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Summary of Assessable Assets of Sole Traders Only
VEA ?
This topic provides a summary of assessable assets for pensions that relate to sole traders only.
Summary table - assessable assets for pensions
The following table summarises the assessable assets, and their treatment, from a sole trader's business for pensioners.
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Asset |
Treatment |
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Business assets |
Assess the current market value of business assets, less 'business' liabilities, under section 52C of the Veterans' Entitlements Act |
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Loans to the business by the pensioner |
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Loans to the business by persons other than the owner |
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Loans by the business to the owner |
Disregard them when calculating the assessable value of the business. |
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Loans by the business to persons other than the owner |
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Asset |
Treatment |
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Non-business assessable assets providing security for business liabilities where the business has a net deficiency |
Deduct the amount of the deficiency from the value of the assessable assets. |
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Income equalisation deposits, farm management deposits, farm management bonds |
These are not allowed as deductions and should be added back to the net profit in the year originally earned.
No deduction is allowed for investment expenses. |
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Provision Account |
Add the value back into the net assets of the partnership. |
Section 52C VEA
Section 52CA VEA
An asset means any property, including property outside Australia.
For the purposes of income and assets assessment, a sole trader is a business owned by one person.
The business:
- is not a separate legal entity from the owner,
- is not a separate accounting entity, which means that sole traders need ONLY lodge a personal tax return,
- may be run in the owner's name OR under a registered business name, and
- may or may not have employees.
The owner is:
- liable for all the debts of the business, and
- entitled to all the profits of the business.
The market value of an asset is the point at which a willing purchaser and a willing, but not anxious vendor, would reach agreement.
The market value of an asset is only decreased by the value of an encumbrance secured against it. The market value of an asset is not reduced by any costs which may be incurred if the asset was to be sold.