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Wednesday, 23 March 2011
Page: 3118

Mr Andrews a the Minister for Families, Housing, Community Services and Indigenous Affairs upon notice, on 23 November 2010.

Has she received advice on granting an exemption to the deeming provision for the Age Pension income test for persons whose investments are currently frozen in a Colonial State Mortgage Income Fund; if so, what was it and what consideration has she given to it.

Ms Macklin (Minister for Families, Housing, Community Services and Indigenous Affairs) —The answer to the honourable member’s question is as follows:

Exemptions from the deeming provisions are considered on a case by case basis in accordance with long standing guidelines first put in place following the introduction of extended deeming in 1996. These guidelines ensure consistent and equitable treatment of all requests for exemptions.

Deeming exemptions are granted when financial investments have fundamentally failed and other criteria have been met. These criteria are that the policy intent of deeming not be compromised by the granting of an exemption, the financial investments (or a class of financial investments) are not operating to provide any returns and investors have no access at all to the investment capital. This includes cases where it is accepted that the investors have commenced all reasonable action to obtain access to the investment and the investment is currently inaccessible.

Colonial First State Mortgage Fund Investments decided to terminate their mortgage fund and return capital to investors. The fund sought a deeming exemption and the request was considered under the guidelines.

In the case of Colonial First State Mortgage Fund Investments, the fund has not failed but is being terminated in accordance with its trust deed and capital is being repaid to investors. As the guidelines were not satisfied, a deeming exemption was not granted.