Minister's power to exempt investments from deeming
Under the VEA, the Minister for Veterans' Affairs is the only person with the power to exempt:
- specified financial investments, or
- a specified class of financial investments,
from the deeming provisions. Requests for exemption should be forwarded to the Investment Data Base Unit in Sydney, and recommendations are then made to the Minister.
Income and assets test assessment
If the Minister grants an exemption, any return produced by the financial investment is assessed, even if the rate of return is greater than the applicable deeming rates. The asset value of a financial investment exempted from the deemed income rules will continue to be assessed under the assets test.
General exemption guidelines - for failed financial investments
In keeping with the policy intent of deeming, exemptions are granted only if the:
- specified financial investments (or a class of financial investments) are not operating to provide returns, and
- investors have no access at all to their investment capital (including cases where the investors have commenced all reasonable action to obtain access to the investment and the investment is currently inaccessible), and
- cessation of returns and the inaccessibility of capital has been caused by either:
- a legal impediment imposed by a third party (other than the investor or the fund manager); or
- conditions not reasonably foreseeable when the investor obtained the investment (i.e. adverse economic conditions such as the 1987 share market crash or the 1990/91 property downturn).
Insufficient grounds for exempting financial investments
The poor performance of an accessible investment is insufficient grounds for exemption from the deemed income rules. If there are alternative options such as redemption and reinvestment of funds, exemptions will not be granted.
The Deeming Exemptions Register
The Deeming Exemptions Register contains details of all exemptions. The register also contains information on the asset value to be used for investments with companies and financial institutions in financial difficulty.