $30 000 in a five year period), and • a life interest created by the will of a spouse. Some assets are exempt and not taken into account when calculating your Australian Government income support payment.
Exempt assets include:
• your principal home, and generally, up to two hectares of privately used, surrounding land on the same title document as your home. In some cases, all of the land on the same title may be exempted. For more information, see the factsheet Assets Test for Homeowners—rural and rural residential areas • some income stream products • all superannuation/rollover investments in an approved fund until age pension age • any property or monies left to you in an estate which you are not yet able to receive • a cemetery plot, and either any advanced payment for funeral services or up to two funeral investments or bonds that cost no more than the current Funeral Bond Allowable Limit. See factsheet Funeral expenses—preparations you can make • aids for people with a disability • proceeds from the sale of your principal home which you intend to use to purchase another (generally for up to 12 months, but in some circumstances this may be extended to up to 24 months) • most compensation or insurance payments for loss or damage to buildings or personal effects, and • accommodation bonds paid on entry to residential aged care.
Superannuation pensions, annuities and other income stream products may be either fully assessable, partially assessable or exempt from asset test assessment depending on their particular characteristics and when they were purchased. See the factsheet Income streams.
How are my assets valued?
We ask you to provide your own estimate of the net market value of your assessable assets. The net market value is the amount of money you would get if you sold the asset now, less any debts on the asset such as registered mortgages, hire purchase debts or loans. The net market value is not the:
• amount you paid for the asset • amount it is insured for or what it would cost to replace, or • fire sale value. Example: you bought a car for $10 000 and still owe $2000. If you could sell the car for $7000, this would be its market value. The net market value would be $5000 ($7000 from the sale less $2000 owed). You can get an idea of the market value of many assets (such as real estate, cars, boats and caravans) from newspaper advertisements. If there is any doubt about the value of an asset, or you need help to estimate the value of any item tell Centrelink staff. Centrelink may arrange for the Australian Valuation Office to value assets such as real estate.
Household contents and personal effects
Household contents include furniture, antiques, paintings and other works of art, soft furnishings and electrical appliances. Fixtures such as stoves and built-in items are not included as assets. Personal effects include jewellery for personal use. You will need to estimate the value of these items.
Self-employed people (including family businesses and farmers)
Under the assets test, the Net Asset Value of your business or farm includes any stated goodwill, buildings and machinery. It is the gross value of assets owned by the business, less any debts such as overdrafts. If you live on the farm, the value of the home in which you live is an exempt asset. Generally the land (up to two hectares) on the same land title document as the home, and used for domestic purposes is also not considered when working out the value of your farm. If you are of age pension age, all the land on the same title as the home may be exempt if you meet certain criteria. For more information, see the factsheet Assets Test for homeowners—rural and rural residential areas. If you operate a business at home, any part of the home used primarily or solely for business purposes is an asset.
Value of assets for a couple
If you are a member of a couple, the value of your combined assets is used to calculate your entitlement to a pension or allowance.
Working out your rate
Under the assets test a pensioner or allowee can have assets up to the allowable assets limit without affecting the rate of payment. The amount of allowable assets depends on whether you are a home owner or a non home owner, single or a member of a couple. The allowable assets limits are indexed each year in July. The pension assets test allows for a gradual reduction in the pension rate in cases where the assets are of greater value than the allowable asset limit and up to the asset cut-off limit. The amount of pension that can be paid under the asset test is compared to the amount that can be paid under the income test. The amount of pension paid is the lower of these two amounts. Under the allowance assets test, once the allowable assets limit is reached, payment is no longer made. See the factsheets, Income and allowable limits for pensions, Income and allowable limits for allowances, and the various Rates Charts Gifting, Income streams, Hardship information and Pension Loans Scheme.
How to find out more
Financial Information Service Planning for or needing help in retirement Financial Information Service seminar bookings Looking for work 13 2300 13 6357 13 2850
Parent or guardian To speak to Centrelink in languages other than English TTY* enquiries
13 6150 13 1202 Freecall™ 1800 810 586
*TTY is only for people who are deaf or have a hearing or speech impairment. A TTY phone is required to use this service. Go to our website at www.centrelink.gov.au Check the “we speak your language” link on Centrelink’s website for information in languages other than English. Note: calls from your home phone to Centrelink “13” numbers from anywhere in Australia are charged at a fixed rate. That rate may vary from the price of a local call and may also vary between telephone service providers. Calls to “1800” numbers from your home phone are free. Calls from public and mobile phones may be timed and charged at a higher rate.
The information contained in this publication is intended only as a guide to payments and services. It is your responsibility to decide if you wish to apply for a payment and to make an application, with regard to your particular circumstances. This information is accurate as at September 2008. If you use this publication after that date, please check with us that the details are current.