The Assets Test

Last amended: 22 September 2009

Application of the assets test

Service pension or income support supplement (ISS) will be assets tested when the:

• value of assessable assets exceeds the relevant assets value limit, and
• the rate of service pension, assessed under the assets test, for a person who is not a war widow/widower-pensioner, is lower than the one determined under the income test, or
• the rate of ISS or service pension calculated under the assets test for a war widow/widower-pensioner is lower than both the rate determined under the income test and the ceiling rate.    
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  Chapter 10.2 Assets

  Chapter 10.3 Business Structures and Trusts

   

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Assessment under transitional rules

The same asset value limits and asset test reduction rates apply to all income support recipients regardless of whether they are paid under the transitional rules, or the standard rules[glossary:.:] However, as recipients are being reduced from different maximum rates, there are differences in the asset levels at which payment ceases.

Calculating pension rate for a non- war widow/widower-pensioner

A person who is not a war widow/widower-pensioner can have assets up to and including the assets value limit and still receive the maximum rate of service pension, provided that their income does not exceed the income free area. If the assets value exceeds the assets value limit, the maximum payment rate is reduced by 75 cents for every $250 over the limit. The result is the assets reduced rate. This rate is then compared to the income reduced rate and the lower rate, plus any remote area allowance payable, is the rate of service pension.

Calculating pension rate for a war widow/widower-pensioner

With two exceptions, the maximum possible rate of ISS or service pension for a war widow/widower-pensioner is the ceiling rate (plus any rent assistance and remote area allowance payable). The exceptions are an ISS recipient with saved children where dependent child add-on and guardian allowance may be added to the ceiling rate, or a war widow/widower whose war widow/widower's pension is compensation reduced.

In calculating the rate of ISS or service pension for a war widow/widower-pensioner, if the assets value exceeds the assets value limit, the assets reduced rate is calculated by subtracting 75 cents for every $250 over the limit from the maximum payment rate. The assets reduced rate is then compared to both the income reduced rate and the ceiling rate. The lower of the three rates, plus any rent assistance and remote area allowance payable is the rate of the person's ISS or service pension.

No pension is payable if assets are above the limit at which service pension/ISS ceases.    

Treatment of assets of a couple

If two people are partnered, they are treated as pooling their assets and sharing those assets equally. The assets value limit (AVL) of each member of a couple is also lower than the limit for a person who is not a member of a couple.    

Higher assets limit for non-property owners

A person's assets value limit is also affected by whether they are considered to be a property owner. A person or couple who are property owners have a lower assets value limit than a person or couple who are not property owners.