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Family and Community Services and Veterans' Affairs Legislation Amendment (Sugar Reform) Bill 2004
Schedule 1 Amendment of the Social Security Act 1991

   

Social Security Act 1991

1  Reader’s Guide (eighth dot-point under the heading “4. The other Chapters deal with general topics.”)

Omit “Part 3.14A”, substitute “Parts 3.14A and 3.14B”.

2  After subsection 12A(2A)

Insert:

          (2B)  Subsection (2) does not apply:

                     (a)  to a person to whom Part 3.14B applies because the person has transferred his or her eligible interest in a sugarcane farm in accordance with paragraph 1185R(1)(a) or (2)(a); or

                     (b)  if the person’s partner has transferred by way of gift:

                              (i)  to an eligible descendant of the person; or

                             (ii)  jointly to an eligible descendant of the person and to the descendant’s partner;

                            his or her eligible interest in a sugarcane farm—to the person’s partner;

if the person or the person’s partner (as the case may be), on so transferring his or her eligible interest in the farm, has retained a life interest in the dwelling house on the farm, and in the adjacent private land, that constitute his or her principal home.

3  After section 17A

Insert:

17B   Retirement assistance for sugarcane farmers definitions

             (1)  In this Act, unless the contrary intention appears:

eligible former partner of a qualifying sugarcane farmer has the meaning given by subsection (2).

eligible interest has the meaning given by subsections (5) and (6).

qualifying sugarcane farmer has the meaning given by subsections (3) and (4).

RASF closing day has the meaning given by section 1185N.

RASF commencement day has the meaning given by section 1185N.

relevant sugarcane farm asset means any relevant farm asset that is a produce of, or is used for the purposes of, a sugarcane farm enterprise.

Note:          For relevant farm asset see subsection 17A(1).

sugarcane farm means a farm that is used predominantly for the purposes of a sugarcane farm enterprise.

Note:          For farm see subsection 17A(1).

sugarcane farm enterprise means a farm enterprise where:

                     (a)  a majority of the enterprise is undertaken for the purposes of growing commercial quantities of sugar cane; or

                     (b)  if paragraph (a) does not apply—a significant proportion of the enterprise is undertaken for the purposes of growing commercial quantities of sugar cane and the Secretary has determined, in accordance with any guidelines made by the Secretary for the purposes of this paragraph, that there are special circumstances that mean that the farm enterprise should be treated as an enterprise to which paragraph (a) applies.

Note:          For farm enterprise see subsection 17A(1).

total net value has the meaning given by section 1185S.

transfer :

                     (a)  in relation to an eligible interest in a sugarcane farm—has the meaning given by subsections (7), (8), (10), (11) and (12); or

                     (b)  in relation to an eligible interest in a relevant sugarcane farm asset—has the meaning given by subsections (9), (11) and (12).

Note:          Subsection 17A(1) also contains other definitions relevant to the operation of Part 3.14B.

             (2)  A person is an eligible former partner of a qualifying sugarcane farmer if:

                     (a)  the person was, but no longer is (whether because of death or any other reason), the partner of another person; and

                     (b)  on the day on which the person ceased to be the partner of the other person, the other person was a qualifying sugarcane farmer; and

                     (c)  after ceasing to be the partner of the other person, the person has not again become a member of a couple; and

                     (d)  the person has an eligible interest in a sugarcane farm or sugarcane farms in which the other person had an eligible interest.

Note:          For eligible interest see subsection (5).

             (3)  A person is a qualifying sugarcane farmer if:

                     (a)  the person has, has not ceased to have, and has continuously had for a period of at least 15 years, an eligible interest in a farm; and

                     (b)  the farm is a sugarcane farm and has been a sugarcane farm:

                              (i)  for at least the last 2 years; and

                             (ii)  at all times since 29 April 2004; and

                     (c)  during a period of 15 years, the person or the person’s partner:

                              (i)  has contributed a significant part of his or her labour and capital to the development of a farm or farms; and

                             (ii)  has derived a significant part of his or her income from that farm or those farms; and

                     (d)  during at least the last 2 years:

                              (i)  that contribution of labour and capital has been to the development of a sugarcane farm or sugarcane farms; and

                             (ii)  that derivation of income has been from that sugarcane farm or those sugarcane farms.

Note:          For eligible interest see subsection (5).

