SOCIAL SECURITY - carer payment - assets and income tests - assets hardship provisions - value of inherited property disregarded as asset, but notional income applied - unable to generate income because property on market to be sold, and since sold - proceeds from sale used to purchase another house as primary place of residence - 'reasonably' - decision under review set aside and remitted

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been omitted from this decision and replaced with generic information pursuant to subsection 201(1A) of the Social Security (Administration) Act 1999.

1. Ms Nguyen is a recipient of carer payment. She disputes a decision made by Services Australia (Centrelink) to reduce her rate of payment for the period 31 October 2024 to 27 February 2025 because of an assessment of notional income applied to a property she inherited from her late father.
2. Ms Nguyen came into possession of the property at [Address] NSW, on 31 October 2024. On 19 November 2024, she concurrently declared the inheritance to Centrelink and made a claim for its value to be disregarded under what are known as the assets hardship provisions.
3. Centrelink ultimately agreed that the value of the property could be temporarily disregarded for the purposes of assessing Ms Nguyen's assets but found that the property was capable of generating a notional income of $826.92 per fortnight. With that income taken into account, Ms Nguyen's rate of payment reduced considerably.
4. On 10 December 2024, Ms Nguyen sought internal review of the decision to reduce her rate of payment, submitting that she could not generate income from the property because it was on the market to be sold. It was, in fact, sold on 28 February 2025.
5. On 9 October 2025, Centrelink's authorised review officer (ARO) affirmed the decision to reduce the rate of payment from 31 October 2024.
6. On 15 November 2025, Ms Nguyen applied to the Tribunal for review of that decision. The matter proceeded to a hearing on 6 February 2026. I had before me the hearing papers numbered 1 to 349.

1. The only issue in this application is whether Ms Nguyen's rate of carer payment was correctly reduced from 31 October 2024.
2. The provisions relevant to that issue are contained in the Social Security Act 1991.
3. Whether carer payment is payable and at what rate is subject to an assets test and an income test. Whichever test produces a lower rate of payment applies. Up to the point of inheriting the house, Ms Nguyen's carer payment had been paid on the basis that the income test applied.[1]
4. As at October 2024:[2]
   • If the assets test applied, assets of a single non-homeowner[3] over $314,000 would reduce the rate of carer payment, and carer payment would not be payable with assets of $695,500.
   • If the income test applied, income over $212 in a fortnight would reduce the rate of carer payment by 50 cents per dollar in income over that amount, and carer payment would not be payable with income of $2,500.80 in a fortnight.
5. There are numerous provisions governing the assessment of assets. In general, an asset will have its market value (Jack Woodhouse and Joyce Woodhouse and Secretary, Department of Social Security [1987] AATA 73). A person's own home is not an assessable asset (section 11A of the Act). Section 1118 of the Act sets out other assets that are to be disregarded for the purposes of assessing assets.
6. The social security law recognises, in section 1129 of the Act, that the application of the assets test can result in problematic outcomes for some people and provides a remedy in cases of financial hardship. The Australian Government's Social Security Guide (at topic 4.6.7.10) puts it like this:

The assets test presumes pension and benefit recipients with substantial assets, apart from their principal home, use those assets to produce income for their own support. If substantial assets are held, but they produce little or no income, a person is expected to rearrange their financial affairs before calling on taxpayer-funded income support through the social security system.

Sometimes a pension or benefit recipient is unable, or in the case of a pensioner could not reasonably be expected, to rearrange their financial affairs. Hardship provisions may mean that these people are able to have certain assets disregarded when calculating their pension or benefit rate. Assets which are disregarded for hardship purposes are called 'unrealisable assets' in the SSAct.

1. If section 1129 applies so as to disregard the value of an asset, the rate of payment is to be worked out by reference to section 1130 of the Act as follows.
   • Subsection 1130(2) says that, if section 1129 applies, there is to be deducted from a person's maximum payment rate an amount equal to the person's 'adjusted rate of ordinary income'.
   • Subsection 1130(3) says that the adjusted annual rate of ordinary income is an amount per year equal to the sum of:

(a) the person's annual rate of ordinary income (other than income from assets); and

(b) the person's annual rate of ordinary income from assets that are not assets tested; and

(i) the person's annual rate of ordinary income from unrealisable assets; or

(ii) the person's notional annual rate of ordinary income from unrealisable assets;

(d) an amount per year equal to $19.50 for each $250 of the value of the person's assets (other than disregarded assets); and

(e) any amounts that are not income of the person because of paragraph 8(8)(zp).

