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3.10.1 Overview of Financial Hardship

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Access to financial hardship rules

Financial hardship provisions can apply to people who, because of their assets, are prevented from receiving any, or receive a reduced rate of, either service pension or income support supplement.    

Lodging a claim under financial hardship provisions

A request for consideration under the hardship rules must be made in writing. The request must contain sufficient information to determine whether the claimant satisfies the eligibility criteria.   

Unrealisable assets

If a person cannot, or cannot be reasonably expected to sell or use an asset as security for borrowing then the asset is deemed to be an unrealisable asset.    

Severe financial hardship

Severe financial hardship is based on the following four criteria:

  • total annual asset tested service pension or income support supplement, plus all income does not exceed the maximum annual rate of pension,
  • readily available funds do not exceed the single or partnered limits,
  • there is no other course of action which the person could reasonably be expected to take to improve their financial position, and
  • a delegate has reasonable regard to the unavoidable or reasonable expenditure of the person in relation to the maximum annual rate of pension.     
Rate calculation under the hardship provisions

To calculate the rate of service pension or income support supplement payable under the hardship provisions, the person's adjusted annual rate of ordinary income is deducted from the maximum payment rate of service pension or income support supplement.     

Notional annual rate of ordinary income

A person's notional rate of income is the amount per year equal to 2.5% of the person and the person's partner's unrealisable assets, or the amount per year that could reasonably be expected to be obtained from a purely commercial application of the assets.    


According to Section 52Z(3) of the VEA a person's adjusted annual rate of ordinary income is an amount per year equal to the sum of:

  • the person's annual rate of ordinary income (other than income from assets), and
  • the person's annual rate of ordinary income from assets that are not assets tested, and
  • either:
  • the person's annual rate of ordinary income from unrealisable assets, or
  • the person's notional rate of ordinary income from unrealisable assets, whichever is the greater, and
  • an amount per year equal to $9.75 for each $250 of the value of the person's assets (other than disregarded assets)

 

 

The maximum payment rate is the amount calculated by adding the maximum basic rate applicable to a person to any rent assistance and pension supplement payable. See SCH6-A1(2) of VEA (Method Statement 1 Step 4) and SCH6-A1(6) of VEA (Method Statement 5 Step 4).