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Other Primary Production Issues

The assets test hardship provisions



The issues relate specifically to controlled primary production trusts. Primary producers who hope to qualify for payment under the assets test hardship provisions will be required to satisfy a number of qualification criteria relating to their land or other assets, some of which may include having:    

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  • primary production land (or other assets) on the market, and
  • land farmed to full capacity.
Person need to satisfy requirements for assets test hardship provisions

Where attribution of land owned by a private company or private trust is made to a pensioner, that person will need to satisfy any requirements with respect to this land for assets test hardship purposes as if they owned the land legally in their own right. Furthermore, land owned by a trust or company and attributed to our pensioner will not be considered unrealisable simply because:

  • other attributable stakeholders do not consent to the property being put on the market (and this is required for the property to be sold), or
  • the terms of the trust or company deeds prevent the sale of the property.     More ?
Example of hardship provisions and entity assets

Harvey applied for income support and had the claim rejected as he is over the assets limit, largely due to being a 33% attributable stakeholder in a private company which owns a $300,000 investment property free and clear. Harvey's 2 brothers are the other (non-beneficiary) attributable stakeholders. Harvey has applied under the Asset Test Hardship provisions arguing that the property is unrealisable as his brothers will not agree to the company selling the property (their consent also being required under the company constitution for this to happen), nor can Harvey sell his share in the private company. Harvey cannot claim that he is unable to sell the property and therefore able to access the Asset Test Hardship provisions as this scenario would be one where the company constitution wording prevents the sale of the property.

Forgone wages

Primary producers may be eligible to access forgone wages provisions if they have had a close relative working the farm property for less than award wages. Access to forgone wages generally can only take place once the land in question is transferred to the close relative and the title deeds reflect this change in ownership. Where private trust or private company land that our pensioner has been assessed as being an attributable stakeholder in, is transferred to a close relative in lieu of forgone wages, there may not be a change in the title deed for the property. This will most typically arise where the pensioner signs over control of the private trust or private company to the close relative. Our pensioner may still have the amount of their gift reduced by accessing the forgone wages provisions in such cases, however in these cases forgone wages cannot be considered until control of the trust or company is formally signed over to the close relative.    

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Unpaid work may be considered as forgone wages

Even though the close relative may have worked on the trust farming property while it was not assessed as an asset for income support purposes (ie pre-1/1/2002), any unpaid (or partly paid) work done on the farm may be considered for forgone wages purposes. The amount of forgone wages should be calculated in the same way as for any other farming property (eg personally held land on the part of the pensioner).

Example of forgone wages and transfer of trust assets

Joe is a widowed farmer and planning to retire from farming at age 60, in 2003. The farm assets are valued at $250,000 and are in a discretionary trust of which Joe is [glossary:Appoint:] — [glossary:o:] — [glossary:r:] and Trustee. Due to the new legislation Joe, who previously would have been entitled to payments, will very likely be over the Pension assets limit when he turns 60. Joe's 25 year old son has been working on the farm unrewarded for a number of years. Joe having received advice, understands that he may be able to utilise the forgone wages provisions in transferring the farm to his son (although this will not take place until Joe retires from farming). However, for tax and legal reasons, neither Joe nor his son wants the farm transferred out of the trust. By transferring control of the discretionary trust to his son on his retirement, Joe can have the forgone wages of his son offset against the resulting gifting amount that eventuates from this transfer. The title deeds will not be altered to reflect this transfer, however, this does not present any difficulties in terms of utilising the forgone wages provisions provided that control of the trust has been formally transferred to the son.

In addition, some of the work Joe's son has done on the property was prior to 1 January 2002, when certain trust assets were not assessed as assets for pension purposes. The work Joe's son has done on the trust land, even pre-1 January 2002, can be taken into account when assessing the forgone wages to be applied.

According to section 52ZZJ of the VEA, a person is an attributable stakeholder if a company or trust is a controlled private company or trust in relation to the individual unless the Commission determines otherwise.



According to section 52ZZJ of the VEA, a person is an attributable stakeholder if a company or trust is a controlled private company or trust in relation to the individual unless the Commission determines otherwise.



A relative for the purpose of Part IIIB, Division 11A (means test treatment of private companies and private trusts), in relation to a person, has the meaning given by section 52ZP of the VEA.



According to section 52ZZJ of the VEA, a person is an attributable stakeholder if a company or trust is a controlled private company or trust in relation to the individual unless the Commission determines otherwise.



An asset means any property, including property outside Australia.

A discretionary trust is a private trust set up by an individual or individuals either to:

  • hold property or investments, or
  • run a business.

In virtually all cases the trust deed gives absolute discretion to the trustee to distribute both income and capital among the beneficiaries as he or she sees fit.

Trustee has two meanings depending on the context, (i) and (ii).

(i) a person who looks after someone else's affairs

According to section 202 of the VEA, a trustee is a person appointed by the Commission to administer the financial affairs of a pensioner who may be incapable of managing their own affairs for reasons such as:

  • age,
  • infirmity,
  • ill health, or
  • improvidence.

These criteria include circumstances where a pensioner has a psychiatric disorder or a mental illness as a result of alcohol or drug addiction.

A trustee can be appointed, with or without the consent of the pensioner and once appointed, a trustee has full control of the pension payment.

(ii) a person responsible for administration of a trust

According to section 52ZO of the VEA, trustee has the same meaning as in the Income Tax Assessment Act 1997.