Social Security (Pension Loans Scheme—Market Value) Determination 2022

The instrument rests on a small number of expressly defined and operational concepts.

Accredited valuer. The instrument defines an accredited valuer in s 4. That definition is a disjunctive list: a person accredited as a certified practising valuer by the Australian Property Institute; or a professional member of the Royal Institution of Chartered Surveyors entitled to be described as a Chartered Valuation Surveyor; or a person registered or otherwise authorised under the laws of the State or Territory where the property is situated to value that kind of property. The instrument therefore ties the authority to provide valuations to established professional standards and to state or territory regulatory regimes.

Event time. The instrument repeatedly refers to the event time, defined by reference to the Act, being the time the event mentioned in paragraph 1144AA(1)(c) or (2)(c) of the Act occurs in relation to the debt concerned (s 5(1)). The instrument does not restate those Act paragraphs; it uses them as the trigger for valuation consequences under s 5.

Priority ladder for market value. Section 5(2) sets a four-step priority ladder for establishing market value:

• first, realised sale price where the asset or property is sold before the event time (s 5(2)(a));
• second, agreed value between the Secretary and the relevant person (s 5(2)(b));
• third, prior accredited valuation within three months where there has been no material change, provided the Secretary is satisfied (s 5(2)(c));
• fourth, an accredited valuer’s valuation at the event time (s 5(2)(d)).

Secretary’s review of sale price. Section 5(3) provides an exception to the primacy of sale price. If the Secretary reasonably believes the sale price is reduced because of non-arm’s-length dealing, lack of good faith, unfair terms, or other circumstances, the Secretary may treat market value as the accredited valuer’s determination at the time of sale rather than the sale price.

Adjustments for encumbrances and timing. Section 5(4) requires the market value worked out under s 5 to be reduced by the total value of any charges or encumbrances over the asset or property, excluding certain charges referenced in the Act (s 1133(3)(c) and s 1138). The timing at which those charges are measured depends on which valuation path applies: immediately before sale for a sale-based valuation; at the time of agreement for an agreed value; at the end of the most recent valuation day for prior valuations; or at the event time for a valuation made at the event time.

Interaction with the Act. The instrument is narrowly framed to operate for the purposes of certain subparagraphs in s 1144AA of the Act, and the making power is s 1144AA(6) of the Act (s 3). The instrument therefore functions as a delegated instrument that fills the Act’s gaps on how to calculate market value and adjustments.

Primary actors affected by the determination are the Secretary of the Department of Social Services, persons seeking to repay a debt under the Pension Loans Scheme, persons from whom the Commonwealth seeks to recover a debt under that scheme, and owners of real assets or real property used in calculations under s 1144AA of the Act.

Secretary. The Secretary gains operational discretion under the instrument. The Secretary decides whether to accept an agreed value (s 5(2)(b)), whether the Secretary is satisfied that a prior valuation within the three-month window remains valid (s 5(2)(c)), and whether a sale price should be disregarded because it appears reduced for the reasons listed in s 5(3). The instrument uses the standard "is satisfied" and "reasonably believes" formulations, creating administrative decision points for the Secretary.

Applicants or debtor/property owner. A person seeking to repay a Pension Loans Scheme debt, or from whom the Commonwealth seeks recovery, faces obligations and choices that affect outcomes under the instrument. That person may:

• rely on a completed sale before the event time to set market value (s 5(2)(a));
• negotiate an agreed value with the Secretary (s 5(2)(b));
• provide a recent accredited valuation within three months, and demonstrate no material change to preserve that valuation (s 5(2)(c)); or
• obtain an accredited valuer’s valuation at the event time (s 5(2)(d)).

Professional valuers. Accredited valuers, as defined in s 4, supply the technical determinations that the instrument elevates in priority. The instrument gives formal recognition to three types of accreditation, which will channel demand for valuations to those professionals.

Lenders, mortgagees and charge-holders. The instrument requires the market value to be reduced by the total value of charges or encumbrances over the asset or property, except for charges referred to in s 1133(3)(c) or s 1138 of the Act (s 5(4)). Charge-holders therefore affect net recoverable value and thus the Commonwealth’s recovery calculations. The instrument pins the time at which encumbrances are measured to the valuation method used, which will influence whether certain encumbrances rank and reduce the assessed market value.

