• Age Pension remained payable to Mrs Poldak as a single non-homeowner from 1 September 2023;
• Mrs Poldak's rate of age pension is to be reassessed in accordance with the finding that the transfer of $400,000 on 29 December 2021 was not a disposal of assets for the purposes of section 1123 of the Social Security Act 1991; and
• The total value of Mrs Poldak's asset as at 1 September 2023 was $567,549.

SOCIAL SECURITY - Age Pension - cancelled - total assets value exceeded allowable assets limit - principal home sold - proceeds of sale used as advance payment to build granny flat - payment determined as assessable asset - granny flat registered under daughter and son-in-law - defective and incomplete building works - claim approved to rectify defects - exemption if beyond applicant's control - payment not retained - spent and no longer an asset - life tenancy agreement - not a disposal of assets as gifting - single non-homeowner - qualified and remained payable - decision under review set aside

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. This review concerns a decision by Services Australia - Centrelink (Centrelink) to cancel age pension from 1 September 2023 on the basis that the claimant's total asset value exceeded the allowable assets limit for age pension to be payable.
2. Mrs Poldak has been in receipt of age pension since 20 February 2021. On 1 September 2021, she sold her principal home.
3. On 5 February 2022, Mrs Poldak formally entered into a granny flat agreement with her daughter and son-in-law. An amount of $400,000 was advanced to her son-in-law on 29 December 2021 to fund the building of the granny flat. As at 1 September 2023, the granny flat arrangement remained in place however the granny flat had not been built to completion because of defective and incomplete building works.
4. On 16 June 2025, Centrelink determined that $390,000 of the monies transferred by Mrs Poldak was an assessable asset from 1 September 2023 and valued Mrs Poldak's total asset value to be $957,549. As the total asset value exceeded the asset value limit for a single non-homeowner, Mrs Poldak's age pension was cancelled from 1 September 2023.
5. On 20 June 2025, Mrs Poldak sought internal review of the decision to cancel her age pension. On 29 July 2025, an authorised review officer affirmed the decision to cancel Mrs Poldak's age pension.
6. On 2 October 2025, Mrs Poldak made an application to the Administrative Review Tribunal (the Tribunal) for independent review of the authorised review officer's decision.
7. Mrs Poldak participated in a hearing before the Tribunal on 4 December 2025 via MS Teams audio conference and gave affirmed evidence. She was represented by her financial advisor, Ms [A].
8. In addition to Mrs Poldak's oral evidence and submissions at hearing, the Tribunal had regard to the documents provided by Centrelink to the Tribunal in accordance with section 23 of the Administrative Review Tribunal Act 2024, pages 1 to 543 (the hearing papers), and documents lodged by Mrs Poldak, 137 pages in length. The hearing papers were provided to Mrs Poldak prior to the hearing.

1. The statutory provisions relevant to this application for review are contained in the Social Security Act 1991 (the Act) and the Social Security (Administration) Act 1999 (the Administration Act).
2. The issue to be determined in this application for review is the value of Mrs Poldak's assets as at 1 September 2023. To resolve that question, the Tribunal must consider how $400,000 from the proceeds of the sale of Mrs Poldak's principal home on 1 September 2021 is to be assessed for the purpose of assessing her rate of age pension. This requires consideration of how the granny flat agreement with her daughter and son-in-law, who are the registered owners of the property at [Suburb 1], Queensland, is to be treated for the purposes of the social security law.

