Malcolm Urquhart's Money Matters

Money Matters

By Malcolm Urquhart
Monday 1st September 2008

Good News for Farming Families

Despite extensive advertising many people including farmers of age pension age still do not realize that they may be eligible for the age pension.

One year ago today Centrelink increased the assets tests for the age pension.

Pensioner homeowner couples can have up to $856,000 in assets and still obtain a part pension. Single homeowner can have up to $540,250 and also get a part pension. For homeowners the value of the home is excluded and home contents for Centrelink purposes for both couples and singles are generally valued at around $10,000.

Non Homeowner couples can have $981,000 in assets and single non home owners can have $664,750 in assets before losing the pension.

From an income test point of view couples combined can earn up to $66,000 per annum and singles can earn up to $39,500 and still receive a part pension.

The full age pension for couples combined is currently $919.40 per fortnight and for singles is $552.60 per fortnight.

In January 2007, the government brought in new legislation for farming families. From 1 January 2007, if your home and adjacent land is larger than 2 hectares and on one title document, the whole property may be exempt from the assets test. To be eligible:

- You must be of Age Pension Age and receive, or qualify to receive, age Pension, Carer Payment or Service Pension.
- You must have had a long term (20 year) continuous attachment to the land and the principle home, and
- You must be making effective use of productive land to generate an income, given your capacity to do so.

The real question for horticulturalists and irrigation farms is what about the water rights? As everyone is aware, the value of water has risen considerably in recent years. Previously Centrelink has taken into account the value of the water as part of the assets tests.

Bill Thompson of Commins Hendriks Solicitors in 2007 made representations through Mrs Kay Hull, Federal Member for Riverina to The Hon Mal Brough MP, regarding the value of water in relation to the assets test exemption. The minister confirmed that if the value of the land has been exempt under the new 2007 concessions then "the water entitlement or allocations will also be exempt from the new assets test".

"If a person's property is on multiple titles, the value of the water entitlement or allocation will be apportioned over the area of the land that has been exempted under the concession, and the area of land that is still being assessed"

In more good news, in a recent case applying for an Income support Payment for a client through Department of Veterans Affairs, who use the Income and Assets Test rules as Centrelink for the calculation of pensions, the department also confirmed that in the conditions described above, the value of the water would continue to be treated the same!

Often the best investment that you can make is to seek advice.

* Malcolm Urquhart is an Authorized Representative of Urquhart Sexton Financial Planning Pty Ltd, Australian Financial Services License No. 303051