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Special Residence - Basic Assessment Rules

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Last amended: 25 July 2006

    

VEA ?

Provisions Relating to Special Residences and Special Residents

Part IIIB, Division 11, Subdivision C VEA

VEA ? (go back)

Basic assessment rules for special residences

To determine the homeowner status for a person in a special residence, the entry contribution is compared to the extra allowable amount (EAA).    

If a special resident's entry contribution...

Then they are assessed as a...

And...

exceeds the extra allowable amount

homeowner     

is less than or equal to the extra allowable amount

non-homeowner     

Extra allowable amount

    

The EAA is the difference between the assets value limits for a property owner (low limit) and a non-property owner (high limit) that applies to the person.

Note: A person's entry contribution and EAA are assessed on an individual basis even if they are a member of a couple. Assets value limits for couples (partnered or illness separated) are generally quoted on rates charts as a combined figure and will require conversion to an individual rate before calculating EAA.

Impact of domestic circumstances on basic assessment rules

The person's domestic circumstances may impact the basic assessment rules. The following three tables cover possible scenarios in these main groupings:

Note: A special assets value limit applies to illness separated couples in special residences in certain circumstances.

Not a member of a couple

The following table provides assessment rules for possible scenarios of persons who are not a member of a couple and reside in a special residence.

If the person is not a member of a couple, resides in a special residence and the entry contribution is...

Then the person is a special resident and is assessed as...

more than the EAA    

a homeowner.    

less than or equal to the EAA    

a non-homeowner.    

Member of a couple

The following table provides assessment rules for possible scenarios of persons who are a member of a couple and reside in a special residence.

If the person is a member of a couple and resides in a special residence...

And the individual entry contribution is...

Then follow the assessment rules contained in...

whose partner resides in the same special residence    

more than the EAA

  • homeowners, and
  • both special residents.

whose partner resides in the same special residence    

less than or equal to the EAA

  • non-homeowners, and
  • both special residents.

whose partner resides in another special residence    

more than the EAA

  • homeowners,
  • both special residents, and
  • the value of the two entry contributions are compared,
  • the lower value is assessable as an asset, and
  • the higher value is considered the principal home and disregarded.

whose partner resides in another special residence    

less than or equal to the EAA

  • non-homeowners, and
  • both special residents.

whose partner    

  • is not a special resident, and
  • is a property owner

any amount

  • homeowners,
  • one special resident, and
  • the values of the entry contribution and the partner's property are compared,
  • the lower value is assessable as an asset, and
  • the higher value is considered the couple's principal home and disregarded as an asset

whose partner    

  • is not a special resident, and
  • is not a property owner

more than the EAA

  • homeowners, and
  • one is a special resident.

Note: Even though the partner is not a property owner, as a member or a couple they are both taken to be homeowners of the special residence.

whose partner    

  • is not a special resident, and
  • is not a property owner

less than or equal to the EAA

  • non-homeowners, and
  • one is a special resident.

Member of an illness separated couple

The following table provides assessment rules for possible scenarios of persons who are a member of an illness separated couple and reside in a special residence.

If the person resides in a special residence and is a member of an illness separated couple...

And the entry contribution(s)...

Then the person is assessed as...

And their partner is assessed as...

whose partner is also a special resident    

are both more than the EAA

  • a special resident, and
  • a homeowner
  • a special resident, and
  • a homeowner

whose partner is also a special resident    

are both less than or equal to the EAA

  • a special resident, and
  • a non-homeowner
  • a special resident, and
  • a non-homeowner

whose partner is also a special resident    

  • for the person is more than the EAA, and
  • for the partner is less than or equal to the EAA
  • a special resident, and
  • a homeowner

Note: A special assets value limit applies

  • a special resident, and
  • a non-homeowner

whose partner    

  • is not a special resident, and
  • is a property owner

is more than the EAA

  • a special resident, and
  • a homeowner
  • a homeowner

whose partner    

  • is not a special resident, and
  • is a property owner

is less than or equal to the EAA

  • a special resident, and
  • a non homeowner

Note: A special assets value limit applies

  • a homeowner

whose partner    

  • is not a special resident, and
  • is not a property owner

is more than the EAA

  • a special resident, and
  • a homeowner

Note: A special assets value limit applies

  • a non-homeowner

whose partner    

  • is not a special resident, and
  • is not a property owner

is less than or equal to EAA

  • a special resident, and
  • a non-homeowner
  • a non-homeowner


A person is a homeowner if he or she has a right or interest, which gives reasonable security of tenure in the principal home. A person is also considered to be a homeowner if they have sold their home in the previous 12 months and intend to use part or all of the proceeds to purchase another home.

