Older rural homeowners questions and answers 

Concessional asset treatment for older Australians who reside in rural and rural residential areas

  1. Title document


    Q. Does a limit exist on the size or dollar value of land that can be held on the same title document?

    A. No. The whole area of land adjacent to the dwelling house on one title document, regardless of its size or dollar value, can be excluded from the assets test (provided other criteria have been met). This is in line with current policy where a person's principal home located on a city residential block is exempt from the assets test regardless of its value.

    Q. Can more than one title be excluded from the assets test if the home and adjacent land is on one title and an extended garden is on the other title?

    A. No. Only adjacent land on the same title document as the principal home will be excluded from the assets test (provided other criteria have been met). The area of land on the other title with the extended garden will be assessed under the assets test.

    Q. Are there any circumstances where land held on more than one title could be considered as if held on one title document?

    A. Yes, this can occur in three circumstances, where:
    • the house is located on both blocks of land, or
    • the alienation of one of the blocks of land without the other will seriously undermine the function of the house as a dwelling, or
    • both blocks taken together are protected under a law of the Commonwealth, state or territory because of its natural, historic or Indigenous heritage.

    Q. Can two titles be amalgamated to get the maximum advantage from the concession?

    A. The amalgamation of titles is a factor that will be considered when determining if a pensioner is effectively using the land. In cases where amalgamation of titles has occurred, the date of the amalgamation, and the affect the amalgamation has on the land to produce an income or support the person will be taken into consideration.

    If the amalgamation occurred after the budget announcement on 8 May 2006, then generally the pensioner will not be entitled to the concession. However, if the amalgamation improves the pensioner's ability to support themselves, (i.e. generate more income) then they will satisfy the effective land use test (provided other relevant criteria are met).

    If the amalgamation occurred prior to the budget announcement on 8 May 2006, the pensioner will satisfy the effective land use test (provided other relevant criteria are met).

    If the person fails the effective land use test, due to an amalgamation of titles, they will be ineligible for the concession. They may be entitled to have up to two hectares adjacent to their home exempt from the assets test under the private land use test.

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  2. One-title Grandfathering Provision


    Q. What happens if, prior to 1 January 2007, a person had land exempt on more than one title adjacent to their home?

    A. The person will continue to have the two hectares on more than one title exempt from the assets test, providing the land on the other title is used primarily for private or domestic purposes.

    If the person ceases to receive an income support payment then the grandfathering provision will not apply. That is, if the person goes back on income support then the person will only have the area of land adjacent to the principal home on one title document exempt from the assets test.

    If the person moves permanently from the principal home they will lose the benefit of the grandfathering provision.

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  3. Private land use test


    Q. Does the 'Private land use test' change existing rules for land two hectares and under?

    A. No. The private land use test will be the same as the existing rules relating to domestic and private use, and will apply to areas of land two hectares and under. The only change is that the legislation specifies that the area of land adjacent to the home must be held on one title document.

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  4. Extended land use test


    Age Pension, Carer Payment, and Service Pensioner eligibility

    Q. Is a pensioner who is of age pension age receiving another income support payment, such as Disability Support Pension (DSP), eligible for the concession?

    A. No. To be eligible pensioners must qualify and be payable for the Age Pension, Carer Payment or the Service Pension. A pensioner receiving DSP may choose to receive Age Pension instead of DSP to take advantage of the concession. The pensioner should discuss with Centrelink the advantages and disadvantages of transferring to the Age Pension.

    Q. Is a qualifying pensioner's partner, who is not age pension age, eligible for the concession?

    A. Yes, providing the partner is living in the principal home and satisfies that they are effectively using the land.

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  5. Long-term attachment


    Q. Is the 20-year attachment to land and principal home satisfied if the pensioner has lived in the old farmhouse for 15 years and built a new house on the property five years ago (maybe on adjoining titles) that they currently live in?

    A. Provided the pensioner owns and has lived on the property for 20 years and both houses taken together have been the pensioner's principal home for 20 years, the 20-year continuous attachment will be satisfied. The pensioner's current place of residence and adjacent land on the same title document may be exempt from the assets test (subject to other criteria being met).

    Q. If only the pensioner's partner has the 20-year attachment to land and principal home is the couple entitled to the concession?

    A. No. The pensioner must be the person who has the 20-year continuous attachment to the land and principal home.

    Q. Is the 20-year attachment to land met if the pensioner has owned the land for 20 years but has only lived in the house on the land as their principal home for 10 years?