State and territory regulators. Because s 4(c) recognises registration or authorisation under state or territory laws as a pathway to being an accredited valuer, state and territory regimes that regulate valuers influence who qualifies to perform valuations for the instrument’s purposes.

Indirectly affected parties. Related-party purchasers, family members, or other parties who might buy property at non-arm’s-length prices are indirectly affected because s 5(3) permits the Secretary to discount such sales for valuation purposes. Real estate agents, conveyancers and solicitors will face evidentiary demands when a sale price is relied upon as market value.

Timing-sensitive stakeholders. Any stakeholder with an interest in the assessed value has an incentive to influence the timing of sale, valuation or agreement relative to the event time identified under the Act, because s 5 links valuation outcomes to those temporal facts.

Duties and rights in this instrument are narrow, directed to valuation processes, evidentiary hierarchies, and the Secretary’s decision-making. The instrument does not create new criminal offences or a stand-alone compliance regime. It prescribes administrative duties about which measurements are binding for calculating market value and how to reduce that value by encumbrances.

Duty to use accredited valuers where required. The instrument requires valuation work, in several pathways, to be conducted by an "accredited valuer" as defined in s 4. Where s 5(2)(c) or s 5(2)(d) applies, the valuation relied upon must have been carried out by an accredited valuer. This creates a practical duty on persons relying on valuations to commission appropriately accredited professionals and to retain documentary proof of accreditation.

Duty to record and produce sale documents. Where a sale is used under s 5(2)(a) as the market value, the sale price is determinative unless the Secretary reasonably believes the sale is reduced for the reasons in s 5(3). While the instrument does not prescribe documentary form, the operational implication is that persons will need to preserve sale contracts, settlement statements and related documents to support a sale price assertion.

Duty to demonstrate absence of material change. Where a prior valuation within three months is to be used (s 5(2)(c)), the Secretary must be satisfied there has been "no material change in circumstances affecting the market value" since the most recent valuation day. That places a de facto evidential duty on the person seeking to rely on that valuation to show that market circumstances, property condition, or encumbrances have not materially changed.

Right to agree a value. Section 5(2)(b) gives persons the explicit right to agree a value with the Secretary, subject to the Secretary’s acceptance. That creates a negotiated pathway where both parties can avoid commissioning additional valuations if they reach mutual agreement.

Secretary’s discretionary powers. The instrument confers specific decision-making powers to the Secretary. The Secretary decides whether to accept an agreed value, whether a prior valuation remains valid for the three-month window, and whether a sale price should be replaced by a valuer’s determination where the Secretary reasonably believes the sale was reduced for specified reasons (s 5(3)). Those are administrative rights and duties with scope for judgment.

Duty to adjust market value for charges and encumbrances. Once market value is established under s 5(2), s 5(4) requires it to be reduced by the total value of charges or encumbrances over the asset or property, except charges referred to in s 1133(3)(c) or s 1138 of the Act. The timing for measuring those charges depends on which valuation path applied (s 5(4)(a)-(d)). Persons must therefore identify and quantify encumbrances at the relevant point in time.

Right to rely on professional accreditation. By setting out the accredited valuer definitions in s 4, the instrument gives persons a right to select recognised valuation providers and to rely on their output, subject to the Secretary’s assessment where relevant.

No explicit enforcement rights or appeal mechanics in the determination. The instrument itself does not set out appeal or review routes, nor prescribe sanctions; it is directed to valuation calculation for the purposes of the Act. Any review or enforcement mechanisms therefore arise under the Act or other administrative law avenues, not under the determination itself.

The determination does not create standalone criminal penalties, fines, or a bespoke enforcement regime. It is a technical instrument that prescribes valuation methods for use under the Act. Authority for its making is subsection 1144AA(6) of the Social Security Act 1991 (s 3). The instrument’s practical enforcement mechanisms will therefore operate through the parent Act’s repayment and recovery apparatus and through administrative decision-making by the Secretary.

