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C02/2008 Funeral Bonds - increased exemption limit


DATE OF ISSUE:  29 January 2008

Funeral Bonds – increased exemption limit

Amends DI No.



This Departmental Instruction explains the changes occurring from 1 January 2008 to the means test exemption of funeral bonds.


The means test exemption of funeral bonds was initially set in the early 1990s.  Since then the cost of funerals has increased, but the exemption amount of $5,000 had not changed. Refer to previous DIs B42/90, B46/91 and B19/93.

Summary of the changes

From 1 January 2008, the income and assets test assessment of funeral bonds changed as follows:

  • the funeral bond threshold (means test exemption) increased from $5,000 to $10,000;
  • the funeral bond threshold will be CPI indexed each July (first indexation will be 1/7/2008); and
  • a second exempt funeral bond per person's funeral becomes possible.

Increasing the means test exemption for funeral bonds to $10,000 will help people make better provision for their funeral arrangements without affecting their income support.  The future indexation of this amount will also ensure that the value of this exemption remains in line with general cost increases of funerals.


These changes were announced in the 2007/08 Budget.  An article titled: “Funeral bonds exemption limit increased” was also published in the December 2007 edition of Vetaffairs.

For DVA staff, a Funeral Bonds page has been added to the Income Support Intranet site as a key reference.  A Businessline was issued on 3 January 2008 providing details of this measure, including the planned systems and procedural changes.  The TRIM reference is 08847E.


Legislation for this measure is Schedule 4 of Families, Community Services and Indigenous Affairs Legislation Amendment (Further 2007 Budget Measures) Act 2007.  Royal Assent was given on 28 September 2007 and the changes for Schedule 4 commence from 1 January 2008.

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.

An updated VEA compilation is available in the CLIK Legislation Library.

Policy amendments

Details of the policy changes are available in the CLIK Policy Library under the following topics:

CLIK glossary terms have also been adjusted as follows: exempt asset (amended), funeral bond (amended), funeral bond threshold (new term), prepaid funeral (amended), pre-arranged funeral (deleted).

Information products

You & Your Pension has been reviewed.  Minor changes will be made to Chapter 4 Your Income and Assets.

The following DVA Factsheets have been amended:

Form changes

There are no new forms planned for this measure.

Minor amendments are being made to the booklets: D503/4B About Claiming Service Pension and D529B About Claiming ISS.

System changes – PIPS release Jan 2008

Changes to the Managed Investment screen in PIPS have been incorporated in the quarterly release on 25 January 2008.

The PIPS Managed Investments screen will display two new data entry fields called 'Amount Invested' and 'Current Value'.  These fields will be linked to the new funeral bond assessment rules.

The exemption status and asset value for each funeral bond will be automatically determined by PIPS where a person owns 1 or 2 funeral bonds.

Where a person owns 3 or more funeral bonds, the exemption status and asset value for each funeral bond must be determined manually.  Appropriate messages will be displayed in these cases.


From 1 January 2008, the 'Amount Invested' and the 'Current Value' of the funeral bond must be obtained and recorded in all cases.  Staff have been advised to set aside cases that are affected by the new funeral bond rules until the PIPS changes occur on 25 January 2008 and the new fields are available.

The funeral bonds data collection tips on the Investment Database Unit intranet site have been updated to reflect the new procedures.

Affected cases – January 2008

The funeral bond changes are intended to benefit income support pensioners with new and existing funeral bond investments.  The people most likely to benefit from the doubling of the funeral bond threshold on 1 January 2008 are those who:

  • did not have a funeral bond and invest up to $10,000 in a new funeral bond;
  • already had one exempt funeral bond, purchase another funeral bond and the combined amount invested in both bonds is not more than $10,000;
  • already had a non-exempt funeral bond where the amount invested was more than $5,000 but does not exceed $10,000.

Existing less than maximum rate cases with non-exempt funeral related investments are being reviewed by the Investment Database Unit and other nominated Income Support Service Delivery staff to determine whether or not they will benefit from the funeral bond changes.

Affected cases – annual indexation

The funeral bond threshold will be CPI indexed on 1 July annually and the first indexation will be 1 July 2008.  Affected cases are expected to be those income support pensioners with non-exempt funeral bonds that may become  exempted if the amount invested falls within the increased indexed funeral bond threshold.  The exemption status of any non-exempt funeral bond will be retested against the indexed funeral bond threshold every July.

More information about the planned system changes and procedures for annual indexation will be made available via the funeral bonds data collection tips on the Investment Database Unit intranet site before July 2008.

Contact officers

The contact officer for:

  • policy questions is Cheryl Oliver on (02) 6289 6001;
  • systems questions is Stuart Campbell on (08) 8290 0532;
  • procedural questions is Eddie Bolanac on (02) 9213 7875.

Jeanette Ricketts

National Manager

Income Support and

Aged Care Policy

Peta Stevenson

National Manager

Business Modernisation &


Jill de Vaus

A/g National Manager

Income Support

Service Delivery

29th January 2008

Attachment A

VEA/SSA Amendments





Excluded income amounts


Para 5H(8)(zj) – new note

Para 8(8)(MA) –note adjusted

Exempt funeral investments – definition




Exempt funeral investment – definition

Type A funeral investment – definition

Type B funeral investment – definition




Disregarded assets


Para 52(1)(ja) – new note

ss1118(1) – note 4 adjusted

Indexed and adjusted amounts table

new item

s59A – new item 13B

s1190 – new item 36

CPI indexation table

new item

ss59B(1) – new item 8B

ss1191(1) – new item 26