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Summary of Assessable Assets of Sole Traders Only

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This topic provides a summary of assessable assets for pensions that relate to sole traders only.

Summary table - assessable assets for pensions

The following table summarises the assessable assets, and their treatment, from a sole trader's business for pensioners.     

Asset

Treatment

Business assets

Assess the current market value of business assets, less 'business' liabilities, under section 52C of the Veterans' Entitlements Act

Loans to the business by the pensioner

  •       Treat as an injection of capital in the business.
  •       Add them back to the net assets of the business if listed as a liability on the balance sheet.

Loans to the business by persons other than the owner

  •       Assess them as 'loans' if the lender is a DVA pensioner.
  •       Take them into account as liabilities when calculating the assessable value of the business.

Loans by the business to the owner

Disregard them when calculating the assessable value of the business.

Loans by the business to persons other than the owner

  •       Assess them as the personal financial investments of the owner.
  •       Take them out of the business financial statements.

Asset

Treatment

Non-business assessable assets providing security for business liabilities where the business has a net deficiency

Deduct the amount of the deficiency from the value of the assessable assets.

Income equalisation deposits, farm management deposits, farm management bonds

These are not allowed as deductions and should be added back to the net profit in the year originally earned.

  •       Hold actual income earned.  (This will show on the Income Tax Return.)

No deduction is allowed for investment expenses.

Provision Account

Add the value back into the net assets of the partnership.


An asset means any property, including property outside Australia.

For the purposes of income and assets assessment, a sole trader is a business owned by one person.



The business:

  • is not a separate legal entity from the owner,
  • is not a separate accounting entity, which means that sole traders need ONLY lodge a personal tax return,
  • may be run in the owner's name OR under a registered business name, and
  • may or may not have employees.



The owner is:

  • liable for all the debts of the business, and
  • entitled to all the profits of the business.

The market value of an asset is the point at which a willing purchaser and a willing, but not anxious vendor, would reach agreement.

The market value of an asset is only decreased by the value of an encumbrance secured against it. The market value of an asset is not reduced by any costs which may be incurred if the asset was to be sold.