Veterans’ Entitlements (Pension Loans Scheme—Market Value) Determination 2022

The instrument introduces and fixes a closed set of valuation pathways and timing rules for market value determinations relating to the Pension Loans Scheme as recorded in section 5. It operationalises two linked concepts: (1) the market value of real assets or real property at the event time; and (2) adjustments to that market value to account for charges and encumbrances.

Market value determination is hierarchical. Section 5(2) sets an ordered test:

• Sale price before the event time (s 5(2)(a)).
• Agreed value between the Commission and the person seeking to repay or from whom the Commonwealth seeks to recover debt (s 5(2)(b)).
• Use of an accredited valuer's valuation for one or more days within the three months before event time, subject to the Commission being satisfied there has been no material change since the most recent valuation day, in which case the Commission uses the most recent valuation (s 5(2)(c)).
• Where none of the preceding apply, an accredited valuer determines market value at the event time (s 5(2)(d)).

A corrective mechanism is built into the sale-price pathway. Section 5(3) permits the Commission to discount a sale price where it reasonably believes that the sale price has been 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". Where the Commission forms that reasonable belief, the instrument requires use of an accredited valuer determination of market value at the time of sale. This substitutes a professional valuation for a possibly compromised sale price (s 5(3)).

Adjustments to market value are handled in section 5(4). The market value determined under section 5(2) is reduced by the total value of charges or encumbrances over the asset or property other than charges referred to in paragraph 52ZA(3)(c) or section 52ZF of the Act. The timing for calculating the value of those charges depends on which pathway applied: immediately before sale if sale occurred (s 5(4)(a)); at the time of an agreement (s 5(4)(b)); at the end of the most recent valuation day if relying on a prior accredited valuation (s 5(4)(c)); or at the event time if a valuer determines value at event time (s 5(4)(d)).

The instrument defines "accredited valuer" tightly in section 4, limiting acceptable professionals to those meeting one of three recognised professional or statutory standards: Australian Property Institute certified practising valuers; RICS members entitled to be described as Chartered Valuation Surveyors; or persons registered or otherwise authorised under the law of the State or Territory where the property sits (s 4).

Two other concepts are implicit in the text. First, the "event time" is the time when the event referred to in paragraph 52ZMAA(1)(c) or (2)(c) occurs; the instrument does not redefine those paragraphs but ties the valuation timing to the Act (s 5(1)). Second, the Commission plays a fact-finding and satisfaction role, deciding whether to accept prior valuations and whether a sale price should be treated as reduced (s 5(2)(c), s 5(3)). The instrument therefore couples objective financial measures with administrative discretion exercised by the Commission.

Directly affected persons are those involved with debts under the Pension Loans Scheme provisions of the Veterans’ Entitlements Act 1986 where market value of real assets or real property must be worked out under subparagraphs 52ZMAA(5)(a)(i) and (b)(i) and adjusted under subparagraphs 52ZMAA(5)(a)(ii) and (b)(ii). The instrument expressly contemplates three categories of private parties in relation to valuation interactions with the Commission: the person seeking to repay the debt, the person from whom the Commonwealth seeks to recover the debt, and persons who own or dispose of real assets or real property that are relevant to the debt calculation (s 5(1)-(2)).

The Commission is a named decision-maker and is directly affected. The instrument grants it evaluative functions: to accept agreed values, to be satisfied that a prior accredited valuation remains current and unaffected by material change, and to form a reasonable belief that a sale price has been reduced for specified reasons (s 5(2)(b)-(c), s 5(3)). The Commission therefore carries the administrative burden and discretion for applying the valuation hierarchy.

Accredited valuers are affected in that only valuations by persons falling within the instrument’s definition of "accredited valuer" are acceptable under the non-agreement pathways. That restricts eligible valuers to Australian Property Institute certified practising valuers, RICS Chartered Valuation Surveyors, or valuers registered or authorised under the State or Territory law where the property is located (s 4). Those criteria affect who can be instructed and what work will be accepted by the Commission.

Parties who sell property before the event time are affected because sale price is the primary determinative pathway, subject to the Commission’s power to treat a sale price as reduced if the sale was not in good faith, not on fair and reasonable terms, or not arm’s length, or because of "any other circumstances" (s 5(2)(a), s 5(3)). That puts an evidential onus on sellers to ensure the sale process, terms and record-keeping will withstand Commission scrutiny.