             (4)  A person is also a qualifying sugarcane farmer if:

                     (a)  the person has an eligible interest in one or more than one sugarcane farm; and

                     (b)  the eligible interest in the farm, or each of the farms, was acquired by the person before 29 April 2004; and

                     (c)  the person or the person’s partner or former partner has been involved in farming in Australia for a continuous period of 20 years, or for periods that together add up to 20 years, by:

                              (i)  contributing a significant part of his or her labour to farm enterprises; and

                             (ii)  deriving a significant part of his or her income from farm enterprises; and

                     (d)  during at least the last 2 years:

                              (i)  that contribution of labour has been to sugarcane farm enterprises; and

                             (ii)  that derivation of income has been from sugarcane farm enterprises.

Note:          For eligible interest see subsection (5).

             (5)  A person has an eligible interest in a sugarcane farm if:

                     (a)  the person has a legal estate or interest in the farm; or

                     (b)  the person has a transferable legal right or a transferable licence to occupy the farm for a particular purpose of the farm enterprise; or

                     (c)  as the mortgagor of a legal estate or interest in the farm (being an estate or interest that is not registered under a relevant State land law), the person has an equitable estate or interest in the farm; or

                     (d)  the person is a shareholder in a proprietary company that has a legal estate or interest in the farm; or

                     (e)  the value of the person’s assets includes an amount calculated (in accordance with section 1208E) by reference to the value of the farm.

Note:          The eligible interest in a sugarcane farm that is relevant for the operation of Part 3.14B is the interest held by a person immediately before that interest is transferred to an eligible descendant. So, for example, to find out whether an interest is covered by paragraph (e), the provisions of Part 3.18 must be applied in relation to the person’s circumstances as they were immediately before the transfer.

             (6)  A person has an eligible interest in a relevant sugarcane farm asset if:

                     (a)  the person has a legal interest in the relevant farm asset; or

                     (b)  the person is a shareholder in a proprietary company that has a legal estate or interest in the relevant farm asset; or

                     (c)  the value of the person’s assets includes an amount calculated (in accordance with section 1208E) by reference to the value of the relevant farm asset.

Note:          The eligible interest in a relevant sugarcane farm asset that is relevant for the operation of Part 3.14B is the interest held by a person immediately before that interest is transferred to an eligible descendant. So, for example, to find out whether an interest is covered by paragraph (c), the provisions of Part 3.18 must be applied in relation to the person’s circumstances as they were immediately before the transfer.

             (7)  Subject to subsections (8), (10), (11) and (12), an eligible interest that a person has in a sugarcane farm is transferred to another person if, and only if, the eligible interest:

                     (a)  ceases to be vested in the person; and

                     (b)  becomes vested in the other person.

             (8)  To avoid any doubt, it is stated that if a person who transfers a legal estate or interest in a sugarcane farm to another person is, under a relevant State land law, registered as being the proprietor (whether that word or any other word is used) of that estate or interest, the legal estate or interest in the farm is taken not to have become vested in the other person unless and until the transfer is registered in accordance with that law.

Note:          For relevant State land law see subsection 17A(1).

             (9)  Subject to subsections (11) and (12), an eligible interest that a person has in a relevant sugarcane farm asset is transferred to another person if, and only if, the eligible interest:

                     (a)  ceases to be vested in the person; and

                     (b)  becomes vested in the other person.

           (10)  If, as the mortgagor of a legal estate or interest in a sugarcane farm (see paragraph (5)(c)), a person has an eligible interest in the farm, the person is taken to have transferred that eligible interest in the farm to another person only if the person:

                     (a)  has, under a relevant State land law, become registered as the proprietor (whether that word or any other word is used) of the legal estate or interest in the farm; and

                     (b)  has then transferred that legal estate or interest to the other person.

           (11)  If a person has an eligible interest in a sugarcane farm or a relevant sugarcane farm asset because (see paragraphs (5)(d) and (6)(b)) the person is a shareholder in a proprietary company that has a legal estate or interest in the farm, or a legal interest in the relevant farm asset (as the case may be), the person is taken to have transferred to another person his or her eligible interest in the farm or relevant farm asset only if the person:

                     (a)  has acquired the company’s legal estate or interest in the farm or the company’s legal interest in the relevant farm asset; and

                     (b)  has then transferred it to the other person.

