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Application of the Sugarcane Farmers' Income Test

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Basic principle of the test

    

VEA ?

How to work out whether the sugarcane farmers' income test is satisfied

Section 49Y(1) VEA

Person's maximum basic rate for age service pension

Section 49Y(4) VEA

VEA ? (go back)

For participation in RASF to be allowed, the sugarcane farmer's (and their partner's) income for the three years preceding the date of legal transfer of the property must be less than the [glossary:maximum:] [glossary:basic:] [glossary:rate:] of age service pension, excluding pension supplement. The income amount used for the sugarcane farmers' income test equals the total of the last three years non-sugarcane farm income plus the total of the last three years sugarcane farm income. Negative total sugarcane farm income can be offset against positive income from other sources.

Example of a sugarcane farmer's income

The table below shows an example of a sugarcane farmer's income for the three years preceding transfer.

Income

Year 1

Year 2

Year 3

Total

Farm

20000

-40000

10000

-10000

Wages

15000

15000

20000

50000

Rent

-10000

-5000

5000

5000

The loss on rental properties in years 1 and 2 cannot be offset against any other source, so the three-year total rent income is $5000. The loss on farming income can be offset against the other positive income. Thus, the assessable income for the sugarcane farmers' income test would be $55,000 minus $10,000 = $45,000.

Income details required where claim backdated

The income details for the three years prior to the date of farm transfer are required to determine whether the person satisfies the sugarcane farmers' income test. The date of claim is not relevant for the sugarcane farmers' income test.

Impact of sugarcane farmers' income test on rate of pension

The sugarcane farmers' income test has no impact on the rate of pension payable. This test is used solely for RASF eligibility purposes. Normal income and assets tests rules continue to apply to determine the rate of pension payable.

Relevant maximum rate of age service pension

The table below shows how to determine which maximum basic entitlement to apply depending on the farmer's personal circumstances at the time of transfer.

If a qualifying farmer was...

Then the income of...

partnered at the time of transfer and is still partnered

both is compared to the partnered maximum basic entitlement

partnered at any time during the three years prior to transfer but is now single

the client only is compared to the partnered maximum basic entitlement

single at the time of the transfer

the client only is compared to the single maximum basic entitlement

illness separated at the time of the transfer

both is compared to twice the single maximum basic entitlement.


According to section 5H of the VEA income is:

  • an amount earned, derived or received by a person for the person's own use or benefit;
  • a periodical payment by way of gift or allowance; or
  • a periodical benefit by way of gift or allowance.

 

 

A service pension is an income support payment broadly equivalent to the social security age and disability support pensions. It may be paid once a veteran or partner has reached the nominated age or is incapacitated for work.

The pension supplement is added to a person's maximum basic rate. The pension supplement is calculated as a 'combined couple' rate. The 'not a member of a couple' rate is 66.33% of the 'combined couple' rate. The member of a couple rate is 50% of the combined couple rate. From 1 July 2010, the minimum pension supplement amount will be able to be claimed on a quarterly basis rather than on a fortnightly basis.

 

 

    VEA

How to work out whether the farmers' income test is satisfied

Subsection 49J(1) VEA

How to work out whether the sugarcane farmers' income test is satisfied

Subsection 49Y(1) VEA

VEA (go back)

For the purpose of the farmers' and sugarcane farmers' income test, the maximum basic rate of age service pension as worked out under subsections 49J(4) and 49Y(4) respectively, multiplied by 3 is considered to be the person's maximum basic entitlement.

If the person's total income for the three income test years is less than the person's maximum basic entitlement, the person satisfies the farmer's/sugarcane farmers' income test.