    A. No. The pensioner is required to own and have lived in the house on the land as the principal home continuously for 20 years.

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  6. Effective use of land


    Q. What will be taken into consideration when determining if a pensioner is making effective use of the land?

    A. A number of factors, including the commercial potential of the land, and personal circumstances such as health and family situation will be taken into consideration when determining if a pensioner is making effective use of the land.

    Pensioners will be encouraged to make effective use of productive land to generate an income. The pensioner's capacity to use the land, or arrange for someone else to use the land, to generate an income will be taken into consideration when determining if the pensioner is making effective use of the land. Any income passed to the pensioner from the commercial use of the land will be assessed under the income test in the usual way.

    Q. If a pensioner has retired and a close family member is working the land will the pensioner satisfy the effective land use test?

    A. Yes. A close family member working the land to its potential is considered to be an effective use of the land. Any income going to the close family member will not be assessed as being received by the pensioner.

    Q. What is a close family member?

    A definition of a close family member includes the partner of the relevant person, or a parent of the relevant person, or a sibling of the relevant person, or a child of the relevant person. It also includes a child of a family member of the person.

    The decision maker may also determine that a person be treated as if they were a close family member. This may cover situations such as stepchildren or foster children.

    Q. If a pensioner chooses to work the land, will their capacity to do so be taken into consideration in determining if the effective land use test is satisfied?

    A. Yes, the capacity of the pensioner to work the land will be taken into consideration. If the pensioner is making a reasonable effort to work the land but is slowing down and has been making less income over the last few years then the effective land use test will be satisfied.

    If the pensioner is making limited use of the land by themselves then the pensioner's capacity to arrange for someone else to lease the land will be taken into consideration in determining if the effective land use test is satisfied.

    Q. Is a pensioner caring for a family member required to satisfy the effective land use requirement?

    A. Yes, a pensioner caring for a family member is still required to take action, such as making arrangements for the land to be leased, to ensure productive land is used to generate an income. The capacity of the pensioner to do this will be taken into consideration in making the decision.

    Q. If the only potential of the land to generate an income is to subdivide will the pensioner be required to subdivide to satisfy the effective land use test?

    A. In rural farming areas the pensioner will not be required to subdivide to satisfy the effective land use test.

    Generally, in rural residential areas the pensioner will not be required to subdivide to satisfy the effective land use test. However if, for example, the size of the block is large for the area, market interest is high, subdivision is encouraged by local government regulations, and residential development is the only commercial use of the land then the pensioner may be required to subdivide. The pensioner's capacity to do this will also be taken into consideration.

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  7. Company structure


    Q. Is a pensioner who controls the private company that owns the farm they have lived on for more than 20 years eligible for the concession?

    A. Yes, if the farmland is being worked to its potential by the farming business the effective use of land test will be satisfied. If the pensioner's home is legally owned by a business structure that they control, the value of the home and farmland on one title will be exempted from the assets test when assessing their entitlement to Age Pension. The income produced by the farming business will be assessed under the income test. The farm's business assets such as plant and equipment will continue to be assessed under the assets test in the usual way.

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  8. Intergenerational transfer and gifting


    Q. If a pensioner who qualifies for the concessional treatment later gifts their farm on one title to their son who is working their farm to full capacity, can the pensioner still access the concession?

    A. This will depend on the pensioner's individual circumstances, such as the value of the gift and if the pensioner remains living on the farm. If, for example, the pensioner continues living on, and retains a right to reside for life on, the property they will be assessed under special granny flat rules. This means that if the value of the gift is above a certain amount ($139,500 at 1 July 2012) they will be considered a homeowner and will still qualify for the concession.

    The gifting rules relating to farm transfers are complex and pensioners are advised to discuss the implications of gifting with Centrelink prior to making any decisions.

    Q. If a pensioner has transferred ownership of the farm to their son two years ago and is residing in a smaller house the pensioner purchased in town, can they move back to the farm and still access the concession?

    A. No. The pensioner will not gain access to the concession given the farm is owned by the pensioner's son and the pensioner's principal place of residence is not on the farm. The pensioner has not retained a right to reside on the farm for life so they are not assessed under the granny flat rules. Under this situation the pensioner will continue to be subject to the gifting rules for another three years. The concession alone will not alter the treatment of existing deprived assets assessed against a pensioner.

    The gifting rules relating to farm transfers are complex and pensioners are advised to discuss the implications of gifting with Centrelink prior to making any decisions.
Content Updated: 4 February 2013