           (12)  An eligible interest that a person (the first person ) has in a sugarcane farm or a relevant sugarcane farm asset because (see paragraphs (5)(e) and (6)(c)) the value of the first person’s assets includes an amount calculated (in accordance with section 1208E) by reference to the value of the farm or relevant farm asset is transferred to another person if:

                     (a)  the first person is divested of that eligible interest; and

                     (b)  as a result, the other person gains an eligible interest in the farm or relevant farm asset of a value that is referrable to the full value of the eligible interest divested.

           (13)  To avoid doubt, if:

                     (a)  a person is able to transfer an eligible interest under either subsection (11) or (12); and

                     (b)  the person transfers that interest under subsection (12);

the person is not required to meet the requirements of subsection (11) in relation to the transfer.

4  Section 23 (definition of pension age )

After “Part 3.14A”, insert “or 3.14B”.

5  Subsection 1074(2) (note)

Repeal the note, substitute:

Note:          Different provisions apply when working out a person’s ordinary income from a farm to find whether:

(a)           the person satisfies the farmers’ income test for the purposes of Part 3.14A (see subparagraph 1185K(3)(a)(ii) and paragraph 1185K(3)(c)); or

(b)           the person satisfies the sugarcane farmers’ income test for the purposes of Part 3.14B (see subparagraph 1185Y(3)(a)(ii) and paragraph 1185Y(3)(c)).

6  Subsection 1075(1) (note)

Repeal the note, substitute:

Note:          Different provisions apply when working out a person’s ordinary income from a farm to find whether:

(a)           the person satisfies the farmers’ income test for the purposes of Part 3.14A (see subparagraph 1185K(3)(a)(ii) and paragraph 1185K(3)(c)); or

(b)           the person satisfies the sugarcane farmers’ income test for the purposes of Part 3.14B (see subparagraph 1185Y(3)(a)(ii) and paragraph 1185Y(3)(c)).

7  Subsection 1076(1) (note)

Repeal the note, substitute:

Note:          The whole of Division 1B does not apply when working out a person’s ordinary income to find whether:

(a)           the person satisfies the farmers’ income test for the purposes of Part 3.14A (see paragraphs 1185K(2)(a) and (3)(a)); or

(b)           the person satisfies the sugarcane farmers’ income test for the purposes of Part 3.14B (see paragraphs 1185Y(2)(a) and (3)(a)).

8  Subsection 1077(1) (note)

Repeal the note, substitute:

Note:          The whole of Division 1B does not apply when working out a person’s ordinary income to find whether:

(a)           the person satisfies the farmers’ income test for the purposes of Part 3.14A (see paragraphs 1185K(2)(a) and (3)(a)); or

(b)           the person satisfies the sugarcane farmers’ income test for the purposes of Part 3.14B (see paragraphs 1185Y(2)(a) and (3)(a)).

9  Subsection 1078(1) (note)

Repeal the note, substitute:

Note:          The whole of Division 1B does not apply when working out a person’s ordinary income to find whether:

(a)           the person satisfies the farmers’ income test for the purposes of Part 3.14A (see paragraphs 1185K(2)(a) and (3)(a)); or

(b)           the person satisfies the sugarcane farmers’ income test for the purposes of Part 3.14B (see paragraphs 1185Y(2)(a) and (3)(a)).

10  Subsection 1083(1) (note)

Repeal the note, substitute:

Note:          When working out a person’s ordinary income to find whether the person satisfies the farmers’ income test for the purposes of Part 3.14A or the sugarcane farmers’ income test for the purposes of Part 3.14B, actual returns on financial assets are taken to be ordinary income (see paragraphs 1185K(2)(b) and (3)(b) and 1185Y(2)(b) and (3)(b)).

11  Subsection 1123(1) (note)

Repeal the note, substitute:

Note:          If Part 3.14A or 3.14B applies in relation to the transfer by a person of a qualifying interest or an eligible interest in a farm or relevant farm asset, that transfer and certain transfers by the person’s partner are taken not to be disposal of assets (see sections 1185D and 1185T).

12  After Part 3.14A

Insert:

Part 3.14B Retirement assistance for sugarcane farmers

Division 1 General

1185M   Purpose of Part

                   This Part deals with the transfer of sugarcane farming interests to family members of a younger generation. The purpose of the Part is to provide that, if the conditions set out in the Part are met, the value of any such interests transferred by a qualifying sugarcane farmer, his or her partner, or an eligible former partner of a qualifying sugarcane farmer, will be disregarded in determining:

                     (a)  whether a social security payment is payable; or

                     (b)  at what rate a social security payment is payable.

