Transferring the farm

There are a number of ways that, as a farmer, you can reduce your assets in order to access a social security payment. This may be because you have reached pension age, have children that are working the farm as well and the profit is not large enough to sustain both generations.

One option may be to transfer the farm to your children and therefore reduce your assets to a level that allows you to receive a pension. Normally, all assets that you give away count as assessable for most Centrelink payments, as mentioned above.

However, you may use the foregone wages and granny flat provisions to legally overcome the disposal provisions. Seek advice from the Financial Information Services Officer at your local Centrelink office for further information about these provisions.

Foregone wages and previous contributions

If a farm or interest in a farm is transferred to a 'close relative', Centrelink will accept his or her previous unpaid work on the farm over a substantial period as valuable consideration for the farm or farm interest. 'Close relatives' include father, mother, son, daughter, brother or sister. Close relatives cannot claim foregone wages for any period in which they were a partner in the farm business.

This means that the value of previous work done by the person receiving the farm can be deducted from the value of the farm. The farm can be transferred at a lower value than otherwise would apply without being a 'deprived asset'.

Granny flat rights (life tenancies)

Farmers who have a long association with their farms (say, twenty years) may be able to lower their asset value by the use of granny flat rights. These are usually family arrangements where the older generation transfers the title to property and retains a right to live there for the rest of their lives (a life tenancy).

You should seek advice from the Financial Information Services Officer at your local Centrelink office about the department's requirements for using granny flat entitlements.