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Tuesday, 18 June 1996
Page: 1742

(Question No. 7)

Senator Woodley asked the Minister for Social Security, upon notice, on 28 March 1996:

With reference to section 1121 of the Social Security Act 1991 which provides, in part, that where a liability is secured over an asset that is comprised of both an assessable asset and an exempt asset, the liability is to be apportioned and that part of the liability that relates to the exempt asset is not allowed to be deducted from the client's assessable assets; and with reference to the case of Little (1 October 1992) in which the Social Security Appeals Tribunal interpreted section 1121A in such a way as not to apportion a liability that was secured over an asset that was comprised of both an exempt and a non-exempt asset:

(1) How is the department currently administering this provision.

(2) Why has this approach been adopted.

(3) How many people have been assessed under this provision in the most recent 12 months for which figures are available.

Senator Newman —The answer to the honourable senator's question is as follows:

(1) Only assets used in carrying out primary production and the liabilities directly related to carrying out those activities are taken into account. This means that if a person's home is on farmland used for primary production activities, only the farmland is included with other farming assets in the total primary production assets held; if the farm, including the home, is encumbered, only the portion of the liability related to primary production activities is included with other primary production liabilities.

(2) The department did not agree with the Social Security Appeals Tribunal's interpretation of section 1121A in the Little case. Amendments to the legislation were contemplated to put the matter beyond doubt but they were not pursued because of legal advice that the existing legislation was clear, and that the department's administration of the provision was correct.

(3) The department does not maintain statistics on the number of assessments under section 1121A.