1185N   RASF commencement and closing days

             (1)  For the purposes of this Part:

                     (a)  the RASF commencement day is the day on which this Part commences; and

                     (b)  the RASF closing day is (subject to any determination under subsection (2)) the day that is 3 years after the RASF commencement day.

             (2)  The Minister may, by written determination, specify a day that is later than the day mentioned in paragraph (1)(b) as the RASF closing day .

             (3)  A determination under subsection (2) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901 .

1185P   Applicable cut-off date

                   In this Part:

applicable cut-off date means:

                     (a)  in relation to a transfer, where:

                              (i)  the transfer was not completed before the RASF closing day; and

                             (ii)  a pre-assessment request in relation to the transfer was lodged with the Department or the Agency within the period of 28 days immediately after the RASF closing day; and

                            (iii)  the Department or Agency responded affirmatively to the request;

                            the first day after the end of the period of 13 weeks beginning on the day on which the Department or Agency responded to the request; and

                     (b)  in relation to any other transfer—the RASF closing day.

1185Q   Pre-assessment request

Pre-assessment request

             (1)  For the purposes of this Part, a pre-assessment request is a written request by a person:

                     (a)  for advice about whether this Part would apply to the person, or to the person’s partner, in the event that a proposed transfer were to take place; and

                     (b)  that sets out sufficient information to enable the advice to be given.

             (2)  For the purposes of subsection (1), a written request does not include a request made by e-mail.

Contact by telephone etc.—timing of request

             (3)  For the purposes of this Part, if:

                     (a)  a person contacted the Department or the Agency:

                              (i)  by telephone; or

                             (ii)  by fax; or

                            (iii)  by e-mail; or

                            (iv)  in person;

                            for advice about whether this Part would apply to the person, or to the person’s partner, in the event that a proposed transfer were to take place; and

                     (b)  the person followed up that contact by lodging a pre-assessment request with the Department or Agency within 21 days after the day on which the person contacted the Department or Agency;

the person is taken to have lodged the pre-assessment request on the day on which the person contacted the Department or Agency.

Affirmative response to pre-assessment request

             (4)  For the purposes of this Part, if a person lodges a pre-assessment request, the Department or the Agency is taken to have responded affirmatively to that request if, and only if, the Secretary, or an officer of the Agency, gives the person a written notice:

                     (a)  that contains advice to the effect that this Part would apply to the person, or to the person’s partner, in the event that the proposed transfer were to take place; and

                     (b)  that specifies the date on which the notice was issued.

Timing of response

             (5)  The Department or the Agency is taken to have responded to a pre-assessment request on the date specified in the notice as the date on which the notice was issued.

1185R   Part to apply to certain transfers of estates in sugarcane farms etc.

             (1)  Subject to subsections (3) and (4), this Part applies to a person if:

                     (a)  at any time after the RASF commencement day but before the applicable cut-off date, the person, being then a qualifying sugarcane farmer, transferred by way of gift to one, or more than one, eligible descendant (either solely to the eligible descendant or jointly to him or her and his or her partner):

                              (i)  his or her eligible interest in the sugarcane farm or sugarcane farms in which he or she had such an interest; and

                             (ii)  all the eligible interests that he or she had in relevant sugarcane farm assets; and

                     (b)  the person, or (if the person is a member of a couple) the person or his or her partner:

                              (i)  has reached pension age; or

                             (ii)  will reach pension age before the RASF closing day; and

                     (c)  the total net value (calculated in accordance with section 1185S) of the sugarcane farm or sugarcane farms, and the relevant sugarcane farm assets, in which the person had eligible interests does not exceed $500,000; and

                     (d)  during the last 3 years before the transfer was completed, the eligible descendant or each of the eligible descendants:

                              (i)  had been actively involved with the sugarcane farm or any of the sugarcane farms; or

                             (ii)  would, in the opinion of the Secretary, have been so involved but for exceptional circumstances beyond his or her control; and

                     (e)  if the person is a member of a couple—the person’s partner does not have an eligible interest in any sugarcane farm or relevant sugarcane farm asset; and

                      (f)  the person satisfies the sugarcane farmers’ income test for the purposes of this Part.