Persons with charges or encumbrances over property are affected because section 5(4) reduces market value by the total value of charges or encumbrances, except those specifically excluded by reference to paragraph 52ZA(3)(c) or section 52ZF. This affects the net recoverable value and therefore the quantum of debt-related adjustments.

Finally, lawyers, accountants and valuers advising clients in Veterans’ Entitlements matters will be affected by the procedural and evidential expectations the instrument creates: agreement with the Commission can avoid the need for valuation, accredited valuations within three months can be relied upon if the Commission is satisfied there has been no material change, and sale documentation must support the integrity of a sale price.

The instrument itself creates no standalone duties in the statutory-criminal sense, but it prescribes decision rules that impose obligations and create operational rights for both the Commission and private parties in the valuation process.

Duties and decision obligations for the Commission

• Apply the valuation hierarchy in s 5(2) when determining market value under the specified subparagraphs of the Act. The Commission must determine which of the pathways applies in the circumstances and use the corresponding valuation method.
• Assess and be satisfied as to the currency of prior accredited valuations relied upon under s 5(2)(c). That satisfaction is a precondition for using a prior valuation that is up to three months old.
• Form a reasonable belief under s 5(3) if it considers sale price is reduced for specified reasons. The instrument requires the Commission to exercise this evaluative judgment where appropriate.
• Calculate adjustments for charges and encumbrances as set out in s 5(4), including determining the relevant time at which the value of encumbrances is measured depending on the valuation pathway.

Rights and obligations that affect private parties

• Parties may agree a value with the Commission, and an agreed value is a primary pathway under s 5(2)(b). This creates a practical route for a private party to shape the market value used for debt purposes, but it presumes mutual agreement with the Commission.
• A seller has the practical right to rely on the sale price as market value if the sale occurs before the event time, but that right is contingent on avoiding circumstances that would lead the Commission to form a reasonable belief under s 5(3) that the sale price is reduced.
• Property owners or their representatives have the obligation to procure accredited valuations if they want a valuer-determined market value under s 5(2)(c) or s 5(2)(d). The accredited valuer must meet the criteria in s 4.
• Persons with charges or encumbrances have an interest in the timing of measurement because s 5(4) prescribes when the total value of those charges is to be worked out depending on the pathway used.

Operational rights for valuers

• Accredited valuers who meet the qualifications in s 4 have the right to provide valuations that will be recognised under the instrument. Conversely, valuers who do not meet those criteria will not provide valuations that are accepted as accredited for these specific Act purposes.

Implied procedural obligations

• If a party wishes a sale price to be accepted, that party implicitly bears the compliance burden of demonstrating good faith, arm’s length dealing, and fair and reasonable terms if the Commission queries the sale under s 5(3). The instrument does not set evidentiary forms, but the Commission’s satisfactions and reasonable beliefs will rest on documentation and factual inquiry.

The instrument places the Commission at the centre of several evaluative steps and gives private parties choices, such as negotiating an agreed value to avoid valuation costs or arranging accredited valuations that meet the timing and professional criteria.

This instrument does not itself prescribe penalties, offences or direct enforcement powers. It is a determination about valuation methodology and is made under subsection 52ZMAA(6) of the Veterans’ Entitlements Act 1986 (s 3). Enforcement and any penalties related to debts under the Pension Loans Scheme would arise under the Act and its enforcement provisions, not from this instrument. The instrument’s legal effect is to set the methods the Commission must use when calculating market value and adjustments for the purposes of specified paragraphs and subparagraphs of the Act.

Operational enforcement features embedded in the instrument are administrative rather than penal. The Commission exercises case-by-case assessment functions: it accepts agreed values, relies on accredited valuations within a prescribed temporal window only where it is satisfied there has been no material change, and substitutes an accredited valuer’s determination where it reasonably believes a sale price has been reduced for specified reasons (s 5(2)(b)-(c), s 5(3)). Those are acts of administrative decision-making that will affect the arithmetic applied to a person’s debt and therefore affect liabilities and recovery under the Act.

Where the Commission uses its evaluative powers adversely to a person, practical enforcement consequences can follow under the Act’s recovery and debt provisions. For example, if the Commission treats a sale price as not reflecting market value under s 5(3), it must instead use a valuer’s determination; that determination will operate in the debt calculation under the Act’s machinery. Any penalties for false statements, fraud, or obstruction would be governed by the Act or other relevant laws, not by this instrument.

