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9.6.5 Deprivation of Assets - Effect on Income
Effect of assets disposal on an income tested pensioner
Deprivation provisions apply to a pensioner who is assessed under the income test and assets test. The value of a disposed asset must be recorded, even if it has no effect on the pensioner's current entitlement. It may be necessary to obtain a valuation for the disposed asset from the Australian Valuation Office.
The value of several disposed assets may cause a pensioner's income support pension to be assets tested. The deemed income may cause an effect under the income test.
Effect of disposal on deemed income
Deeming is applied to the:
- value of all assets disposed of during the previous 5 years, minus
- the $10,000 disposal limit per pension year, or
- the $10,000 disposal limit per tax year and up to a $30,000 limit applied during the 5 year rolling period, plus
- the value of all other financial assets.
The actual income lost by disposal of an income producing asset, when the disposal of assets is being assessed, is ignored.
Transactions that constitute both a disposal of ordinary income and assets
The value of disposed assets is subject to deeming provisions if the value of these assets exceeds the disposal limit. Any actual income lost by disposal of an income-producing asset is disregarded. This ensures no double counting due to the deeming provisions. Asset disposal is assessed under both the income test (deeming) and assets test, regardless of whether the disposed asset was income-producing or capable of producing income.
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).