DATE OF ISSUE: 4 MARCH 1997
CLARIFICATION OF POLICY REGARDING ASSESSMENT OF THE PRINCIPAL HOME.
INTRODUCTION
The purpose of this instruction is to advise that Departmental policy regarding the assessment of the principle home of a pensioner has been changed and extended. These changes affect the following areas:
- Self-contained flat attached to the principal home of a pensioner;
- Dual occupancy residential development;
- Business Conducted from Home;
- Curtilage;
- Where a Pensioner Owns More Than One Residence; and
- A Married Couple Living Apart.
GOSP AMENDMENTS
2.The relevant amendments to the GOSP have been made to reflect this expansion of policy and are available in the latest release. The changes can be found at Attachment A.
BACKGROUND
3.Deficiencies were discovered in the Departmental policy with respect to the assessment of the principal residence in the circumstances outlined above. Inconsistency between our policy and that of the Department of Social Security were observed while other areas were not dealt with by the General Orders Service Pension.
4.It was therefore necessary to examine the existing Departmental policy on the assessment of the principal home to remove the anomalies and achieve consistency in the assessment of our pensioners.
ISSUES
Self contained flat attached to the principal home of the pensioner.
5.This policy has been modified to differentiate between letting a self contained flat attached to the principal home of a pensioner to a near relative or a person other than a near relative.
- A near relative includes:
- a member of the immediate family;
- a blood relative;
- a relative by marriage; or
- an adopted child.
7.Where the self-contained living area is either vacant or let to a near relative, then it is considered to be part of the pensioner's principal residence and is disregarded for assets test purposes.
8.However, where the self-contained living area is let to a person other than a near relative, then it is not considered to be part of the pensioner's principal residence and its value is calculated and included in the pensioner's assessment for assets test purposes.
Dual occupancy residential development
9.This policy covers the situation where a detached dwelling is constructed on a block of land where a residence already exists and the title of the land is not altered. If the pensioner or their partner has a dwelling of this type constructed on their land, and either the pensioner or their partner meets the cost of this construction, the dwelling may be assessable under the assets test depending on whether or not the occupant of the dwelling is a near relative.
Business Conducted from Home
10.This policy has been expanded from its reference under Home-Assessable in the previous version of the GOSP. The GOSP remains unchanged where a customer operates a business at home such that any part of the home used primarily or solely for business purposes is assessable under the income and assets test. A valuation of the relevant area used for business purposes should be obtained from the Australian Valuation Office if it appears that it may affect a pensioner's entitlement.
Curtilage
11.Minor changes to simplify this topic have been made and do not affect the content of current policy on curtilage.
Pensioner Owns More Than One Residence
12.This area of policy was previously only briefly mentioned under Home-Assessable in earlier versions of the GOSP. It stated that only one residence could be disregarded for assets test purposes if a person and their partner lived in separate residences with the most valuable residence being exempt.
13.To provide for more equitable treatment of our pensioners, this area of policy has been changed to align it with that of the Department of Social Security. A pensioner or couple can still only have one home exempt for assets test purposes where they own more than one residence. The primary rule for deciding which property is the principal home is now the residence in which the greatest aggregate of time is spent each year and not the most valuable residence. The other home, where the least aggregate time is spent each year, is an assessable asset.
14.When an equal amount of time is spent during the year in each of the homes owned by a pensioner or couple, the most expensive home is exempted as the principal home with the value of the other home or homes being assessed for assets test purposes.
15.If one member of the couple lives in one of the homes and the other member of the couple lives in the other, because the couple have chosen to live in separate homes, only one of the homes may be exempted. The most valuable home is exempted as the principle home and the value of the other is assessed for assets test purposes.
16.If a pensioner or couple own a residence and rent a home for a significant proportion of the year, the owned residence remains the principal residence and homeownership status is preserved. Accordingly the pensioner or couple will not be eligible for rent assistance on the rented residences as it is not their principal residence.
Married couple living apart
17.This situation has not been covered by previous policy contained in the GOSP and thus represents an extension of policy to incorporate married couples who live apart either because they are estranged or separated by illness.
18.Where one partner of a married couple is not residing in the principal home but there is no estrangement their homeownership status is not affected by their living apart. Each of the couple has the married homeowner assets limit applied and the value of the home is disregarded. Both members of the couple will be 'ineligible homeowners' (i.e. ineligible to receive rent assistance), unless they are covered by one of the exceptions.
19.A married couple living apart due to estrangement are each treated as separate entities. This means that a separated pensioner is a single homeowner if he or she is living in a home which is owned solely or jointly. In any other circumstances the pensioner is a single non-homeowner except where the pensioner lives in another residence that they own. If a pensioner owns a house either solely or jointly but is no longer living in it, the value of his or her share is assessed as an asset and the higher allowable assets limit applies.
20.Special rules apply where the couple is an illness separated couple. Rent assistance may be payable when one party has paid an entry contribution in return for accommodation rights in a special residence, or has entered a care situation such as a Nursing Home.
Queries
21.Any queries in respect of this matter should be directed to Felicity Maher on telephone 06 289 4768, fax 06 289 4853 or LAN C-C-BA-12 or Laurie Howell on telephone 06 289 6706, fax 06 289 4853 or LAN C-C-BA-11
MURRAY HARRISON
BRANCH HEAD
INCOME SUPPORT