- Concessional asset treatment for older Australians who reside in rural and rural residential areas
- Changes from 1 January 2007
Concessional asset treatment for older Australians who reside in rural and rural residential areas
Background
The concessional assets test treatment for older Australians in rural and rural residential areas commenced on 1 January 2007. It assists Age Pensioners, Carer Payment recipients of age pension age and qualifying Department of Veterans' Affairs (DVA) Service Pensioners, living on farms and rural residential blocks of more than two hectares.
Prior to 1 January 2007, only the home and adjacent land of up to two hectares was exempt from the assets test even though the land in excess of two hectares may be held on the same title document. The concessional assets test treatment reflects the view of the Australian Government that older Australians on farms and rural residential areas should not be forced to move from their principal home, where they have lived for a long period of time, to gain an adequate retirement income. The concessional assets test treatment does, in certain circumstances, increase the maximum amount of land that can be exempt from the assets test from two hectares to encompass all the land on the same title as the person's principal home.
Changes from 1 January 2007
Two hectares and under
Where the principal home and adjacent land on one title document is two hectares and under the person must satisfy the Private Land Use Test. That is, the land must be used primarily for private and domestic purposes. This exemption is available to all income support recipients.
Land over two hectares
Where the principal home and adjacent land on one title document is over two hectares the concessional assets test treatment may apply. The pensioner must satisfy the Extended Land Use Test, which requires the following criteria to be met. The pensioner must:
- be of age pension age, qualify and be payable for the Age Pension or a Carer Payment; or qualify and be payable for the Department of Veterans' Affairs Service Pension
- have a long-term (20-year) continuous attachment to the land and their principal home, and
- satisfy that they are making effective use of productive land to generate an income, given their capacity.
Long-term (20-year) attachment
The pensioner must currently own the home and be living in the home as their principal place of residence. The long-term (20-year) continuous attachment applies to pensioners who have:
- lived in that principal home for a continuous period of 20 years, or
- lived on the one property (including a property made up of multiple adjoining titles) for a continuous period of 20 years.
The pensioner will still have a continuous attachment to the land if they have had temporary absences for up to 12 months, and if they were absent for up to two years in a care situation.
Effective use of the land
A pensioner can satisfy they are effectively using the land in a number of ways, which include:
- they are working the land to its potential, or
- a close family member is working the land to its potential, or
- the land is being leased to generate an income, or
- the land is not being worked if it has limited potential to generate an income.
A number of factors are taken into consideration when determining if a pensioner is effectively using the land. This includes the capacity of the pensioner to use the land, or arrange for someone else to use the land, to generate an income.
If the pensioner satisfies they are effectively using the land then all the land adjacent to the principal home on the same title document is exempt from the assets test.
Income generated from the effective use of the land
If income generated from the effective use of the land is going directly to the pensioner qualifying for the concession then it is assessed under the income test in the usual way.
If the income generated from the effective use of the land is going to a close family member working the land then the income is not assessed as being received by the pensioner.
Age pensioner's partner
If a pensioner qualifies for the concession, their partner will also gain access to the concession if they live in the home as their principal place of residence and satisfy they are effectively using the land.
The concession continues to apply if the pensioner and their partner cease to be a couple provided the home continues to be the principal place of residence and the land is being used effectively.
How to access the concession
People of age pension age, who have land over two hectares but do not receive a pension, should contact Centrelink to determine if they are eligible to receive a pension as a result of the concession.