The Deprivation Formula

Last amended: Application of the deprivation formula

The deprivation formula is used in certain circumstances to calculate what amount can be considered reasonable as an [glossary:entry contribution:426] to a [glossary:granny flat:52] or to assess the value of the right to accommodation for sale leaseback residences. The [glossary:Reasonableness Test:368] determines whether or not this formula is applicable.    

The Income Test

Income for the income test

In applying the income test, a person's gross ordinary/adjusted income whether from within or outside Australia, less any permissible reductions in respect of business income, is taken into account. If the person is a member of a couple, half of the combined income of the couple is taken into account, regardless of which member of the couple actually receives the income.     

9.6.5 Deprivation of Assets - Effect on Income

Effect of assets disposal on an income tested pensioner

Deprivation provisions apply to a pensioner who is assessed under the [glossary:income test:288] and [glossary:assets test:599]. The value of a disposed asset must be recorded, even if it has no effect on the pensioner's current entitlement. It may be necessary to obtain a valuation for the disposed asset from the Australian Valuation Office.

The value of several disposed assets may cause a pensioner's income support pension to be assets tested. The deemed income may cause an effect under the income test.