Note 1:       For eligible descendant see subsection 17A(1).

Note 2:       For eligible interest , qualifying sugarcane farmer , relevant sugarcane farm asset , sugarcane farm and transfer , see subsection 17B(1).

Note 3:       For pension age see subsection 23(1).

Note 4:       For actively involved with a sugarcane farm see subsection (5).

Note 5:       For the total net value of a sugarcane farm, or sugarcane farms, and relevant sugarcane farm assets see section 1185S.

Note 6:       For the sugarcane farmers’ income test see section 1185Y.

             (2)  Subject to subsections (3) and (4), this Part also applies to a person if:

                     (a)  at any time after the RASF commencement day but before the applicable cut-off date, the person, being then an eligible former partner of a qualifying sugarcane farmer, transferred by way of gift to one, or more than one, eligible descendant of the farmer (either solely to the eligible descendant or jointly to him or her and his or her partner):

                              (i)  his or her eligible interest in the sugarcane farm or sugarcane farms in which he or she had such an interest; and

                             (ii)  all the eligible interests that he or she had in relevant sugarcane farm assets; and

                     (b)  the person has reached pension age or will reach pension age before the RASF closing day; and

                     (c)  the total net value (calculated in accordance with section 1185S) of the sugarcane farm or sugarcane farms, and the relevant sugarcane farm assets, in which the person had eligible interests does not exceed $500,000; and

                     (d)  during the last 3 years before the transfer was completed, the eligible descendant or each of the eligible descendants:

                              (i)  had been actively involved with the sugarcane farm or any of the sugarcane farms; or

                             (ii)  would, in the opinion of the Secretary, have been so involved but for exceptional circumstances beyond his or her control; and

                     (e)  the person satisfies the sugarcane farmers’ income test for the purposes of this Part.

Note 1:       For eligible descendant see subsection 17A(1).

Note 2:       For eligible former partner of a qualifying sugarcane farmer , eligible interest , relevant sugarcane farm asset , sugarcane farm and transfer see subsection 17B(1).

Note 3:       For pension age see subsection 23(1).

Note 4:       For actively involved with a sugarcane farm see subsection (5).

Note 5:       For the total net value of a sugarcane farm, or sugarcane farms, and relevant sugarcane farm assets see section 1185S.

Note 6:       For the sugarcane farmers’ income test see section 1185Y.

             (3)  This Part does not apply to the person if:

                     (a)  immediately before the transfer, the eligible descendant, or one of the eligible descendants, referred to in paragraph (1)(a) or (2)(a) (as the case may be) had an eligible interest in:

                              (i)  the sugarcane farm or one of the sugarcane farms referred to in subparagraph (1)(a)(i) or (2)(a)(i); or

                             (ii)  any relevant sugarcane farm asset; and

                     (b)  the eligible descendant had acquired the eligible interest in the farm, or in the relevant farm asset, after 29 April 2004; and

                     (c)  the consideration, or part of the consideration, for the interest so acquired was the wages forgone by the eligible descendant while he or she was working as an employee on the farm or any of the farms.

Note 1:       For eligible descendant see subsection 17A(1).

Note 2:       For eligible interest , relevant sugarcane farm asset , sugarcane farm and transfer see subsection 17B(1).

             (4)  This Part does not apply to the person (the transferor ) if:

                     (a)  the eligible interest, or any part of the eligible interest, that was transferred is an interest that the transferor had in a sugarcane farm, or sugarcane farms, or any relevant sugarcane farm asset because the value of the transferor’s assets included an amount calculated by reference to the value of the farm, or farms, or relevant farm asset (see paragraphs 17B(5)(e) and (6)(c)); and

                     (b)  immediately after the transfer to the eligible descendant, or eligible descendants, referred to in paragraph (1)(a) or (2)(a) (as the case may be), the eligible interest, or any part of the eligible interest, transferred was held by a trust that was a concessional primary production trust in relation to the transferor.

Note 1:       For eligible descendant see subsection 17A(1).

Note 2:       For eligible interest , relevant sugarcane farm asset and sugarcane farm see subsection 17B(1).

Note 3:       For the transfer of eligible interests that are such interests because of paragraphs 17B(5)(e) and (6)(c) see subsection 17B(12).

Note 4:       For concessional primary production trust see section 1208U.

