Commonwealth Numbered Acts Commonwealth Numbered Acts
1 After subsection 1076(3A)
Insert:
(3B) However, if subsection 1118(2) applies in relation to the person and:
(a) the person has financial assets that are proceeds:
(i) from the sale of the person's principal home; and
(ii) described in paragraph 1118(2)(a) or (c); and
(b) the earlier of the times mentioned in that paragraph has not occurred for the person and the proceeds;
then:
(c) those financial assets are to be disregarded for the purposes of working out the ordinary income the person is taken to receive under subsection (3) or (3A); and
(d) the ordinary income the person is taken to receive per year on those financial assets is the amount worked out by multiplying the value of those financial assets by the below threshold rate.
2 Subsection 1076(4)
Omit "amount calculated under subsection (3) or (3A)", substitute "sum of the amount calculated under subsection (3) or (3A) and the amount (if any) calculated under paragraph (3B)(d)".
3 After subsection 1077(3A)
Insert:
(3B) However, if subsection 1118(2) applies in relation to a member of the couple and:
(a) the couple have financial assets that are proceeds:
(i) from the sale of the principal home of a member of the couple; and
(ii) described in paragraph 1118(2)(a) or (c); and
(b) the earlier of the times mentioned in that paragraph has not occurred for the member of the couple and the proceeds;
then:
(c) those financial assets are to be disregarded for the purposes of working out the ordinary income the couple is taken to receive under subsection (3) or (3A); and
(d) the ordinary income the couple is taken to receive per year on those financial assets is the amount worked out by multiplying the value of those financial assets by the below threshold rate.
4 Subsection 1077(4) (formula)
Repeal the formula, substitute:
5 After subsection 1078(3A)
Insert:
(3B) However, if subsection 1118(2) applies in relation to the person and:
(a) the person has financial assets that are proceeds:
(i) from the sale of the person's principal home; and
(ii) described in paragraph 1118(2)(a) or (c); and
(b) the earlier of the times mentioned in that paragraph has not occurred for the person and the proceeds;
then:
(c) those financial assets are to be disregarded for the purposes of working out the ordinary income the person is taken to receive under subsection (3) or (3A); and
(d) the ordinary income the person is taken to receive per year on those financial assets is the amount worked out by multiplying the value of those financial assets by the below threshold rate.
6 Subsection 1078(4)
Omit "amount calculated under subsection (3) or (3A)", substitute "sum of the amount calculated under subsection (3) or (3A) and the amount (if any) calculated under paragraph (3B)(d)".
7 Paragraph 1118(1B)(c)
Omit "12", substitute "24".
8 Subsection 1118(2B)
Omit "24", substitute "36".
Veterans' Entitlements Act 1986
9 Subsection 46D(3) (example)
Repeal the example, substitute:
Example: How deemed income of a person who is not a member of a couple is worked out per year for the person's financial assets other than financial assets described in subsection (3A) (using rates and deeming thresholds in force on 1 July 2022).
Elaine, a single pensioner, has $164,000 worth of financial assets, made up of $150,000 in proceeds from the sale of Elaine's principal home and $14,000 of other financial assets. Elaine intends to apply $100,000 of the proceeds of sale to purchase another residence that is to be Elaine's principal home. The below threshold rate is 0.25%. The above threshold rate is 2.25%.
The total value of Elaine's financial assets ($64,000), disregarding part of the proceeds of sale ($100,000--see subsection (3A)), is higher than Elaine's deeming threshold ($56,400--see subsection 46H(1)). So, the deeming threshold is multiplied by the below threshold rate (0.25%):
Elaine's deeming threshold of $56,400 is subtracted from the total value of Elaine's financial assets ($64,000), disregarding part of the proceeds of sale ($100,000--see subsection (3A)). The remainder is $7,600.
The amount of $7,600 is multiplied by the above threshold rate (2.25%):
The ordinary income that Elaine is taken to receive on Elaine's financial assets, other than financial assets described in subsection (3A), is $312 per year ($141 plus $171).
10 After subsection 46D(3)
Insert:
(3A) However, if subsection 52(2) applies in relation to the person and:
(a) the person has financial assets that are proceeds:
(i) from the sale of the person's principal home; and
(ii) described in paragraph 52(2)(a) or (c); and
(b) the earlier of the times mentioned in that paragraph has not occurred for the person and the proceeds;
then:
(c) those financial assets are to be disregarded for the purposes of working out the ordinary income the person is taken to receive under subsection (3); and
(d) the ordinary income the person is taken to receive per year on those financial assets is the amount worked out by multiplying the value of those financial assets by the below threshold rate.
Example: To continue the example in subsection (3), Elaine's financial assets ($100,000) described in this subsection are multiplied by the below threshold rate (0.25%):
The ordinary income that Elaine is taken to receive on Elaine's financial assets described in this subsection is $250 per year.
11 Subsection 46D(4)
Omit "amount calculated under subsection (3)", substitute "sum of the amount calculated under subsection (3) and the amount (if any) calculated under paragraph (3A)(d)".
12 Subsection 46E(3) (example)
Repeal the example, substitute:
Example: How deemed income of a couple is worked out per year for the couple's financial assets other than financial assets described in subsection (3A) (using rates and deeming thresholds in force on 1 July 2022).
Maree and Peter, a couple, have $622,000 worth of financial assets, made up of $500,000 in proceeds from the sale of the couple's principal home and $122,000 of other financial assets. Maree and Peter intend to apply the whole of the proceeds of sale to build another residence that is to be the couple's principal home. The below threshold rate is 0.25%. The above threshold rate is 2.25%.
The total value of the couple's financial assets ($122,000), disregarding the whole of the proceeds of sale ($500,000--see subsection (3A)), is higher than the couple's deeming threshold ($93,600--see subsection 46H(2)). So, the deeming threshold is multiplied by the below threshold rate (0.25%):
The couple's deeming threshold of $93,600 is subtracted from the total value of the couple's financial assets ($122,000), disregarding the whole of the proceeds of sale ($500,000--see subsection (3A)). The remainder is $28,400.
The amount of $28,400 is multiplied by the above threshold rate (2.25%):
The ordinary income that the couple is taken to receive on the couple's financial assets, other than financial assets described in subsection (3A), is $873 per year ($234 plus $639).
13 After subsection 46E(3)
Insert:
(3A) However, if subsection 52(2) applies in relation to a member of the couple and:
(a) the couple have financial assets that are proceeds:
(i) from the sale of the principal home of a member of the couple; and
(ii) described in paragraph 52(2)(a) or (c); and
(b) the earlier of the times mentioned in that paragraph has not occurred for the member of the couple and the proceeds;
then:
(c) those financial assets are to be disregarded for the purposes of working out the ordinary income the couple is taken to receive under subsection (3); and
(d) the ordinary income the couple is taken to receive per year on those financial assets is the amount worked out by multiplying the value of those financial assets by the below threshold rate.
Example: To continue the example in subsection (3), Maree and Peter's financial assets ($500,000) described in this subsection are multiplied by the below threshold rate (0.25%):
The ordinary income that the couple is taken to receive on the couple's financial assets described in this subsection is $1,250 per year.
14 Subsection 46E(4) (formula)
Repeal the formula, substitute:
15 Paragraph 52(1E)(c)
Omit "12", substitute "24".
16 Subsection 52(2A)
Omit "24", substitute "36".
17 Application of amendments
The amendments made by this Schedule apply in relation to the sale of a person's principal home that occurs on or after the commencement of this Schedule.