You are here

Special Exemptions from Deeming

Document

Last amended: 5 March 2010

Special exemption guidelines

The Minister can also exempt 'Saved' Loans and 'frozen' Unlisted Property Trusts.

Requests for exemption should be forwarded to the Investment Data Base Unit in Sydney, and recommendations are then made to the Minister.

Church and charitable institution exemptions

Prior to 1 January 2010 specific funds offered by certain church and charitable institutions were exempt from deeming.

From 1 January 2010, deeming exemptions ceased to be granted for new funds and for new investments placed into existing funds which had previously been granted a deeming exemption prior to 1 January 2010.

Pensioners who have already made investments in an exempt fund prior to 1 January 2010 will continue to have their original investment exempted from deeming and the actual interest earned counted as income under the income test.

If a pensioner puts more money into their exempt investment or makes a new investment with a church and charitable institution on or after 1 January 2010, the deeming exemption will only apply to the amount invested prior to 1 January 2010.

'Saved' personal loans and 'frozen' unlisted property trusts

The following two forms of investment, which were exempt from deeming before the July 1996 deeming changes, are now included in deemed income unless a pensioner can demonstrate financial hardship:

  • low or zero interest 'saved' personal (family) loans made before 22 August 1990 to a:
  • family member,
  • private company and the pensioner or family member has a controlling or substantial interest, or
  • family trust where the pensioner or family member has a controlling or substantial interest, and
  • 'frozen' unlisted property trusts with a continuous restriction on access since 30 June 1996.

Very few pensioners hold these forms of investment. To be granted an exemption a pensioner must:

  • at 30 June 1996, have claimed or been receiving a payment to which deeming now applies,
  • taken reasonable action to maximise income, and
  • be in financial hardship as a result of deeming.
Financial hardship for 'saved' personal loans and 'frozen' unlisted property trusts

For the purposes of deeming exemptions only, financial hardship is when a pensioner's total income, as a result of deeming, is lower than the maximum rate of pension or allowance, including rent assistance where applicable, that could be paid to the pensioner under the income test.

In this instance, total income is the sum of the following:

  • any return from the investment for which exemption is claimed,
  • deemed income from the pensioner's remaining financial assets,
  • income from other sources, and
  • the pensioner's current income test rate of pension or allowance.
Date of effect of exemption – 'saved' loans and 'frozen' unlisted property trusts

Requests for exemption from deeming for 'saved' loans or 'frozen' unlisted property trusts, are treated as an application for review of a decision, as described in the following table:

 

If a pensioner requests an exemption...

Then the exemption applies from the...

Within 3 months of the advice that deeming had been applied to the investment.

date of effect of the assessment, and arrears are payable from that date.

More than 3 months after the advice that deeming had been applied to the investment.

date the request is received.

 

National Disability Insurance Scheme (NDIS) amounts

NDIS amounts held by, or on behalf of, an NDIS participant  to pay for future disability expenses under their NDIS plan are exempt from the deeming provisions of the income test.

Any actual returns that are earned, derived or received on NDIS amounts are exempt income and also exempt from deeming.

According to section 5L of the VEA a family member, in relation to a person, means:

  • the partner, father or mother of the person, or
  • a sister, brother or child of the person, or
  • another person who, in the Commission's opinion, should be treated as one of these relations for the purposes of this definition.

Please note, the definition of a parent is further defined in section 10A 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.

Has the same meaning as in the National Disability Insurance Scheme Act 2013, and means an amount paid under the NDIS in respect of reasonable and necessary supports funded under a NDIS participant’s plan.

Has the same meaning as in the National Disability Insurance Scheme Act 2013, and means a person with disability who meets the access requirements to become a participant in the NDIS.

Has the same meaning as in the National Disability Insurance Scheme Act 2013 and is the plan agreed between an NDIS participant and a Disability Care Australia planner setting out the reasonable and necessary supports the participant requires to achieve their goals and aspirations and describing how these supports will be provided.