Last amended: 30 May 2007
Purpose of deprivation provisions
Deprivation provisions are intended to limit the potential for a person to avoid the income and assets tests. For deprivation provisions to apply it must be shown that a person has diminished directly or indirectly the value of:
If special or unusual circumstances necessitate the quick sale of an asset, deprivation may not have occurred.
Disposal date for deprived income and assets
The date of disposal is the earliest date that disposal of the asset or income occurred. Deprivation provisions apply from the date of disposal.
Treatment of income and assets disposals
Asset disposals are included in the value of a person's assets for five years. The amount to be included is dependent on:
- the date of the disposal,
- whether the person is a member of a couple, and
- whether the disposal occurred in a pension or a pre-pension year for disposals prior to 1 July 2002, or
- whether the disposal occurred in a tax year during a rolling period of five years for disposals on or after 1 July 2002.
Income disposals are included in the person's ordinary income for the period of the disposition. The amount to be included is dependent on the date of the disposal and whether the person is a member of a couple.
Effect of deprivation provisions on income and assets tests
Deprivation provisions apply to a person assessed under both the income and assets tests. The value of a disposed asset must be recorded, even if it has no effect on the person's current entitlement.
Circumstances where deprivation can occur
Deprivation of income and/or assets can occur in relation to a number of circumstances, including:
- trusts and private companies,
- deceased estates and separation,
- home and accommodation transfers,
- farm transfers,
- private annuities,
- rental income, and
- cash.