Editors --- "Assets test: principal home; exempt assets" [2008] SocSecRpr 11; (2008) 10(1) Social Security Reporter, Article 11

• MARTIN and SECRETARY TO THE DFaCSIA
• The issue
• Background
• The law
• Formal decision

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Assets test: principal home; exempt assets

MARTIN and SECRETARY TO THE DFaCSIA

(2007/2051)

Decided: 13th December 2007 by N. Isenberg

The issue

Mr and Mrs Martin claimed Age Pension (AP) on 17 January 2007, and were granted AP. Included in their assets was their farm property held on five titles, located west of Dorrigo and valued, in all, at $800,000. In April 2007 and June 2007 an ARO and the SSAT respectively determined that the rate of AP payable to the Martins should be reduced because of the value of their combined assets. The issue in contention was which of the five pieces of land, that together comprised the applicants ‘farm, should be included in their combined assets for AP purposes.

Background

Although the farm in question occupied five titles, it was agreed that the applicants’ home was situated on only one of those titles, a property of 47.15 ha. One of the other titles was farm property totalling 2.54 ha, and known as the ‘Snows Road Property’. Centrelink contended that only the value of the house and its immediate surrounds (on the one title) should be exempt for AP purposes; the Martins argued that the whole of the value of the farm (including all 5titles) should be exempt from their assets for pension calculations. Some of the land occupied by the farm was very steep and land-locked, and it was conceded that the house itself could not be reached other than via the Snows Road Property.

The law

Under s.1118 of the Social Security Act 1991 (the Act) an applicant’s principal home is exempt from inclusion in the value of combined assets for AP purposes. Under s.11A(1) of the Act land adjacent to a dwelling is also exempt, but only if that land is on the same title document as the home itself. However, under section 11A(2)(c) of the Act:

11A(2)The Secretary may determine that land is to be treated, for the purpose of subparagraph (1)(a)(i), as if it were held on the same title document as other land if any of the following apply:

...

(c) the alienation of one of the blocks of land without the other would seriously undermine the function of the house as a dwelling.

The Tribunal noted that the alienation of the Snows Road property from the property on which the house stood would seriously undermine its function as a dwelling, because there was no other means of access to the house.

The Tribunal accepted the Australian Valuation Office value for the property as a whole ($800,000).Applying the AVO per hectare valuation the Tribunal determined that the value of the property on which the applicants’ principal home stood, together with the Snow’s Road property, was $480,035 in total. The Tribunal determined that both the applicants’ principal home and the Snows Road Property should be exempt from inclusion in the value of combined assets for AP purposes.

Formal decision

The Tribunal set aside the decision under review and remitted the matter to Centrelink for recalculation of the applicants’ AP entitlements.

[P.A.S.]