1. Age pension is paid to persons who have reached age pension age and are Australian residents. Payability of age pension is subject to an income test and an assets test. The rate of age pension payable is the lowest rate produced by either test.[1] The assets test is provided for in point 1064-G1 of the Act and requires the value of a person's assessable assets to be identified. The value of certain assets is disregarded from assessment, such as the person's principal home and, if particular criteria are met, the proceeds of sale of the person's principal home. Under section 44 of the Act, age pension is not payable to a person if the rate of payment is reduced to nil.
2. The disqualifying asset limit for a single non-homeowner at the date of the cancellation of Mrs Poldak's age pension was $898,500.
3. Centrelink contends that Mrs Poldak's total asset value was $957,549 as at 1 September 2023 and comprised of:
   • Savings worth $90,075;
   • Income streams worth $454,974;
   • Other assets worth $22,500; and
   • Deprivation/gifts to the value of $390,000.
4. Mrs Poldak told the Tribunal that she did not dispute the valuations made for her assets described as savings, income streams and other assets. She contends that the transfer of $400,000 to her son-in-law was not a gift that should attract the asset disposal provisions as Centrelink asserts and should therefore not have been included in her total asset value.
5. Documentary evidence, accepted by the Tribunal, confirmed that on 1 September 2021 Mrs Poldak sold her residential property at [Suburb 2], with a settlement sum of $718,973.74.
6. Mrs Poldak confirmed in her evidence, accepted by the Tribunal, that of the total proceeds of the sale, $400,000 went towards the building of a granny flat which was intended to be her principal place of residence. The remaining proceeds were deposited into a Downsizer superannuation account and an income stream product.
7. Following the sale of her principal home, Mrs Poldak held discussions with her daughter about using the proceeds of the sale to build a granny flat on her daughter and son-in-law's property. An agreement was made in principle verbally and on 29 December 2021, she transferred $400,000 to her son-in-law in accordance with the agreement so that the build of the granny flat could be commenced in January 2022. On 5 February 2022, a 'Granny Flat Agreement' was formally executed between Mrs Poldak, her daughter and son-in-law.
8. A copy of the 'Granny Flat Agreement' was before the Tribunal. The recitals to the agreement confirmed that Mrs Poldak was funding the construction of a single detached flat on the owners' property that would serve as a granny flat. The owners of the property, Mrs Poldak's daughter and son-in- law, would reside in a separate dwelling on the property and the owners agreed to grant Mrs Poldak a life tenancy of the granny flat in consideration of Mrs Poldak paying for the construction of the granny flat. The agreement confirmed that Mrs Poldak would pay $400,000 for the construction and on completion of the construction of the granny flat Mrs Poldak would be irrevocably granted an exclusive right to reside in the granny flat until the agreement was terminated or Mrs Poldak died.
9. A 'Statement activity' authored by [Building company 1], and addressed to Mrs Poldak's daughter and son-in- law confirmed that payments were made towards construction between 13 October 2021 and 28 September 2022 in the sum of $827,758.36. Mrs Poldak told the Tribunal, and it was accepted, that the monies she paid her son-in-law were paid to [Building company 1] for the construction of the granny flat. Additional monies were also paid by Mrs Poldak's daughter and son-in-law to [Building company 1] for the construction of the main house on the property.
10. The build was not completed and that which was built was defective. The Tribunal had before it a Non-Completion Assessment Report confirming the state of the works completed. Mrs Poldak's son-in-law brought a claim under the Queensland Home Warranty Scheme to the Queensland Building and Construction Commission and [in] May 2024, the claim was approved with $356,974.20 being assessed as the amount approved to rectify the defects and the amount to complete the work being $1,254,878.79. The Queensland Home Warranty Scheme did not cover the full scope of works required and the maximum payable under the scheme of $200,000 was paid. Mrs Poldak told the Tribunal that the monies paid out were used to complete the works required on the main residence to get it to 'lock-up' stage.
11. Construction of Mrs Poldak's granny flat has not, to date, been completed. While construction was commenced, the building work was defective. Documents were before the Tribunal that confirmed that proceedings have been commenced in the Queensland Civil and Administrative Tribunal in respect of the incomplete and defective build.
12. With respect to homes sold between 1 July 2007 and 31 December 2022, subsection 1118(1B) sets out the circumstances under which the proceeds from the sale of a principal home can be disregarded from the value of a person's assets for a period of 12 months commencing from the date of settlement for the purposes of section 1118(2) of the Act (as in force before 1 January 2023). These circumstances include if the person intends to apply or has applied part or whole of the proceeds to build, repair, renovate or purchase a new residence. If a person is unable to build, repair, renovate or purchase a new residence within 12 months, subsection 1118(2B) sets out the requirements that must be met for the principal home sale proceeds to continue to be exempt from the assets test for a further 12 months. These requirements include that the person has, within a reasonable time, made reasonable attempts to build, repair, renovate or purchase a new residence within 12 months but, due to delays beyond the person's control, has been unable to build, repair, renovate or purchase a new residence. There is no discretion to extend the total period beyond 24 months.