• Regarding (b), an asset is not assets tested if it is excluded by section 1118 of the Act.
• Regarding (c), subsection 1130(5) provides the notional annual rate of ordinary income from unrealisable assets is:

(a) the amount per year equal to 2.5% of the value of the person's and the person's partner's unrealisable assets; or

(b) the amount per year that could reasonably be expected to be obtained from a purely commercial application of the person's and the person's partner's unrealisable assets;

• There are special provisions if the unrealisable asset is a farm or is a property occupied by a family member.

1. I come to the facts of Ms Nguyen's case.
2. Ms Nguyen's father passed away in November 2022 and probate was granted in March 2024. Knowing she would inherit [the property], she engaged an independent financial adviser and then a Centrelink adviser in June or July 2024. Centrelink's adviser told her that the assets hardship provisions might apply if the house was on the market, but she was not given advice about the effect of notional income on her rate of payment.
3. She engaged a real estate agent and entered into a formal arrangement about a week after she took possession of the house on 31 October 2024.[4]
4. Centrelink valued the property at $860,000, as at 31 October 2024.[5]
5. The house sold on 28 February 2025, for $940,000.[6] In the meantime, Ms Nguyen had purchased another house to live in (closer to where she already lived and where her children go to school). Most of the proceeds from the sale of [the property] went directly to fund that purchase so were never disbursed to Ms Nguyen.[7] As the new house was excluded from the assessment of Ms Nguyen's assets (as her primary place of residence), her rate of carer payment returned to the higher rate from 28 February 2025.
6. [The property] was unoccupied for the period 31 October 2024 to 28 February 2025 and had been unoccupied since early 2023 when her brother - who had lived there temporarily to care for their father - moved out.
7. The consequence for Ms Nguyen of notional income being included in the assessment of the rate of carer payment is that her carer payment abruptly, and unexpectedly, reduced by nearly $900 per fortnight, and for a period of about 4 months until the sale.
8. She told me that had she been warned that might happen, she would nonetheless have sold [the property] when she did, but - as she had had quite a bit of notice about the inheritance - would have arranged for a loan or tried to keep savings to sustain her through the period of the shortfall. As it was, she was placed at risk of homelessness.
9. In Ms Nguyen's submission, it had not been possible to derive rental income from the property while it was on the market for sale, and where she had acted on Centrelink's advice, the imposition of notional income in relation to the property is unfair.
10. I see the point. It is hard to understand how the purpose of the assets hardship provisions are served when a person is placed in nearly the same position they would have been in had they not been granted an exemption under section 1129.
11. I observe that section 1130 applies whether or not it produces what might seem a fair result. If section 1129 applies to exclude an asset on the basis of assets hardship, section 1130 applies to attribute income from that asset.
12. The question, then, is whether the amount of the reduction in the rate of payment has been correctly calculated.
13. Going straight to the crux of the matter, that turns principally on how paragraph 1130(3)(c) and subsection (5) are to apply in this case. There, the inquiry is what is the amount that 'could reasonably be expected to be obtained from a purely commercial application' of the property. If that amount is less than 2.5% of the valuation of the property, that amount applies. If it is more, then 2.5% figure applies.
14. Centrelink applied the 2.5% figure (2.5% of the valuation of $860,000 is $21,500 or $826.92 per fortnight), with the inevitable result that Ms Nguyen's rate of payment reduced by slightly more than that amount.
15. The meaning of the test is subsection 1130(5) has been considered by the Federal Court.
16. In Secretary, Department of Social Security v Ross Bodey Copping and Irma Copping [1987] FCA 176, Foster J (agreeing with Jenkinson and Burchett JJ) said, in relation to an earlier version of the same test (at [10]):

I think that the word "reasonably", in the context which sub-section 6AD(3) [now paragraph 1130(3)(c)] supplies, directs the Secretary's attention to, inter alia, all the circumstances, including the personal relations of those concerned in the property, which in his judgment might reasonably be taken into account by "the person" or "the person's spouse", as the case may be, in deciding how the property was to be exploited to produce income. And he is required, in my opinion, to have regard to the annual rate of income that could reasonably be expected to be derived from, or produced with the use of, that property in all the circumstances, including those circumstances to which I have just referred. The construction suggested does not direct enquiry merely as to the annual rate of income likely in fact to be derived from, or produced with the use of, the property by "the person" or "the person's spouse", as the case may be, but rather enquiry as to what annual rate of income the Secretary, or the Administrative Appeals Tribunal on a review, considers would be likely to be derived from, or produced with the use of, the property by that person if that person made decisions concerning the exploitation of the property which in all the circumstances, including personal circumstances, the Secretary, or the Tribunal on review, considered reasonable.