Secretary’s discretionary corrective mechanism. Section 5(3) is the instrument’s principal corrective mechanism. It enables the Secretary to override a sale price where the Secretary reasonably believes the sale price is reduced because the sale was not in good faith, not on fair and reasonable terms, not at arm’s length, or for any other circumstances. This is an administrative check against undervaluation through artificial or non-commercial transactions. The instrument does not specify procedural steps the Secretary must follow to exercise this power, for example whether notice is required before treating the sale price as unacceptable, nor does it stipulate evidentiary thresholds beyond the "reasonably believes" standard.

Encumbrances reduce market value. Section 5(4) requires the market value to be reduced by the total value of charges or encumbrances over the asset or property, excluding charges referenced in s 1133(3)(c) and s 1138 of the Act. The practical effect is to lower the net value available for Commonwealth calculation and recovery. The instrument specifies the temporal point for measuring those charges according to the valuation path used, which sets a deterministic rule for enforcement of priority among encumbrances for this specific Commonwealth purpose.

Administrative review and judicial oversight. The instrument does not itself set out appeal rights. Any challenge to an administrative decision under the instrument, including disputes about whether the Secretary was "satisfied" or "reasonably believed" a specified matter, would be governed by the Act and general administrative law, rather than by the instrument. The instrument leaves open the ordinary administrative review and judicial processes that apply to decisions made under the Act; however the instrument does not identify those processes or the procedures to be followed.

Information and documentary consequences. The instrument creates practical evidentiary obligations for persons who seek to rely on a sale price, an agreed value, or a recent valuation. If those documents are absent, the Secretary’s alternative valuation paths allow the Department to require an accredited valuer’s assessment. Failure to provide documents may therefore lead to the Secretary opting for his or her own valuation, which could adversely affect the person from whom recovery is sought.

Limitations on designating what counts. The instrument excludes certain charges from the deduction in s 5(4) by reference to other sections of the Act. Because those exclusions are made by cross-reference, enforcement outcomes for particular encumbrances depend on how the Act treats them; those outcomes cannot be determined solely from the determination.

The determination is designed to operate as an instrument subordinate to the Social Security Act 1991. It explicitly references and implements parts of that Act, in particular subparagraphs 1144AA(5)(a)(i) and (b)(i), and it is made under s 1144AA(6) (ss 3 and 5(1)). The instrument therefore functions only to supply operational detail where the Act requires a market value to be taken into account for repayment or recovery purposes under the Pension Loans Scheme.

Cross-references within the Act. The instrument also cross-references other parts of the Act when excluding certain charges from the deduction in s 5(4). It excludes "any charge referred to in paragraph 1133(3)(c) or section 1138 of the Act" from the reductions to market value. The instrument itself does not describe the content of those provisions, therefore practitioners must consult the Act to understand which charges are excluded and why.

State and territory valuation and registration regimes. The accredited valuer definition in s 4(c) depends on whether a person is "registered or otherwise authorised, under the laws of the State or Territory in which the property is situated, to value that kind of property". That clause creates an interface with state and territory law governing licensing or registration of valuers. The determination therefore depends on the operation of separate regulatory regimes for valuation practice and leverages them to set minimum professional standards.

Property and personal law. The instrument’s requirement to reduce market value by charges or encumbrances (s 5(4)) interacts with property law principles about mortgages, liens and priorities. Which encumbrances reduce assessed value for Commonwealth recovery will turn on the existence and quantification of those encumbrances at the time specified by the instrument, and on how those encumbrances are recognised under property law. The instrument does not alter property rights; it prescribes a valuation convention for the Commonwealth’s statutory recovery process.

Administrative law. The decision-making standards used by the instrument include "is satisfied" (s 5(2)(c)) and "reasonably believes" (s 5(3)). Those standards are familiar in administrative law and will be subject to ordinary judicial review grounds where decisions are challenged. The instrument does not set out internal review mechanisms; interactions with administrative law and statutory review pathways under the Act will determine remedies and challenge avenues.