According to subsection 5MC(2) of the VEA a special residence is:

  • a retirement village; or
  • a granny flat; or
  • a sale leaseback home.

 

 

An entry contribution is the amount paid or agreed to be paid by a person for the right to live in a:

  • retirement village; or
  • granny flat.

If a person lives in a home subject to a sale leaseback agreement, the entry contribution is the balance of the amount still to be paid by a buyer, at the date of a sale leaseback agreement.

The "extra allowable amount" is the difference between the property owner assets value limit and the non property owner assets value limit which applies to the person.

As the property and non property owner assets value limits are indexed or adjusted on an annual basis, the extra allowable amounts also increase annually.

The assets value limits applied to this formula are the limits applicable at the time the person made the [glossary:entry contribution:DEF/Entry contribution] to enter the [glossary:special residence:DEF/Special Residence].

 

Refer to Section 52N of the VEA for the full definition.

 

 

One element of the means test for income support pensions whereby the rate of pension payable to a pensioner reduces progressively as their assets increase above a certain threshold known as the assets value limit (AVL).

Assets value limit is the maximum value of assets a person can have without affecting the person's pension rate. The assets value limit is worked out in accordance with SCH6-F3 of the VEA.

Rent Assistance is an allowance, which may be paid to a service pensioner or income support supplement (ISS) recipient to assist in meeting the cost of rental accommodation.

To receive rent assistance, a pensioner must be paying rent (other than Government rent) for accommodation in Australia, and the amount paid must exceed a certain threshold.

According to Section 5E(2) of the VEA a person is a member of a couple, if they are:

  • legally married to another person and is not living separately and apart from the other person on a permanent basis; or
  • living in a prescribed registered relationship with the other person (whether of the same sex or a different sex) and is not living separately and apart from that other person on a permanent basis; or
  • all of the following conditions are met:
  • living with another person, whether of the same sex or a different sex;
  • not legally married to that person;
  • in a de facto relationship with that person; and
  • not in a prohibited relationship

The term “partnered” is also commonly used.

An illness separated couple is a couple who cannot share a home because of the illness or infirmity of one or both partners. Illness separated couples may be paid the higher single rate of pension. Refer to subsection 5R(5) of the VEA for the full definition.

 

 

The term not a member of a couple covers all persons who are not covered by the definitions of member of a couple.

 

 

The Special Assets Value Limit is calculated by the following formula:

(Partnered property owner AVL  +  Partnered non-property owner AVL) /  2

Refer to Section 59J of the VEA for the full definition.

 

 

The "extra allowable amount" is the difference between the property owner assets value limit and the non property owner assets value limit which applies to the person.

As the property and non property owner assets value limits are indexed or adjusted on an annual basis, the extra allowable amounts also increase annually.

The assets value limits applied to this formula are the limits applicable at the time the person made the [glossary:entry contribution:DEF/Entry contribution] to enter the [glossary:special residence:DEF/Special Residence].

 

Refer to Section 52N of the VEA for the full definition.

 

 

An asset means any property, including property outside Australia.

The principal home has the meaning given by subsection 5LA(1) of the VEA and subsection 5LA(2) of the VEA. The principal home of a person is generally the place in which they reside. In certain circumstances, however, the principal home of a person can be the place in which they formerly resided. The following property is regarded as part of the principal home.

  • the residence itself (e.g. house, flat, caravan),
  • permanent fixtures (e.g. stoves, built-in heaters, dish-washers, light fittings and affixed carpets),
  • [glossary:curtilage:DEF/Curtilage] (i.e. two hectares or less of private land around the home where the private land use test has been satisfied, or all land held on the same title as the person's principal home where the extended land use test has been satisfied), or
  •       any garage, shed, tennis court or swimming pool used primarily for private purposes provided it is on the same title as the principal home.