1. In Michael J Dineen v Secretary to the Department of Social Security [1988] FCA 425, Woodward J cited that passage and added (at [41] and [44]):

In my view it is inherent in the reasoning of the Full Court that the Secretary, or the Tribunal on a review, in a case such as this, should pose the question:- how much income might be expected to be produced by economic exploitation of the property after allowance is made for relevant and reasonable considerations of personal and family circumstances. There must be a presumption that a person in the position of the present applicant will do his reasonable best to obtain income from the property, consistent with his personal capacities, family obligations and other relevant circumstances. ...

One begins with the assumption that income will be derived or produced to the extent that it is reasonable to do so, and then makes any necessary allowance for the particular circumstances of the case.

1. I have not identified many decisions of the Tribunal or its predecessor, the Administrative Appeals Tribunal (AAT), that apply those authorities, and none with facts similar to Ms Nguyen's case, but note the following:
   • Shephard and Repatriation Commission [1989] AATA 605 concerned an equivalent provision in the Veterans' Entitlements Act 1986. The applicant and his brother co‑owned a small farm as tenants in common. The applicant lived in a house on the farm and the farm was operated by his nephew. Practical considerations (including that the applicant did not have exclusive control of the land, the farm was too small to be particularly viable, and it was not reasonable to charge the nephew rent) led to a finding that the amount that could be obtained from a purely commercial application of the applicant's interests in the property was nil.
   • In Department of Family and Community Services and Self [2000] AATA 118, a loan that was an asset in the hands of the respondent was found to be incapable of being repaid, earning interest or being transferred for value. No amount could be obtained from a commercial application of the asset.
   • In Edward and Patricia Bennett and Secretary, Department of Family and Community Services [2003] AATA 373, the AAT held that notional income reasonably could be derived from leasing a part of farmland, notwithstanding that the applicants did not want to lease the property because they enjoyed the views and the freedom to come and go without a lessee interfering with their privacy.
   • In Stergiopoulos and Secretary, Department of Social Services (formerly Families, Housing, Community Services and Indigenous Affairs) [2013] AATA 720, the AAT found a house that could not be offered for rent because it was 'riddled with asbestos' had no commercial value for the purposes of section 1130(5) (but affirmed the decision under review for unrelated reasons).
2. In my view, the amount that could reasonably be expected to be obtained from a purely commercial application of (that is, leasing) [the property], during the period it was on the market to be sold (and for the short period beforehand when it was being prepared for sale) is plainly nil.
3. Copping and Dineen require an assessment of the actual circumstances, not pristine or hypothetical circumstances.
4. Ms Nguyen could not have known how long the house would remain on the market, and so offering a short-term lease for any defined period would have been unrealistic. Even if it could have been known the house would have remained on the market for more than 3 months, it may well be that leasing out the house would have been quite detrimental to its sale price - quite the opposite of a commercial application.
5. None of the AAT decisions I have identified above would suggest otherwise. Because of practical considerations, a decision not to lease the premises for matters of preference (as in Bennett) was not available to Ms Nguyen.
6. The result is that the notional annual rate of ordinary income from unrealisable assets is nil and not $21,500. Ms Nguyen's entitlement to carer payment for the period 31 October 2024 to 27 February 2025 will need to be reassessed.

The Tribunal sets aside the decision under review and remits the matter for reconsideration in accordance with the order that, for the purposes of subsection 1130(5) of the Social Security Act 1991, the notional annual rate of ordinary income from unrealisable assets ([Address] NSW) is nil.

[2] See A Guide to Australian Government payments, as at 1 September 2024.

[3] A homeowner, under subsection 11(4) of the Act, is a person who has a right or interest in their principal home (so a person who owns a house but does not live in it may not be a homeowner for the purposes of the social security law).