Last amended: 10 October 2007
Unrealisable assets, including farms, are deemed to produce a notional income, except where special provisions apply.
Where the unrealisable asset is a farm being worked to its full capacity solely by the pensioner or their partner, notional income is not assessed. In this situation, only the actual income derived from the property is taken into account.
Special provisions apply if the farm is being worked by a family member. In this case, the notional ordinary income for a person's farm that is an unrealisable asset is the lower of:
Reasonable rent is defined by the following formula:
Reasonable rent = (Income – FTB free area) ? 2
Example: A pensioner's son and his partner are sole occupants of the farm. The annual net farm income is $32,000. The partner's annual salary is $12,000. Therefore their total income is $44,000. The maximum family income free area for 2007 is $41,318. Reasonable rent is $1,341 calculated as ($44,000 - $41,318) ? 2
The farm is valued at $240,000. Therefore 2.5% of $240,000 = $6,000
The commercial lease value of the farm is $8,000 per annum.
Reasonable rent is $1,341
Therefore notional income for the property is $1,341
The net value of a farm is the value of :
The value of the farm includes improvements, livestock, plant and machinery.
The farm value does not include the value of a person's:
When the farm is not operated by a pensioner, their partner or a family member, reasonable rent does not need to be calculated. In this case, the notional income for the farm is the lower of:
For non-farming properties, the commercial lease value of an asset [2] is the value that can reasonably be obtained by using the asset. Generally this is the asset's market rental value.
For farming properties, the commercial lease value is assessed by the AVO [2]. Reassessment may be requested if the valuation does not sufficiently take into account any of the following:
Note: If the asset does not have commercial lease value then notional income for the asset cannot be assessed.
Links
[1] https://clik.dva.gov.au/user/login?destination=node/16838%23comment-form
[2] https://clik.dva.gov.au/%23