             (5)  For the purposes of paragraphs (1)(d) and (2)(d), a person is taken to have been actively involved with a sugarcane farm during a particular period if, during that period, the person:

                     (a)  has contributed a significant part of his or her labour to the development of the sugarcane farm; or

                     (b)  has undertaken educational studies or training in a field that, in the opinion of the Secretary, is relevant to the development or management of the sugarcane farm enterprise.

1185S   How to assess the total net value of sugarcane farms etc. subject to a transfer

Meaning of total net value

             (1)  For the purposes of subsections 1185R(1) and (2), the total net value of a sugarcane farm, or sugarcane farms, and relevant sugarcane farm assets, the eligible interests in which have been transferred, is to be calculated as follows:

where:

market value of sugarcane farm assets means the total of the market values of the sugarcane farm, or sugarcane farms, and relevant sugarcane farm assets immediately before the transfer of the eligible interests.

sugarcane farm debts means the total of any amounts of money that:

                     (a)  had been borrowed for the purposes of undertaking one or more sugarcane farm enterprises on the sugarcane farm or sugarcane farms; and

                     (b)  had not been repaid before the transfer of the eligible interests.

Note:          The total net value of a sugarcane farm, or sugarcane farms, and relevant sugarcane farm assets is not affected by the number of persons who have interests in them.

             (2)  Subsection (1) has effect subject to subsections (3), (4) and (5).

Value of farm reduced by value of transferee’s interest

             (3)  If:

                     (a)  a person transfers eligible interests that the person has in a sugarcane farm, or sugarcane farms, and relevant sugarcane farm assets; and

                     (b)  immediately before the transfer by the person of his or her eligible interests in the farm, or farms, and relevant farm assets, the transferee had an eligible interest in the farm, or one of those farms, or a relevant farm asset;

then, the total net value of the farm, or farms, and relevant farm assets is the amount worked out under subsection (1) reduced by the value of the transferee’s eligible interest in the farm or relevant farm asset at that time.

Value of farm affected by previous transaction

             (4)  If:

                     (a)  a person transfers his or her eligible interests in a sugarcane farm, or sugarcane farms, and relevant sugarcane farm assets; and

                     (b)  at any time after 29 April 2004 the person making the transfer entered into a transaction or transactions; and

                     (c)  the result of the transaction or transactions was that the total net value (worked out in accordance with subsection (1)) of the farm, or farms, and relevant farm assets immediately before the transfer is less than the total net value that that farm, or those farms, and relevant farm assets would have had immediately before the transfer if the person had not entered into the transaction or transactions (the unreduced value );

then, the total net value of the farm, or farms, and relevant farm assets is taken to be an amount equal to the unreduced value.

Life interest retained in principal home on farm

             (5)  If:

                     (a)  a person transfers eligible interests that the person has in a farm by way of gift; and

                     (b)  the person retains a freehold estate, a leasehold interest or a life interest in the dwelling-house on the farm, and the adjacent private land, that constitute the person’s principal home;

then:

                     (c)  for the purposes of subsections 1185R(1) and (2), the person is taken to have transferred the whole of his or her eligible interest in the farm by way of gift; and

                     (d)  in assessing the market value of the farm for the purposes of subsection (1), the value of the dwelling-house and the adjacent private land is not to be included.

Note:          For eligible interest, relevant sugarcane farm asset , sugarcane farm and transfer see subsection 17B(1).

Division 2 Modification of provisions relating to assets test

1185T   Transfer of estate in sugarcane farm etc. not disposal of an asset

             (1)  If this Part applies to a person because of subsection 1185R(1), then, subject to subsections (4) and (6):

                     (a)  the transfer by the person of his or her eligible interest in a sugarcane farm or in a relevant sugarcane farm asset is taken not to be a disposal of an asset (within the meaning of section 1123); and

                     (b)  if the person’s partner has also transferred by way of gift to an eligible descendant of the person any eligible interest in a sugarcane farm or in a relevant sugarcane farm asset, that transfer is taken not to be a disposal of an asset (within the meaning of section 1123).

             (2)  If this Part applies to a person because of subsection 1185R(2), then, subject to subsections (5) and (6), the transfer by the person of his or her eligible interest in a sugarcane farm or in a relevant sugarcane farm asset is taken not to be a disposal of an asset (within the meaning of section 1123).

             (3)  To avoid doubt, subsections (1) and (2) have effect despite sections 1208L and 1208M.

