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Exempt Income from Other Non-government Sources

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Last amended 
20 August 2015

Free accommodation or board and lodging

VEA section 5H(8) (ze)

The value of free accommodation or free board and lodging provided to a person is not income.

If an employer provides written advice that a deduction from wages for the cost of accommodation or board and lodging provided by the employer is being made, the amount deducted is not considered as income. Any amount received after that deduction is treated as income.

Compensation and insurance payments

VEA section 5H(8) (ea), (q) and (r)

If a pensioner receives compensation or an insurance payment for loss of, or damage to, their buildings, plant or personal effects, that payment is not treated as income for DVA purposes. The ongoing income assessment of this payment is described in the following table.

 

The portion of compensation or insurance payment for loss or damage to buildings, etc, that is...

Then under the income test...

determined as a disregarded asset under paragraph 52(1) (o) of the VEA, e.g. because they intend to use part or all of the payment to rebuild/repair the old home, or acquire a new home.

For more information see:

9.2.7 Temporary Absence

9.2.7 Extension of Home Proceeds Exemption

10.2.3 Disregarded Assests Relating to the Principal Home

  • any money actually earned from an invested payment is not treated as income for up to 12 months; and
  • it is a specific class of investments exempted from deeming.    

Also, these exemptions may be extended for up to an additional 12 months, if the pensioner can show that they are experiencing delays beyond their control.

determined not to be a disregarded asset under paragraph 52(1) (o) of the VEA, e.g. because they intend to spend the funds for another purpose.

For more information see:

9.2.7 Temporary Absence

10.2.3 Disregarded Assests Relating to the Principal Home

it may become immediately assessable, consistent with how the funds were spent or invested.     

 

Note: If a person receives compensation, the extent to which the compensation is applied to limit the person's disability pension, war widow's/widower's pension, or MRCA payment, is exempt income for service pension and ISS purposes.  For more information see Chapter 9.10 Compensation Offsetting.    

Borrowings and loans

If a pensioner borrows money or obtains loans via a bona fide arrangement where:

  •     the money moves from the lender to the borrower, and

  •     there is an intention to repay the borrowed money or loan,

    then the amount of borrowings (loans) advanced to the pensioner is not treated as income for DVA purposes (e.g. credit card borrowings or personal loans from a financial institution).

Domestic payment

VEA section 5H(8) (zf)

If a pensioner receives a payment from the sale of personal items not intended for profit on re-sale, such as the sale of their television, then the amount received is not treated as income for DVA purposes.

Mortgage insurance payments

VEA section 5H(8) (pa)

If a pensioner receives payments from a mortgage insurance arrangement which requires the insurer to make payments to the creditor in the event of illness, unemployment or other special circumstances, then the payments are not treated as income for DVA purposes.

Private health insurance rebate

VEA section 5H(8) (z)

The Private Health Insurance Incentives Act 1998 provides for a 30% private health insurance rebate/benefit from 1 January 1999. This rebate/benefit is not income for DVA purposes, as it is merely refunding money already assessed as part of gross income.

Payments from approved exchange trading systems

VEA section 5H(8) (zl)

Credits received from participation in approved exchange trading systems and other community exchange schemes are not treated as income for DVA purposes.

If both cash and credits in exchange traded systems schemes are received, the cash amount is assessed as income.

Domestic solar power generation

VEA section 5H(8)

If a person installs solar panels and generates energy which is then fed back into the electricity grid, the manner of reimbursement dictates the way it is assessed.

Discounts on power bills due to energy being fed back into the electricity grid are not assessable. Likewise, credits on power bills due to energy being fed back into the electricity grid are not assessable. This is because such credits and discounts do not fit the VEA definition of income and therefore have no impact on the pension assessment.

However, if a pensioner receives payment in the form of cheques, cash or direct deposits into a bank account for energy fed back into the electricity grid, this is regarded as assessable income and must be included in the pension assessment. Feed-in tariffs for electricity generated by solar panels should be regarded as irregular earnings and assessed over a 12 month period.  For more information see 10.1.1 Overview of Ordinary Income.

Many state and territory governments provide financial assistance to households to assist with the costs of purchasing and installing solar panels. This assistance is not assessable, as it essentially provides a discount on the price of purchase and installation of panels.

Exempt funeral bonds

VEA section 5(H) (zj)

If the funeral bond meets the requirements to be an exempt asset, it is also exempt from the income test. This means that interest paid on an exempt funeral bond is not income for DVA purposes and it is not subject to the deeming provisions.  For more information see 10.2.3 Disregarded Assets Relating to Deceased Estates and Funeral Expenses.

Note: If a funeral bond is not an exempt asset, then it is subject to the deeming provisions (see 9.5.6 Deemed Income from Other Managed Investments).     

Rental income from principal home for aged care residents

VEA section 5H(8) (nc) and (nd)

Rental income from a pensioner's principal home received while living in an aged care residence may be exempt from the income test in certain circumstances.  For more information see 9.2.4 In Care Assessment Rules.

