Assessment of Assets for Sole Traders

Last updated:1 June 2021

This topic provides information on the following:

•       assessable assets of sole traders,
•       verification of asset value, and
•       summary of assessable assets for pensions.

Assessable assets for all businesses

The value of the net assets of a business run by a sole trader are assessable if the owner or their partner is a pensioner. The amount to be taken into account for assets test purposes is the current market value of the assets, less the 'business' liabilities listed on the financial statements. If the pensioner is involved in primary production activities, section 52CA of the VEA rules apply. This section allows for primary producers to offset total debts against the total assets of the business.    

Verification of asset value

Each item on the balance sheet must be individually examined and a judgement made about whether the asset value recorded is reasonable. In most cases, the asset value recorded on the balance sheet is accepted, particularly for assets such as:

• bank accounts,
• petty cash,
• pre-paid expenses,
• debts owing, and
• plant and equipment.

However, if necessary, the balance sheet must be adjusted and the value of assets owned by the business reassessed to reflect current market value. Using conventional accounting methods, fixed assets are recorded at historical cost, usually the purchase price less depreciation.    

Valuation of real estate belonging to sole traders

The following table describes the requirements for valuation of real estate belonging to a sole trader.