             (4)  If:

                     (a)  the applicable cut-off date in relation to the transfer referred to in paragraph (1)(a) was the RASF closing day; and

                     (b)  when the transfer was completed neither the person making the transfer nor his or her partner had reached pension age;

subsection (1) only applies after one of them reaches that age.

             (5)  If:

                     (a)  the applicable cut-off date in relation to the transfer referred to in subsection (2) was the RASF closing day; and

                     (b)  when the transfer was completed the person making the transfer had not reached pension age;

subsection (2) only applies after the person reaches that age.

Note 1:       For eligible descendant see subsection 17A(1).

Note 2:       For eligible interest , RASF closing day , relevant sugarcane farm asset , sugarcane farm and transfer see subsection 17B(1).

Note 3:       For pension age see subsection 23(1).

             (6)  Disregard subsections (1) and (2) when working out a rate for the purposes of Division 6 of Part 2.2A.

Note:          Part 2.2A provides for the payment of a pension bonus to a person who qualifies for an age pension if the person has deferred claiming that pension for a period of at least one year and the person, or the person’s partner, has worked gainfully during that period.

Division 3 Requests for increase in rate of social security payment

1185U   Application

                   This Division applies if:

                     (a)  a person, or a person’s partner, has reached pension age; and

                     (b)  this Part applies because of a transfer of eligible interests by the person or the person’s partner; and

                     (c)  the person is receiving a social security payment under this Act; and

                     (d)  the value of the eligible interests has been included in the value of the person’s assets, or the partner’s assets, when calculating the rate of the person’s social security payment.

1185V   Request for increase

                   If:

                     (a)  the rate at which a social security payment is being, or has been, paid to a person is less than the rate (the increased rate ) at which it would be, or would have been, paid if the value of the eligible interests transferred by the person or the person’s partner had not been included in the value of the person’s assets, or of the partner’s assets, in calculating the rate of the person’s social security payment; and

                     (b)  the person wants the social security payment to be paid at the increased rate;

the person must make a request to that effect.

1185W   Form of request

                   A request under section 1185V must be made in writing and must be in accordance with a form approved by the Secretary.

1185X   Determination of request

             (1)  If:

                     (a)  a person makes a request under section 1185V in respect of a social security payment; and

                     (b)  the Secretary is satisfied that the rate at which the social security payment is being, or has been, paid to the person is less than the rate at which it would be, or would have been, paid if the value of the eligible interests transferred by the person or the person’s partner had not been included in the value of the person’s assets, or the partner’s assets, when calculating the rate of the person’s social security payment;

the Secretary must determine that the request is to be granted.

             (2)  The determination takes effect:

                     (a)  if the person makes the request during the period of 13 weeks that starts on the day on which the transfer was completed—on the day on which the transfer was completed; or

                     (b)  in any other case—on the day on which the request is made.

Division 4 Sugarcane farmers’ income test

1185Y   Does a person satisfy the sugarcane farmers’ income test?

How to work out whether the sugarcane farmers’ income test is satisfied

             (1)  This is how to work out whether a person who has transferred his or her eligible interest in a sugarcane farm or sugarcane farms satisfies the sugarcane farmers’ income test for the purposes of this Part:

Method statement

Step 1.    Work out under subsection (2) the amount of the person’s ordinary income (other than ordinary income from farming) for each of the last 3 financial years before the applicable completion day (the income test years ).

              If the person was a member of a couple on the applicable completion day, work out also under subsection (2) the amount of his or her partner’s ordinary income (other than ordinary income from farming) for the 3 income test years.

              Add up all the amounts so obtained. The result is called the person’s total non-farm income .

Step 2.    Work out under subsection (3) the amount of the person’s ordinary income from farming for each of the 3 income test years.

              If the person was a member of a couple on the applicable completion day, work out also under subsection (3) the amount of his or her partner’s ordinary income from farming for the 3 income test years.

              Add up all the amounts of positive income for both the person and the person’s partner and deduct from that total the amounts of negative income (if any) for both the person and the person’s partner. The result is called the person’s total farm income (which may be either positive or negative).

Step 3.    Work out the person’s total income for the 3 income test years :

               (a)     if the person’s total farm income is a positive amount—by adding that amount to the amount of the person’s total non-farm income; or

               (b)     if the person’s total farm income is a negative amount—by deducting that amount from the amount of the person’s total non-farm income.

