Private Land Use Test

Last updated: 5 September 2012

Private land use test

The private land use test applies to all income support recipients.

Criteria for private land use test

The private land use test is satisfied if land adjacent to the principal home is:

• two hectares or less,
• held on the same title as the principal home, and
• used primarily for private and domestic purposes in association with the principal home.

Note: If the private land use test applies, up to two hectares of land is exempt curtilage.

Private and domestic purposes

If the house and land is used for private and domestic purposes the private land use test will be satisfied, and the relevant area of land of up to two hectares will be exempt from the assets test. Land that is used occasionally for community purposes, even if a token payment is received, can be considered to be used for private and domestic purposes.

Land includes more than one residence

Only one dwelling house can be regarded as a person's principal home and be excluded from assessment. This applies even if the land contain — s two residences on the same title.

The home in which the person normally resides is regarded as the person's principal home. The other residence must be assessed as an asset.

The only exception to this general rule is where two dwellings have been built on the same property title under dual occupancy arrangements.     

Commercial purposes

Any land that is used primarily for commercial purposes does not satisfy the private land use test. The land that is used commercially is an assessable asset. If part of the principal home is used for commercial purposes, then this part of the home no longer satisfies the private land use test and must be regarded as an assessable asset. For example, if a pensioner runs a business from home and 40% of the floor space of the house is occupied by the business, then the value of this 40% must be regarded as an assessable asset. The remaining 60%, which is used as the principal home and therefore for private and domestic purposes, is exempt from assessment. Evidence that a property is being used for commercial purposes may include, for example, an income tax return indicating that rent is being paid for the floor space, or a business address which is the same as the person's residential address.

Grandfathering provisions – exempt curtilage on more than one title

If a pensioner had curtilage on more than one title exempted prior to 1 January 2007, the additional titles will continue to be exempt, provided all the land continues to be used primarily for private or domestic purposes. If the pensioner ceases to receive an income support payment, the grandfathering provision will finish. That is, if the pensioner's income support payment re-commences at a later date, only the area of land adjacent to the principal home which is on the same title as the principal home will be exempt.

The grandfathering provisions will also cease once the pensioner moves permanently from the principal home. Any adjacent land on a separate title will then become an assessable asset. The only exemption to this is where the pensioner moves to a care situation or becomes an aged care resident. In this case the grandfathering provisions will still apply and the land will continue to be included as part of the principal home while the principal home remains exempt from assessment.