Contract law and private sale behaviour. Because the determination elevates sale price to primary status when a sale occurred before the event time (s 5(2)(a)), commercial contracts for sale and sale timing will be consequential. Parties may time or structure sales to influence the valuation used under the Act; contract terms, settlement timing and disclosure may therefore gain new significance. The Secretary’s power in s 5(3) to reject a sale price on grounds such as lack of arm’s-length dealing alters the incentive landscape for related-party transfers.

Tension with confidentiality and settlement terms. The instrument presumes that the sale price and supporting documents can be relied on. If sale contracts include confidentiality or settlement clauses that hinder disclosure of price or encumbrance details, the practical operation of the instrument may require negotiation to obtain necessary evidence. The instrument itself does not resolve conflicts with confidentiality clauses; those will interact with contractual law and administrative evidentiary expectations.

The instrument contains only limited historical metadata. It identifies its name as the Social Security (Pension Loans Scheme,Market Value) Determination 2022 (s 1). The commencement provision records that each provision of the instrument commences on the later of 1 July 2022 and the day after registration, and in practice the commencement applied as 22 July 2022 because paragraph (b) of that rule applied (s 2 and the commencement table). The instrument also states it is made under subsection 1144AA(6) of the Social Security Act 1991 (s 3).

No later amendments, revocations or modification entries are contained in the text provided. The instrument’s commencement table includes a note that the table relates only to the provisions as originally made and will not be amended in the instrument text to deal with later amendments. Any subsequent amendments or replacement instruments are not recorded here. Practitioners seeking amendment history or versions must therefore consult the official legislative register or a consolidated instrument publication to identify subsequent changes.

Document metadata. The front matter of the source includes authorising and publishing metadata. It shows the determination was made by Ray Griggs AO CSC, Secretary of the Department of Social Services, dated 15 July 2022. The instrument’s contents page identifies two parts, the preliminary matters and the rules for adjusted value for real assets and real property, with the operative provisions limited to the definitions and s 5 methods.

No expressed savings or transitional provisions are contained in the instrument beyond the commencement table. The instrument’s note that column 3 entries are not part of the instrument indicates that the published commencement information should be treated as administrative content rather than substantive law.

Practical consequence for research. Because the instrument was made under a delegated power in the Act and is sparse, amendment history and consequential instruments could be material to practice. For authoritative and current law, consult the official Federal Register of Legislation for any amendments, legislative instruments that supersede it, or consequential changes to the Social Security Act that affect the operation of s 1144AA and the cross-referenced sections s 1133(3)(c) and s 1138. The instrument itself contains no record of such subsequent activity.

The determination text contains no record of litigation or judicial consideration. It does not name any cases, does not include excerpts of judicial decisions, and does not purport to resolve contested law. The instrument is administrative and normative in form; disputes concerning its operation would ordinarily arise as part of decisions made under the Social Security Act and would therefore be litigated, if at all, by challenging those underlying decisions or their implementation in administrative review or judicial review proceedings.

Potential dispute loci that could generate litigation. Although no litigation history is recorded in the instrument, the text identifies several specific decision points that could be contested in litigation or merits review in the future:

• the Secretary’s decision whether to accept an agreed value (s 5(2)(b)). A party might challenge a refusal to accept an agreed value as unreasonable or not according to law;
• the Secretary’s satisfaction that there has been "no material change in circumstances" since the most recent valuation day (s 5(2)(c)). Disputes over what constitutes a material change could lead to contestation;
• the Secretary’s "reasonable belief" that a sale price is reduced due to lack of good faith, unfair terms, non-arm’s-length dealing, or other circumstances (s 5(3)). Judicial review could test whether the belief was rational, lawful and supported by evidence;
• quantification and timing of charges or encumbrances for the reduction mandated by s 5(4). Parties could dispute whether particular encumbrances exist, their values, or whether they fall within the exclusions by reference to s 1133(3)(c) or s 1138 of the Act.

Nature of remedies available. While the instrument itself does not set out remedies, administrative law principles would apply to any judicial review or merits proceedings challenging decisions implementing the instrument. Remedies could include remaking the administrative decision, declaratory relief, injunctions, or quashing orders where a court finds jurisdictional error. The instrument does not provide procedural steps, standing rules, or specific limitation periods; those would be governed by the Act and general administrative law.