Finally, the instrument’s references to adjustments for charges and encumbrances (s 5(4)) mean that the Commission will reduce the gross market value by encumbrances other than those excluded by paragraph 52ZA(3)(c) or section 52ZF. The practical result can increase net recoveries. The instrument leaves to the Act the mechanisms and powers to recover sums, enforce debts, or apply sanctions where appropriate.

This instrument is expressly made under subsection 52ZMAA(6) of the Veterans’ Entitlements Act 1986 and is procedural in scope. Its text frequently refers back to provisions of the Act rather than reproducing them, so its operation is integrative rather than standalone. Key interaction points are described below, grounded in the instrument’s references.

Primary legislation: Veterans’ Entitlements Act 1986

• The instrument specifies methods "for the purposes of" subparagraphs 52ZMAA(5)(a)(i) and (b)(i) and for adjustments in subparagraphs 52ZMAA(5)(a)(ii) and (b)(ii) (s 5(1), s 5(4)). Therefore the instrument takes its operative force from the Act and is confined to assisting the Commission and private parties to apply those Act provisions.
• It uses the Act’s concept of "event time", tying valuation moments to events defined in paragraph 52ZMAA(1)(c) or (2)(c) of the Act (s 5(1)). The instrument assumes the Act supplies the substantive triggering events, with this determination providing the valuation mechanics.

Reference to other Act provisions

• Section 5(4) excludes certain charges from the deduction rule by reference to paragraph 52ZA(3)(c) and section 52ZF. The substance of those exclusions is not in this instrument; rather, the instrument defers to the Act’s definitions and exclusions for which encumbrances are omitted from reduction.

State and Territory law

• The instrument’s definition of "accredited valuer" includes persons "registered or otherwise authorised, under the laws of the State or Territory in which the property is situated, to value that kind of property" (s 4(c)). This creates a cross-jurisdictional interaction where State and Territory regulatory regimes for valuation practice determine whether a given valuer qualifies for the instrument’s purposes.

Professional and standards bodies

• The instrument recognises private professional standards by including Australian Property Institute certified practising valuers and members of the Royal Institution of Chartered Surveyors entitled to be described as Chartered Valuation Surveyors (s 4(a)-(b)). Those bodies’ membership and accreditation rules therefore intersect with the operation of this federal determination: only persons meeting those professional qualifications are acceptable valuers under the instrument.

Administrative law principles

• Although not stated in the instrument, the Commission’s satisfactions and formations of reasonable belief under sections 5(2)(c) and 5(3) will be exercised subject to general administrative law constraints and judicial review principles in the wider legal system. The instrument sets the matters that the Commission must consider and use, but the procedural fairness and reasonableness of that exercise may be tested through administrative law remedies rooted in other statutes and common law.

Other Commonwealth debt and recovery laws

• The instrument fits into the larger legal framework that governs Commonwealth recovery of debts, but it does not alter the mechanisms for recovery set out in the Act. It only prescribes valuation methods for the assets and property components of the debt calculation.

In short, the instrument operates as a procedural annex to the Act. Its applicability is conditional on the Act’s substantive provisions and it imports State and Territory regulatory criteria for valuers and private professional accreditation standards. The instrument does not create new offences or recovery powers separate to the Act.

The instrument includes an explicit commencement table and a note indicating the table relates only to the instrument "as originally made" (s 2). Section 2 sets the commencement as the later of 1 July 2022 and the day after registration. The instrument contains no amendment provisions in its text and no schedules that record subsequent modifications. The instrument’s own note explains that the commencement table will not be amended to deal with any later amendments of the instrument, and that column 3 is not part of the instrument and may be edited in published versions (s 2). The text supplied contains no later amending or saving provisions.

As made, the instrument was authored under subsection 52ZMAA(6) of the Act (s 3) and given the name Veterans’ Entitlements (Pension Loans Scheme,Market Value) Determination 2022 (s 1). Absent further material added to this source, there is no textual record here of any amendments, repeals, transitional provisions beyond the commencement rule, or later determinations that modify its content. The instrument’s own commencement provision effectively backdates its operation only to a fixed administrative start point, and does not itself create staged commencement for different provisions.

Users should note two housekeeping features included in the instrument that are relevant to amendment history and publication: first, the note in section 2 that the commencement table relates only to the instrument as originally made and will not be amended to reflect later amendments; second, the statement that information in column 3 of the table is not part of the instrument and may be edited in any published version. Those statements affect how the instrument will appear in consolidated or publicly published forms and indicate that publication annotations will not be taken as substantive amendments.

If future changes are made to the instrument, those changes would be recorded in amending instruments or notices published under the Act’s powers or in consolidated legislative publications. This instrument as presented contains no further amendment history or records of prior versions.

