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C19/2007 24 months Home Proceeds Exemption

Document

DATE OF ISSUE:  15 August 2007

24 months Home Proceeds Exemption

Purpose

The purpose of this Departmental Instruction is to inform staff of legislative and policy amendments for the new discretion to enable an extension of home proceeds exemptions for principal homes that have been sold, lost or damaged.  This extended exemption for up to an additional 12 months became available from 1 July 2007.

Background

These changes resulted from an announcement earlier this year that the Australian Government would extend the exemption period in relation to principal homes.  The extension is to benefit affected pensioners who have sold their principal home, or are unable to live in their home due to loss or damage (including by a disaster), and intend to use the proceeds to acquire a new principal home or repair the damaged principal home.

The new discretion was to address community concerns that the average time to build homes is increasing in some places.  Also, in places where there have been disasters, the reduced supply of housing and the increased demand for labour in the building industry can increase the time it takes for a house to be purchased, rebuilt or repaired.

Legislation

The legislation for this measure is Schedule 10 of Families, Community Services and Indigenous Affairs Legislation Amendment (Child Support Reform Consolidation and Other Measures) Act 2007.  Royal Assent was given on 21 June 2007 and these changes commenced from 1 July 2007.

For this measure, both the Social Security Act 1991 (SSA) and the Veterans' Entitlements Act 1986 (VEA) have been similarly amended.  A summary of the legislative changes to both acts is provided at Attachment A.

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Policy updates

The policy in relation to principal home exemptions has been updated for the discretionary extension and also to clarify the exemption arrangements.

The main changes are in these topics:

Minor changes have also been made to the following topics:

Businessline issued

A Businessline was issued to staff on 24 July 2007 providing further details of this measure, including the systems and procedural changes.  The TRIM reference is 0769708E.

Note: The above link will not work for external users. For internal users, if the link doesn't appear to be working make sure you have your Internet browser open before clicking the link.

Affected cases

The discretionary extension is intended to benefit pensioners with new and existing home proceeds exemptions, whether from sale of home or a lost/damaged home.  It is not intended to grant the extension at commencement of the exemption.  The extension is for those whose 12 months exemption will soon expire, but who are experiencing delays beyond their control in acquiring a home, or having essential home repairs completed.

Additionally, pensioners whose home proceeds exemption had already expired, but it is not yet 24 months since commencement of the exemption, may apply for their remaining extension period, available from 1 July 2007.

Contact officer

For any questions regarding this instruction please contact Cheryl Oliver in Income Support and Aged Care Policy on (02) 6289 6001.

S.Kennedy for

Jeanette Ricketts

National Manager

Income Support and Aged Care Policy

15 August 2007


Attachment A

VEA/SSA Amendments

Description

Amendment

VEA

SSA

Property owner (homeowner) status following sale of principal home

replaced

5L(4)(c)

11(4)(c)

Principal home definitions – temporary absence

reference added

5LA(9)(a)

11A(9)(a)

Principal home lost or damaged – extension determination

new

5LA(9A)

11A(9A)

Rent definitions – ineligible property owner

minor deletion

5N(1)

13(1)

Disregarded assets – insurance or compensation payments for loss or damage to buildings, plant or personal effects – when invested

VEA – no change

SSA – minor change

52(1)(o)

1118(1)(s)

Disregarded assets – insurance or compensation payments for loss or damage – when proceeds converted into land or buildings

new

new

new

new

52(1)(oa)

52(1B)

52(1C)

52(1D)

1118(1)(sa)

1118(1AA)

1118(1AB)

1118(1AC)

Disregarded assets – sale of principal home

new

replaced

new

52(1E)

52(2)

52(2A)

1118(1B)

1118(2)

1118(2B)