Evidentiary and proof issues likely to arise. Litigation would likely focus on documentary and expert evidence: valuation reports by accredited valuers, sale contracts, settlement statements, records of encumbrances and mortgages, and communications reflecting negotiations for an agreed value. The instrument’s reliance on accredited valuers and on temporal markers such as the "valuation day" or the "event time" means that disputes will often turn on expert testimony and contested factual chronologies.

Absence of publicly recorded cases in the instrument. Because the instrument as provided contains none of this litigation history, practitioners should search case law databases and the Federal Court and Administrative Appeals Tribunal records for any decisions referencing this determination or the relevant sections of the Act when assessing precedent or likely outcomes in disputes.

The instrument is compact but introduces several traps for the unwary because a small set of rules governs high-value calculations. These are practical, operational risks and compliance blind spots arising from particular words and cross-references in the text.

Sale price is primary but not sacrosanct. If an owner sells property before the event time, the sale price is the starting point for market value (s 5(2)(a)). However the Secretary can override that sale price if the Secretary reasonably believes the sale price has been reduced because it was not in good faith, was not on fair and reasonable terms, was not at arm’s length, or for any other circumstances (s 5(3)). The catch is that related-party or distressed sales may therefore be disregarded, which can defeat attempted strategies to lock in a low sale price to reduce the assessed market value.

Agreed values require Secretary buy-in. The instrument contemplates an agreed value between the Secretary and the person seeking to repay the debt or from whom recovery is sought (s 5(2)(b)). That pathway is only available if the Secretary accepts the agreement. Parties cannot unilaterally impose an agreed value; it is a negotiated right, not a private contractual right binding the Commonwealth absent Secretary consent.

Three-month valuation window has a "no material change" gate. A prior valuation within three months will be used only if the Secretary is satisfied there has been no material change affecting market value since the valuation day (s 5(2)(c)). The instrument does not define "material change". That undefined threshold creates uncertainty: relatively small changes in local market conditions, development approvals, tenancy, property damage, or encumbrance events could be argued as material by the Department or contested by owners.

Accredited valuer definition is specific and multi-sourced. The definition in s 4 requires accreditation through one of three routes: Australian Property Institute certification, RICS Chartered Valuation Surveyor membership, or state/territory registration. If a valuation is performed by an otherwise reputable valuer who lacks one of those recognitions, the valuation may not qualify under the instrument, forcing a fresh valuation and delay.

Timing for measuring charges depends on which valuation path applies. Section 5(4) ties the moment for calculating the value of encumbrances to the valuation pathway used,immediately before sale, at the time of an agreement, end of the most recent valuation day, or at the event time. That means two parties looking at the same asset could have different encumbrance timing rules depending on which pathway applies, producing materially different net values.

Exclusions by cross-reference leave uncertainty unless the Act is consulted. Section 5(4) excludes charges referred to in s 1133(3)(c) or s 1138 of the Act from the deduction, but the instrument does not explain those exclusions. Practitioners must consult the Act to identify which charges are excluded and why, otherwise risk miscalculating reductions.

"Reasonably believes" and "is satisfied" standards create review risk. The instrument uses ordinary administrative standards (s 5(2)(c) and s 5(3)). Those standards are subject to legal review, and poor process or lack of evidence can produce remediable errors. Departments often document reasoning; however failure to record the factual and legal basis for satisfactions or beliefs can lead to successful challenges.

No procedural rules about notice or consultation. The instrument does not prescribe consultation or notice requirements before the Secretary disregards a sale price, rejects an agreed value, or requires a fresh valuation. Practitioners should not assume such processes exist only because fairness might demand them; they must check the Act’s procedural rules or the Department’s practice.

Costs and delays from professional valuations. Where an accredited valuer’s determination is required at or near the event time (s 5(2)(d)), commissioning a valuation can be time-consuming and costly. If multiple valuations are required,for example because the Secretary rejects one,costs can escalate and delay resolution.

Interplay with confidential sale terms. If sale agreements contain confidentiality clauses about price, those may need to be waived to permit the Commonwealth to rely on sale price for valuation. The instrument does not address confidentiality tensions.