The instrument as supplied contains no record of litigation, no references to cases, and no mention of judicial consideration of its provisions. The text does not cite any decisions and does not include a schedule of prior litigation. Section 3 records the statutory authority under subsection 52ZMAA(6) of the Veterans’ Entitlements Act 1986, but the instrument itself is silent on any legal challenges or court rulings about the determination.

That absence in the instrument means there is no source-provided litigation history to report here. The instrument creates administrative decision points,most notably the Commission's satisfaction that a prior valuation remains current and the Commission's reasonable belief that a sale price has been reduced,which could be susceptible to legal challenge under general administrative law principles in the future. Any such litigation would be recorded outside this instrument in court decisions or in case law databases. The instrument does not itself predict, authorise, or limit judicial review remedies; it simply prescribes the valuation mechanics the Commission must apply.

Practitioners preparing disputes under the Act should therefore look beyond this instrument to case law on administrative decision-making, valuations, and debt recovery under the Veterans’ Entitlements Act 1986. However, no cases or litigation outcomes are cited in the instrument text that is the source for this analysis.

This instrument contains several features that create practical traps if parties do not meet its procedural expectations. The following points are drawn directly from the instrument’s text and explain where routine practice might produce adverse outcomes.

Sale price is primary but conditional (s 5(2)(a), s 5(3))

• A sale occurring before the event time will ordinarily set market value via the sale price. However the Commission may treat a sale price as not reflecting market value if it reasonably believes the price was reduced for reasons such as lack of good faith, unfair terms, non-arm’s-length dealing, or "any other circumstances" (s 5(3)). That catch-all phrase means sellers cannot assume that a sale price will be accepted without contemporaneous documentation to show the sale process was proper and the terms were market conforming.

Agreed values require bilateral consent (s 5(2)(b))

• An "agreed value" is only effective if both the Commission and the person seeking repayment or the person from whom the Commonwealth seeks to recover the debt agree to it. A party cannot unilaterally fix market value by agreement with a private counterparty; the agreement must be with the Commission. That makes negotiation with the Commission a necessary step if the parties want to avoid valuation costs or uncertainty.

Three-month valuation window requires Commission satisfaction and currency (s 5(2)(c))

• Reliance on an accredited valuer’s prior valuation is limited to valuations made within the three months before the event time, and even then only if the Commission is satisfied that there has been no material change since the most recent valuation day. The word "satisfied" positions an evidential burden on the party relying on that prior valuation to establish lack of material change. If circumstances have altered, the Commission may require a new valuation.

Definition of accredited valuer is prescriptive (s 4)

• Only valuers meeting one of three specific criteria qualify. If a valuer is not an Australian Property Institute certified practising valuer, not a RICS Chartered Valuation Surveyor, and not registered/authorised under State or Territory law where the property is located, their valuation will not be accepted as an accredited valuation for these purposes. In cross-jurisdictional contexts ensure the valuer’s registration or authorisation is of the kind to value that "kind of property" in that jurisdiction.

Timing of reduction for encumbrances depends on valuation pathway (s 5(4))

• The instrument requires calculated reductions for charges and encumbrances, but the timing varies: immediately before sale for sale-pathway valuations, at time of agreement if using an agreed value, at the end of the most recent valuation day if using a prior accredited valuation, or at the event time if an accredited valuer determines the value at event time. Parties must be ready to provide up-to-date information about encumbrances at the relevant time point.

Some encumbrances are excluded from reduction by reference to the Act (s 5(4))

• Section 5(4) excludes charges referred to in paragraph 52ZA(3)(c) or section 52ZF. The instrument does not state what those exclusions are. Practitioners must consult the Act to discover which encumbrances are excluded from the deduction rule, otherwise they may miscalculate net asset values.

Commission discretion creates evidential risk (s 5(2)(c), s 5(3))

• Several key steps depend on the Commission's substantive evaluations ("is satisfied", "reasonably believes"). Those standards are fact-dependent and may produce disputes. A party relying on a sale price or a prior valuation faces practical evidential obligations to establish integrity of the sale or lack of material change.

No procedural detail on evidentiary form

• The instrument prescribes decision criteria but gives no procedural template for evidence. For example, it does not state what documents suffice to show arm’s length dealing or what materials will satisfy the Commission on material change. Parties should not assume informal statements suffice.

