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9.6.1 Overview of Deprivation Provisions

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Last amended: 30 May 2007

Purpose of deprivation provisions

Deprivation provisions are intended to limit the potential for a person to avoid the income and assets tests. For deprivation provisions to apply it must be shown that a person has diminished directly or indirectly the value of:

If special or unusual circumstances necessitate the quick sale of an asset, deprivation may not have occurred.    

Disposal date for deprived income and assets

The date of disposal is the earliest date that disposal of the asset or income occurred. Deprivation provisions apply from the date of disposal.    

Treatment of income and assets disposals

Asset disposals are included in the value of a person's assets for five years. The amount to be included is dependent on:

  • the date of the disposal,
  • whether the person is a member of a couple, and
  • whether the disposal occurred in a pension or a pre-pension year for disposals prior to 1 July 2002, or
  • whether the disposal occurred in a tax year during a rolling period of five years for disposals on or  after 1 July 2002.

Income disposals are included in the person's ordinary income for the period of the disposition. The amount to be included is dependent on the date of the disposal and whether the person is a member of a couple.    

Effect of deprivation provisions on income and assets tests

Deprivation provisions apply to a person assessed under both the income and assets tests. The value of a disposed asset must be recorded, even if it has no effect on the person's current entitlement.     

Circumstances where deprivation can occur

Deprivation of income and/or assets can occur in relation to a number of circumstances, including:


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.

 

 

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).

An asset means any property, including property outside Australia.

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.

 

 

If there is a disposition of assets on or after 1 July 2002, the rolling period is the period comprising the tax year in which the relevant disposition took place and such (if any) of the 4 previous tax years as occurred after 30 June 2002. This means that disposals that occurred prior to 1 July 2002 are not counted in the rolling period. Subsection 52JB(4) VEA (for individuals) and subsection 52JD(6) VEA (for members of a couple) define the rolling period relevant to the $30,000 disposal of assets 'free area' rule.