13. A person is considered to be a homeowner as defined in paragraph 11(4)(c) of the Act while the whole or part of the proceeds of the sale of the person's principal home are disregarded under subsection 1118(2) of the Act.
14. The Tribunal was satisfied that Mrs Poldak's circumstances met the requirements of subsection 1118(1B) and 1118(2B) and the proceeds of the sale of her principal home were correctly disregarded from the value of her assets under subsection 1118(2) for the period 1 September 2021 to 31 August 2023. During this period Mrs Poldak is considered to be a homeowner as defined in paragraph 11(4)(c) of the Act as the whole or part of the proceeds of the sale of her principal home were disregarded under subsection 1118(2). It follows that part of her proceeds of sale ($400,000) continued to be exempt from the pension assets test for the period between 1 September 2022 and 1 September 2023 under subsection 1118(2B) of the Act.
15. From 1 September 2023 section 1118(2) of the Act no longer applied to disregard the value of the proceeds of the sale and Mrs Poldak ceased to be a homeowner for the purposes of Act. As construction of the granny flat had not been completed the Tribunal then considered the status of the $400,000 that was applied towards the building the granny flat which would become her new residence in accordance with the Granny Flat Agreement. After the 24 month exemption ceased on 1 September 2023, the granny flat that was intended to become her principal home had not been built to completion for reasons outside of her control. As she had no right or interest in a principal home, she no longer met the definition of a homeowner under section 11(4) of the Act as of 1 September 2023.
16. The Centrelink authorised review officer contends that those proceeds are to be included to the value of Mrs Poldak's total assets as they are to be treated as an asset that had been deprived of. This is commonly referred to as 'gifting'.
17. The social security provisions in respect of 'gifting' mean that the asset has been disposed of (gifted) for less than adequate financial consideration continues to be assessed as an asset of that person. The disposal provisions are contained within Division 2 of Part 3.12 of the Act. In summary, section 1123 relevantly provides that for the purposes of social security law, where a person disposes of an asset and receives no consideration in money or money's worth for the disposal, inadequate consideration in money or money's worth for the disposal, or the Secretary is satisfied that the person's purpose or the dominant purpose in engaging in that course of conduct was to obtain a social security advantage, the person is deemed to have disposed of the assets.
18. On the evidence before the Tribunal, the Tribunal is satisfied, and so finds, that none of the conditions contained in subsection 1123(1) of the Act have been met. That is because, firstly, the evidence clearly established that the $400,000 that Mrs Poldak paid to her daughter and son-in-law was in exchange for the construction of a granny flat that would become her place of residence on their property. Consideration of adequate value and of money's worth passed at the time when Mrs Poldak paid her son-in-law the $400,000. That consideration was a life tenancy in the granny flat that was to be constructed and $400,000 was adequate consideration. That the granny flat has not been built to completion as a result of actions of a third-party and outside of the control of Mrs Poldak and her son-in-law, does not extinguish the consideration passed at the date of transfer. Those moneys have not been retained by Mrs Poldak's daughter and son-in-law; they were paid to [Building company 1], in good faith and to advance a contract to construct her dwelling. The $400,000 has been spent and is no longer an asset of Mrs Poldak.
19. Secondly, the Tribunal is satisfied, having received evidence from Mrs Poldak that her intention was always, and remains, to build a granny flat to reside in as her principal home for the remainder of her life or until the agreement is terminated. That is evidenced by the actions subsequently taken to correct deficiencies in the build. Her conduct has not been designed to defeat the social security asset limit provisions. The Tribunal is further satisfied, and so finds, that Mrs Poldak has not engaged in conduct in order to obtain an advantage from the social security law as defined by subsection 1123(2) of the Act.
20. It therefore follows that the transfer of $400,000 was not a disposal of an asset. As at 1 September 2023, the value of Mrs Poldak's total assets did not include the $400,000 and continued to be $567,549. As the value of Mrs Poldak's assets were below the asset limit for a single non-homeowner of $898,500, age pension continued to be payable to Mrs Poldak.
21. The Tribunal understands that a debt has been raised against Mrs Poldak for the period between 1 September 2023 to 16 June 2025. That debt decision was not before the Tribunal in this review.
22. The Tribunal finds that the decision to cancel Mrs Poldak's age pension from 1 September 2023, was not legally correct.
23. As the Tribunal has reached a different decision to the authorised review officer, the Tribunal will set aside the decision under review and remits the matter to Centrelink for reconsideration

1. The Tribunal sets aside the decision and remits the matter for reconsideration in accordance with the order that:
   • Age Pension remained payable to Mrs Poldak as a single non-homeowner from 1 September 2023;
   • Mrs Poldak's rate of age pension is to be reassessed in accordance with the finding that the transfer of $400,000 on 29 December 2021 was not a disposal of assets for the purposes of section 1123 of the Social Security Act 1991; and
   • The total value of Mrs Poldak's asset as at 1 September 2023 was $567,549.