Publication notes are not substantive (s 2)

• The commencement table note clarifies that column 3 is not part of the instrument and may be edited in published versions. Parties should not rely upon edits in published tables as substantive law. Check the instrument text itself for legal obligations.

These practical points show where operational mistakes can produce unfavourable valuation outcomes. The instrument centralises decision-making with the Commission and narrows acceptable valuation providers, making early engagement with the Commission and accredited valuers advisable.

Compliance with the determination requires attention to timing, choice of valuer, documentation of sales, management of encumbrances and constructive engagement with the Commission. The following steps map directly to the instrument’s operative provisions.

1. Establish which valuation pathway applies (s 5(2))

• Determine whether a sale of the relevant asset or property took place before the event time. If so, the sale price is the starting point.
• If no sale occurred, consider approaching the Commission to negotiate an agreed value. An agreed value requires the Commission’s agreement under s 5(2)(b).
• If no agreement is likely and there is a recent valuation, ensure the accredited valuer’s valuation falls within three months before the event time and gather evidence to demonstrate there has been no material change since that valuation day (s 5(2)(c)).
• If none of the above are available, commission an accredited valuer to determine market value at the event time (s 5(2)(d)).

2. Use an accredited valuer who meets the instrument’s definition (s 4)

• Retain a valuer who is either: an Australian Property Institute certified practising valuer; a RICS member entitled to be described as a Chartered Valuation Surveyor; or a valuer registered or otherwise authorised under the laws of the State or Territory where the property is situated (s 4(a)-(c)).
• Confirm in writing that the valuer’s accreditation fits one of the three categories and that the valuer’s scope includes the "kind of property" being valued.

3. If relying on a sale price, document the sale process (s 5(2)(a), s 5(3))

• Ensure the sale was conducted in good faith, on fair and reasonable terms, and on an arm’s length basis.
• Retain and provide to the Commission sale contracts, marketing material, sale process documentation, evidence of independent advice, and any comparables that support the sale price.
• Be prepared to rebut any Commission assertion that the sale price was reduced by non-market circumstances.

4. If seeking to rely on a prior valuation within three months, assemble evidence on material change (s 5(2)(c))

• Provide the Commission with the accredited valuer’s report and demonstrate that no material change affecting market value has occurred since the most recent valuation day. Material change may include significant market movements, physical damage, change of planning status, or new encumbrances.
• If uncertainty exists about material change, commission a current valuation to avoid dispute.

5. If agreeing a value with the Commission, formalise the agreement (s 5(2)(b))

• Negotiate with the Commission and obtain written agreement of the agreed value. Ensure the agreement references the relevant debt matter and records the timing and provenance of the agreed figure.

6. Compile accurate information on charges and encumbrances (s 5(4))

• Identify all charges or encumbrances over the asset or property and calculate their total value at the time applicable to the valuation pathway used:
  • Immediately before sale for sale-based valuations (s 5(4)(a));
  • At the time of agreement for agreed values (s 5(4)(b));
  • At the end of the most recent valuation day for prior accredited valuations (s 5(4)(c));
  • At the event time for valuations determined at event time (s 5(4)(d)).
• Determine whether any charge falls within the exclusions referred to in paragraph 52ZA(3)(c) or section 52ZF of the Act, and if so do not include it in the deduction calculation (s 5(4)).

7. Engage early with the Commission to limit dispute

• Where possible, approach the Commission early to seek agreement on valuation method or to confirm acceptability of a proposed accredited valuer. Early engagement can avoid protracted disputes over valuation pathway and timing.

8. Keep contemporaneous records

• Because the Commission applies satisfaction and reasonable belief assessments, maintain contemporaneous documentary evidence of property condition, offers, contract negotiation, marketing, valuation reports, encumbrance records and correspondence with the Commission and valuers.

9. Liaise with State or Territory regulators if necessary

• If relying on a valuer authorised by State or Territory law, confirm the valuer’s registration covers that kind of property and obtain proof of authorisation to avoid later objections under s 4(c).

10. Consult the Act on excluded encumbrances

• The instrument references paragraph 52ZA(3)(c) and section 52ZF for exclusions. Practitioners must consult these Act provisions to identify which encumbrances are excluded from reduction so that net market value is calculated correctly (s 5(4)).

Following these steps aligns with the instrument’s hierarchy, preserves evidentiary grounds to counter Commission queries under s 5(3), and ensures charges are calculated at the correct time as required by s 5(4). Where doubt remains, obtaining a current accredited valuation and engaging the Commission to reach an agreed value reduces implementation risk.