Rural customers and primary producers

Some rural properties and farms have more than one title or larger blocks than residential properties. The asset test rules are different for these properties.

Assets test for rural customers

We assess all asset types as part of the assets test. How much we can pay you depends on the value of your assets.

If you operate a business from your home or it is larger than 2 hectares, part or all of your home is assessed differently. We do this using either the extended land use test or the private land use test.

What the extended land use test is

The extended land use test may exempt your whole property from the assets test if all the following apply:

  • your principal home and surrounding land is greater than 2 hectares and on the one title
  • you have reached Age Pension age
  • you get or are eligible for Age Pension or Carer Payment
  • the house on the property has been your principal home for 20 years or more.

To meet this test you need to make use of the land to generate an income based on your capacity to do so. This could mean either:

  • you or a family member run a farming business on the land
  • you lease the land to someone else for a commercial rate of return.

You may also meet the test if you have little or no scope to earn income from the land.

How to apply for the extended land use test

When applying for the extended land use test, we consider all the following:

  • where the land is
  • your family situation, for example caring responsibilities
  • your health
  • if any of your family have their own house on the land
  • if you use the land to support a family member or a child of a family member
  • any commercial land use, either current or potential
  • environmental issues that might affect land, like a drought
  • if the land combines 2 or more blocks or titles.

Watch our video to learn more about the extended land use test.

Extended land use test examples

You get an income support payment and run a farming business on your property

Bob is single, gets the Age Pension and owns 30 hectares on a single title. Bob’s lived there all his life and runs it as a dairy farm. As long as Bob keeps working the farm to its potential, the whole property is exempt from the assets test. Bob must tell us about other business assets , such as stock and sheds as these will be included in Bob’s assets test.

You get an income support payment and earn no income

Betty and Jim both get the Age Pension and moved to their 5 hectare, single title rural block 21 years ago. The block is scrubby, with no water. There’s not much scope to earn income from it and the council won’t let them subdivide it. This means the whole property is exempt from their assets test.

You get an income support payment and your family runs a farming business on your property

Jenny is 85 and gets the Age Pension. Jenny has lived on the 100 hectare single title farm for the past 40 years. Jenny can’t run the farm on her own. Jenny’s son John and his family live in another house on the land. John earns his living from running the farm. The whole property is exempt from Jenny’s assets test.

Private land use test

If you don’t meet the extended land use test, the private land use test may apply.

We’ll need to check if your principal home and up to the first 2 hectares of land surrounding it can be excluded from the assets test. If your home meets both of the following, it will not be counted as part of your assets:

  • the land is on one title
  • the land is used wholly or partly for private or domestic purposes, that is, not entirely for commercial purposes.

If you use the land primarily for commercial purposes, you don’t meet the private land use test. This means your land is included in the asset test.

Primary production businesses

If an assets main use is for primary production, this will count as a business asset. This applies even if you use the asset for something else. If there is a liability over the asset, we may deduct the part of the liability that relates to your primary production business.

What is a primary production business

We consider you to be a primary production business if you get income directly from any of the following:

  • farming crops or animals
  • fishing or forestry
  • making dairy products from the raw material you produce.

A primary production business can be any of the following:

  • a sole trader
  • a partnership
  • a private trust
  • a private company.

To understand your primary production business assets, we’ll do any of the following:

  • add up all your assets you use to keep it going, like land, equipment and stock
  • add up all your liabilities that relate to it, like unpaid expenses and bank loans
  • count them as one asset and one liability.

If you have excess debt on one primary production asset, we can use it to reduce the assessed value of another.

Forgone wages

If you retire and transfer ownership of the farm to a family member, there’s some things you’ll need to tell us.

If you do this and don’t get a fair price in return, it may be a gift. This means the value of the farm land and other farm assets will still count in your assets test.

We can reduce the value of the gift if the person you transfer the farm to is your close relative. To do this, the person must have made unpaid contributions to the farm that count as forgone wages.

What a forgone wage is

Forgone wages only cover contributions by the farmer’s close relatives aged 15 or older, in any of the following ways:

  • unpaid farm work
  • unpaid care for the farmer
  • improvements to the farm.

We can’t include any time you spent share farming or in a partnership as a forgone wage contribution period.

We consider unpaid work as any of the following:

  • farm record and account keeping
  • farm hand work
  • other tasks that the farm would have had to pay an outside worker to do.

We consider unpaid care as a high level of personal care for at least 12 months, including:

  • cooking and feeding
  • dressing and undressing
  • showering and toileting.

Normal housework and chores don’t count as unpaid care.

If you add improvements to the property, you’ll need to tell us. Improvements may include any of the following:

  • building new fences, dams and sheds
  • planting vines, seeds or trees that produce a crop
  • buying livestock and equipment.

We don’t consider the following to be improvements:

  • increase in market value over time
  • repairs
  • planting trees that don’t crop, such as windbreaks
  • proposed capital expenditure.

When you can claim forgone wages

You can do this if you transfer the farming land to a close relative. This can include any of the following:

  • directly to your close relative
  • from you to their trust
  • from your trust or company to theirs
  • from your trust or company to them.

Forgone wages only apply to the transfer of the farming land, plant, stock and equipment. If you transfer other assets and you don’t get a fair value, gifting rules apply.

How to provide foregone wage evidence

When you claim forgone wages you’ll need to give evidence to show all the following:

  • you’ve transferred ownership of the farm, or control of the trust or company that owns the farm, to a close relative
  • your relative worked for the farm for little or no wages
  • your relative’s work helped you as the farm’s owner, or the controller of the trust or company that owned it.

To support your foregone wages claim, we’ll need evidence to tell us the following:

  • details of all the times when the new owner did unpaid work or provided unpaid care
  • details of the value of any improvements contributed
  • documents to support this, such as tax returns and receipts
  • details of the business structure through which you operated the property over the years.

We may also ask the new owner for a statement about their forgone wages.

How we value unpaid work

To get a figure for the value of unpaid work we use the following method:

  • work out a wage from Australian Bureau of Statistics average weekly earnings figures
  • subtract 20% of wages over $10,000 to represent the tax that may have been payable
  • subtract 10% of annual wages this includes benefits such as board, lodging, meals or use of vehicles.

To get the underpaid work figure we subtract what the farm paid from the normal wage. For example, if the farm paid 75% of the award wage, the extra 25% is forgone wages.

How we value unpaid care

We use the cost of paying a local provider for the same level of care. This could be any of the following:

  • a home help service
  • a care at home service
  • a food service.
Page last updated: 25 June 2024.
QC 27571