Step 4.    Work out under subsection (4) the maximum basic rate for age pension applicable to the person. Multiply that rate by 3. The result is called the person’s maximum basic entitlement .

Step 5.    If the person’s total income for the 3 income test years is less than the person’s maximum basic entitlement, the person satisfies the sugarcane farmers’ income test for the purposes of this Part.

              If the person’s total income for the 3 income test years equals or exceeds the person’s maximum basic entitlement, the person does not satisfy the sugarcane farmers’ income test for the purposes of this Part.

Person’s ordinary income from all sources other than farming

             (2)  For the purpose of working out a person’s ordinary income from all sources other than farming during a financial year, the following provisions have effect:

                     (a)  the provisions of Part 3.10 other than Division 1B apply to the person and so apply as if any reference in Division 1A to a tax year were a reference to that financial year;

                     (b)  any return on a financial asset that the person has actually received during the financial year is taken to be ordinary income of the person.

Person’s ordinary income from farming

             (3)  For the purpose of working out a person’s ordinary income from farming during a financial year, the following provisions have effect:

                     (a)  the provisions of Part 3.10 other than Division 1B apply to the person and so apply as if:

                              (i)  any reference in subsection 1074(1) to a tax year were a reference to that financial year; and

                             (ii)  subsection 1074(2) and section 1075 were omitted;

                     (b)  any return on a financial asset that the person has actually received during the financial year and that relates to a farm or a relevant farm asset is taken to be ordinary income of the person from farming;

                     (c)  if, at the end of the financial year, the value of all trading stock on hand that relates to a farm is less than the value of all such trading stock on hand at the beginning of that financial year—the amount of the difference is to be deducted from that part of the person’s ordinary income from farming for that financial year that is income in the form of profits;

                     (d)  there is also to be deducted from the person’s ordinary income from farming:

                              (i)  losses and outgoings that relate to a business of primary production and are allowable deductions under section 8-1 of the Income Tax Assessment Act 1997 ; and

                             (ii)  deductions for the cost of depreciating assets that are used in a business of primary production and are allowable deductions under Subdivisions 40-A to 40-E (inclusive), or Division 328, of the Income Tax Assessment Act 1997 ; and

                            (iii)  contributions that are allowable deductions under sections 82AAC, 82AAD, 82AADA and 82AAF of the Income Tax Assessment Act 1936 ;

                     (e)  if a negative result is obtained after applying paragraphs (c) and (d)—the person’s ordinary income from farming for the financial year is a negative income;

                      (f)  if paragraph (e) does not apply—the person’s ordinary income from farming for the financial year is a positive income.

Person’s maximum basic rate for age pension

             (4)  For the purposes of Step 4 in the Method statement in subsection (1), the maximum basic rate for age pension applicable to the person is:

                     (a)  if the person was a member of a couple at any time during the 3 years immediately before the applicable completion day—an amount equal to twice the sum of:

                              (i)  the amount that was, on the applicable completion day, the maximum basic rate for a partnered person under Module B of Pension Rate Calculator A in section 1064; and

                             (ii)  the amount that was, on the applicable completion day, the person’s pension supplement worked out under point 1064-BA2; or

                     (b)  if paragraph (a) does not apply—an amount equal to the sum of:

                              (i)  the amount that was, on the applicable completion day, the maximum basic rate for a person who is not a member of a couple under Module B of Pension Rate Calculator A in section 1064; and

                             (ii)  the amount that was, on the applicable completion day, the person’s pension supplement worked out under point 1064-BA2.

Definitions

             (5)  In this section:

applicable completion day , in relation to a transfer, means the earlier of:

                     (a)  the day on which the transfer was completed; and

                     (b)  the RASF closing day.

income , in relation to a person, has the same meaning as in subsection 8(1), except that, in addition to any amount that is not income of the person because of subsection 8(4), (5), (7A) or (8), any payment to the person under:

                     (a)  the Veterans’ Entitlements Act; or

                     (b)  the Farm Household Support Act 1992 ;

is not income of the person for the purposes of this section.

ordinary income from farming , in relation to a person who has an eligible interest in a sugarcane farm or sugarcane farms, means the ordinary income of the person from:

                     (a)  the sugarcane farm, or sugarcane farms, and any relevant sugarcane farm assets; and

                     (b)  any other farm, or farms, or relevant farm assets in which the person has an interest.