Prepare to document provenance of encumbrances and payments. Because the instrument reduces market value by encumbrances, parties must produce reliable documentation showing the nature and amounts of charges as of the specific relevant time under s 5(4). Informal or unregistered arrangements risk being excluded or mis-valued for the purposes of the calculation.

Compliance under the instrument means ensuring valuation and encumbrance evidence meets the priority ladder and timing rules in s 5, and that accredited valuer requirements in s 4 are satisfied. The following practical steps translate the instrument’s text into an operational checklist.

1. Identify the event time under the Act. Before any valuation strategy is set, identify precisely the event time referenced in the Act (s 5(1)). The instrument ties outcomes to that temporal marker, so the first compliance step is to determine when the relevant Act paragraph’s event occurs in relation to the debt.

2. Decide whether a sale can or should be relied upon. If the asset was sold before the event time, be prepared to rely on the sale price (s 5(2)(a)). Preserve complete sale documentation: contract of sale, vendor settlement statements, transfer documents, disclosures, and any communications about sale terms. Anticipate that the Department may scrutinise the transaction for indications of lack of arm’s-length dealing, unfair terms, or lack of good faith (s 5(3)).

3. If using an agreed value, document the agreement fully and seek Secretary acceptance. Section 5(2)(b) requires agreement with the Secretary. Prepare a written proposal with supporting valuation evidence, background on the property, and the rationale for the proposed figure. Do not assume an agreed value will be accepted automatically; engage early with the Department.

4. Where relying on a prior valuation within three months, use an accredited valuer and document no material change. If relying on s 5(2)(c), ensure the valuation report is by an accredited valuer as defined in s 4. Keep records of any events that might constitute material change, such as damage, tenancy variations, planning or zoning changes, or new encumbrances, and be prepared to demonstrate to the Department that no material change occurred.

5. If valuation must be done at the event time, commission an accredited valuer promptly. For s 5(2)(d) valuations, instruct an accredited valuer capable of meeting the timing and scope required. Confirm the valuer meets one of the accreditation tests in s 4 and ensure the report explicitly states assumptions, valuation date, and any limiting conditions.

6. Quantify encumbrances at the prescribed time. Under s 5(4), the market value must be reduced by charges or encumbrances, measured at the timing appropriate to the valuation method used. Identify all registered and unregistered encumbrances, obtain statements from mortgagees, and compile evidence to show the amount of each encumbrance at the relevant point in time.

7. Check excluded charges in the Act. Because s 5(4) excludes charges referred to in s 1133(3)(c) and s 1138 of the Act, consult those Act provisions to determine whether particular encumbrances are excluded from reduction. Do not assume all encumbrances are deductible; check the Act.

8. Maintain accreditation proof and chain of custody for valuation reports. Valuation reports should include the valuer’s accreditation credentials, scope of work, valuation date, and signature. Retain records establishing the valuer’s status under s 4: APIV accreditation, RICS membership details, or state registration records.

9. Anticipate Department scrutiny of related-party transactions. If a sale occurred between related parties or within family or corporate groups, be ready for the Department to apply s 5(3). Document negotiation history, independent marketing steps undertaken, and attempts to test market price to counter any suggestion of reduced sale price.

10. Engage early with the Department where possible. If an agreed value pathway is desired, approach the Department early to explore agreement and avoid the need for fresh valuations. Early engagement can reduce duplication and delay.

11. Preserve communications and be prepared for administrative review. Because the instrument confers discretionary powers on the Secretary, preserve correspondence, valuation instructions, and evidence submitted to the Department. If a decision under the instrument is disputed, those records will be central to any administrative review or judicial challenge.

12. Budget for valuation costs and timing. Professional valuations can be costly and may require lead time. Plan financially and operationally for the need to commission accredited valuers, and for potential additional valuations if the Department challenges initial evidence.

Following these steps aligns practical conduct with the instrument’s mechanics. The instrument itself provides the legal framework; compliance requires matching documentary and professional practice to the prioritized valuation paths and the timing for measuring encumbrances set out in s 5.