Payments received from family members

VEA section 5H(8) (zd)

A periodical payment or benefit by gift or allowance to a pensioner is exempt income if paid by a close relative of the pensioner, such as a parent, child, brother or sister. The actual source of such payments should be checked. Payments are treated as income when paid by or through a third party, such as a company that is not acting as agent for the close relative.

German and Austrian restitution payments

VEA section 5H(8) (s)

German and Austrian restitution payments are not income for DVA purposes.  For more information see 10.1.5 Restitution Payments - Germany and Austria.     

Netherlands restitution payments

Netherlands restitution payments may or may not be assessed as income for DVA purposes, depending on the type of restitution payment received.  For more information see 10.1.5 Restitution Payments - Netherlands.   

Education scholarships and prizes

VEA section 5H(8) (hc) and (hd)

Non-discretionary fee pay or fee waiver scholarships and prizes are exempt from the income test.  For examples of exempt scholarships see 10.1.7 Income from Education Scholarships, Prizes and Allowances.

Personal care support scheme payments

VEA section 5H(8) (ya)

Payment made by some organisations and agencies to a person with a disability is exempt if it is paid to:

Exchange trading systems are community based schemes where goods and services are exchanged without money. Exchange traded systems schemes have a local unit of exchange, often called an 'eco', but other names for the unit of exchange are also used.

To be exempt from the income test the scheme has to be an 'approved scheme' under the Act. The Commission may approve a scheme if it is satisfied that:

  • it is a local community-based system,
  • its primary purpose is to help persons maintain their labour skills and keep them in touch with the labour market, and
  • it is not a system run by a person or organisation for profit.

 

 

An exempt asset is one that is disregarded when calculating the value of a person's assets under the assets test.  Examples of exempt assets include:

For a full legislative definition see section 52 of the VEA.

 

 

In 1990 the government introduced legislative changes called “deeming” to simplify the assessment of cash deposits and income from certain investments. These changes were made:

  • in response to pensioner concerns about complex income and assets test rules;
  • to encourage pensioners to maximise their private income.

Deemed income is the minimum rate that the government expects income support pensioners to earn from investments.

Banks created “pensioner accounts” which paid interest at the deeming rate set by the government.

On 1 July 1996 further changes meant the deeming rate was applied to all financial assets as defined in section 5J(1) of the VEA.

 

 

The following personal care support schemes are approved under the Social Security Act 1991:

  • 'ACT Lifetime Care and Support Scheme' operated by the Lifetime Care and Support Commissioner of the Australian Capital Territory
  • 'Attendant Care Scheme' operated by the Multiple Sclerosis Society,
  • 'Attendant Care Service, and Post Acute Service' Victorian Transport Accident Commission (TAC)
  • 'Scheme for Payment of Medical and Like Benefits to Persons Injured as a result of a Transport Accident and Scheme for Individualised Funding' Victorian Transport Accident Commission (TAC)
  • Australian Capital Territory Government Disability ACT self-directed funding pilot "My Choice"
  • Australian Capital Territory Government Enhanced Service Offer
  • 'Austrian Long-term Care Allowance (Pflegegeld)' Austrian Government
  • 'Cash Allowance Attendant Scheme' operated by the Spastic Society of Victoria,
  • 'Direct Payment Pilot Project' NSW Department of Ageing, Disability and Home Care's Attendant Care Program
  • 'Direct Payments Project' operated by the Victorian Department of Human Services Personal Care Support Program,
  • 'Disability Services Queensland personal care support' Qld Government Disability Services Qld
  • 'Family Options Program' operated by the Victorian Government,
  • 'Future Care Payments' Tasmanian Motor Accident Insurance Board (MAIB)
  • 'Indennita di Accompagnamento' (Italian Carers Payment) operated by the Italian Ministry of Internal Affairs,
  • 'Individual, Family and Carer Support Grants Scheme' operated by the Western Australia Disabilities Services Commission,
  • 'Interchange Program' operated by Loddon-Mallee Region Incorporated,
  • "Individualised Funding" Scheme administered by the South Australian Department for Communities and Social Inclusion
  • 'Local Area Coordination Scheme' NT Government
  • 'NSW Attendant Care Program Direct Funding Model' administered by the NSW Department of Ageing, Disability and Home Care
  • 'NSW Government's Individual Budgets: Direct Payments Scheme'
  • 'NSW Lifetime Care and Support Scheme - Self-purchasing of treatment, rehabilitation and care services'
  • 'Phase One: Self-managed Funding Initiative' administered by the SA Department of Families and Communities
  • 'Queensland Your Life Your Choice Self-Directed Support: Host Providers and Direct Payment', administered by the Queensland Department of Communities, Child Safety and Disability Services.
  • 'National injury Insurance Scheme Queensland'
  • 'Self-Directed Funding Tasmania Program' administered by the Tasmanian Government Department of Health and Community Services.
  • Tasmanian Self Directed Funding Pilot Scheme
  • 'United Kingdom (UK) Attendance Allowance' operated by the UK Government,
  • 'United Kingdom Disability Living Allowance' operated by UK Government, and
  • United Kingdom Government's 'Personal Independence Payment Scheme'.
  • 'Victorian Direct Payments Project' administered by the Victorian Department of Health and Human Services.