Assessable Assets

Providing a list of assessable assets may not be as useful as you might hope. It is not that the list of assessable assets is difficult to provide. In fact, the Social Security Act includes a list which I have added at the end of this article. It is knowing what value to declare on each assessable asset that can be the challenge.

While each item on the list requires some explanation around value, in this article I am just going to focus on personal effects and household contents as well as vehicles, boats, caravans and the likes.

Personal effects and household contents

Without providing further information, Centrelink advise it is the market value of the assets that you should declare. A FIS officer once explained market value to me as the price you would get for your items if you were to hold a garage sale. He very specifically advised me it is not fire sale price (too low) and most definitely not the insured value (to high).

It is worth mentioning at this point that I have had a client list her assets at $2,000 and Centrelink did challenge this amount. After a discussion, they accepted the value.

I was once told that Centrelink will accept that a pensioner’s personal effects and household contents have a market value of $10,000 in most cases. This does not remove the requirement to declare the value of personal effects and household contents, however, and there are situations where the value would exceed $10,000.

This is likely to occur where you have a collection of artworks, valuable coins, or rare gems for example. A collection is part of your personal effects and so the value would need to be included in the amount you declare for personal effects and home contents. It would be difficult to argue that your personal effects are valued at $10,000 when you have a collection of artworks (for example) that you purchased for more than this amount.

Vehicles, caravans, boats and other toys!

As for the value of vehicles, again it is the market value. It is my understanding that Centrelink use redbook.com.au or carsales.com.au as a reference if they want to check if the value you have nominated for your vehicle is reasonable. I suggest to my clients to use the same method to decide on the value that they declare.

And then there are boats, waterskis, caravans etc. I have never had a client challenged on the value they have nominated but then again, I have always encouraged clients to use their best (conservative) estimate of market value.

And what else do you need to declare?

The following is the list of assessable assets taken directly from the Guide to Social Security Law:

The Act definition uses the term 'property'.

"Property includes:

• Personal effects and household contents such as:

  • clothing,

  • jewelry,

  • hobby collections,

  • furniture,

  • paintings and works of art,

  • soft furnishings, and

  • electrical appliances other than fixtures such as stoves and built in items,

• Motor vehicles, caravans and boats,

• Real estate including holiday homes,

• Businesses and farms,

• Surrender value of life insurance policies,

• Asset tested income stream products,

• Financial investments including:

  • cash,

  • bank, building society and credit union accounts,

  • term deposits,

  • bonds and debentures,

  • managed investments,

  • listed shares and securities,

  • loans to family trusts, family members or organisations,

  • amounts disposed of without adequate financial return,

  • gifts above $10,000 per pension year (pre 1 July 2002),

  • gifts above $10,000 in a single financial year, or gifts exceeding $30,000 over a 5 financial year rolling period (on or after 1 July 2002),

  • bullion,

  • investments in superannuation funds, approved deposit funds and deferred annuities after age pension age, and

• Entry Contributions to retirement villages if less than the extra allowable amount at time of entry.

What does this all mean for me?

Please be aware that this is just a snapshot of the information available on this subject and you should not make any decisions based on this article without seeking further advice about your individual circumstances.

Run your eye over the list and make sure you have declared all of your assessable assets. Just as importantly make sure that you have not valued your assessable assets to generously. Remember garage sale value but not fire sale value.