Last updated:1 June 2021
VEA ? [2]
This topic provides information on the following:
VEA ? [4]
The value of the net assets of a business run by a sole trader are assessable if the owner or their partner is a pensioner. The amount to be taken into account for assets test purposes is the current market value [3] of the assets, less the 'business' liabilities listed on the financial statements. If the pensioner is involved in primary production activities, section 52CA [5] of the VEA rules apply. This section allows for primary producers to offset total debts against the total assets of the business.
More ? [6]
Each item on the balance sheet must be individually examined and a judgement made about whether the asset value recorded is reasonable. In most cases, the asset value recorded on the balance sheet is accepted, particularly for assets such as:
However, if necessary, the balance sheet must be adjusted and the value of assets owned by the business reassessed to reflect current market value. Using conventional accounting methods, fixed assets are recorded at historical cost, usually the purchase price less depreciation.
More ? [7]
The following table describes the requirements for valuation of real estate belonging to a sole trader.
More ? [8]
If the real estate... | Then... |
is recorded on the balance sheet, | a valuation of the property by a qualified valuation service provider may be necessary. |
is a farm, | a valuation of livestock, plant and equipment, as well as the property itself, excluding the principal home [3] and any exempt land, by a qualified valuation service provider may be necessary. |
includes the pensioner's principal home and up to two hectares [3] of adjacent private land [3], | the assessable value of the real estate is the value of the portion of the principal home and land that is used for commercial purposes. Any land in excess of the two hectares of adjacent land is assessable. A valuation by a qualified valuation service provider may be necessary. |
includes the pensioner's principal home and all land on the same title, More ? [9]
| a valuation by a qualified valuation service provider may be necessary if the property includes titles other than the principal home title. |
An asset means any property, including property outside Australia.
For the purposes of income and assets assessment, a sole trader is a business owned by one person.
The business:
The owner is:
The market value of an asset [3] is the point at which a willing purchaser and a willing, but not anxious vendor, would reach agreement.
The market value of an asset is only decreased by the value of an encumbrance secured against it. The market value of an asset is not reduced by any costs which may be incurred if the asset was to be sold.
The principal home has the meaning given by subsection 5LA(1) [20] of the VEA and subsection 5LA(2) [20] of the VEA. The principal home of a person is generally the place in which they reside. In certain circumstances, however, the principal home of a person can be the place in which they formerly resided. The following property is regarded as part of the principal home.
4.9421 acres.
Private land is land of [glossary:two hectares:DEF/Two Hectares] or less, which is:
Links
[1] https://clik.dva.gov.au/user/login?destination=node/16382%23comment-form
[2] https://clik.dva.gov.au/book/export/html/16382#tgt-cspol_part10_ftn365
[3] https://clik.dva.gov.au/%23
[4] https://clik.dva.gov.au/book/export/html/16382#tgt-cspol_part10_ftn366
[5] https://clik.dva.gov.au/service-eligibility-assistant-updates/all-determinations-order-date-signed-oldest-most-recent/determinations-under-vea
[6] https://clik.dva.gov.au/book/export/html/16382#tgt-cspol_part10_ftn367
[7] https://clik.dva.gov.au/book/export/html/16382#tgt-cspol_part10_ftn368
[8] https://clik.dva.gov.au/book/export/html/16382#tgt-cspol_part10_ftn369
[9] https://clik.dva.gov.au/book/export/html/16382#tgt-cspol_part10_ftn370
[10] https://clik.dva.gov.au/book/export/html/16382#ref-cspol_part10_ftn365
[11] https://clik.dva.gov.au/book/export/html/16382#ref-cspol_part10_ftn366
[12] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/102-assets
[13] https://clik.dva.gov.au/book/export/html/16382#ref-cspol_part10_ftn367
[14] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/102-assets/1022-determining-value-asset
[15] https://clik.dva.gov.au/book/export/html/16382#ref-cspol_part10_ftn368
[16] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/102-assets/1024-assessing-personal-assets-and-investments/assets-value-property-and-real-estate
[17] https://clik.dva.gov.au/book/export/html/16382#ref-cspol_part10_ftn369
[18] https://clik.dva.gov.au/compensation-and-support-policy-library/part-9-principles-determining-pension-rate/92-residential-situation/923-additional-assessment-rules-certain-types-residences/private-land-use-test
[19] https://clik.dva.gov.au/book/export/html/16382#ref-cspol_part10_ftn370
[20] http://clik.dva.gov.au/legislation-library
[21] http://clik.dva.gov.au/node/32981