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Thursday, 30 June 1994
Page: 2416

Senator CHAMARETTE (12.06 p.m.) —I move:

5.Clause 18, page 51, paragraph (c), lines 5 to 8, omit proposed subsection 1074E(6), substitute the following subsection:

"(6)If the investment product is held by a person during a part of a period of 12 months, the performance of the product during that part is taken to be the performance of the product with respect to that person for the whole 12 months.".

The aim of this amendment is to overcome a situation drawn to my attention earlier this year when a constituent who had held a parcel of shares for six months and then sold them found that the Social Security Act provided a mechanism whereby the value of those shares was calculated by the department over a 20-month period, thereby grossly inflating the assessed income in relation to the shares. I note that this bill proposes that where an investment product, be it a fund or shares,

comes on the market at some point during a financial year and the pensioner is a holder of the product for part of the year, then the assessed income will be based only on the period the product was available.

  This is, of course, an advance on the previous position where the performance of the product would have been extrapolated for the 12-month period. However, why should this change apply only to new products? Why should pensioners not be able to hold a parcel of shares in BHP, Coles-Myer or whatever, for part of a year, be able to demonstrate an actual capital gain for the period of ownership and have that gain used as the basis for assessing their income for social security purposes? That is the purpose of this amendment—to do away with the iniquitous situation where illusory gains can be treated as actual when the investor is a pensioner.