I have been working on our family farm for 25 years for little return. Farm does carry a debt. Can the farm be made over to me and Dad get pension? Dad is 81 and wants to still live in his own house on the farm. His only income is from the farm at the moment.
Andy, Great Western, VIC
Top answer provided by:
Great question and quite complex!
There are a lot of other important questions that would need to be addressed.
The farm could be transferred to you. You would need to seek legal advice in regard to the stamp duty as there may be some exemptions relevant to you. There may also be capital gains tax depending on when the farm was originally purchased.
If the farm was transferred to you for ‘no consideration’ this may be treated as a gift for Centrelink purposes, which would impact your Dad getting a pension.
However, when assessing your dad’s eligibility for Centrelink ‘forgone earnings’ on the farm by you, could be taken into consideration. As stated, you have worked on the farm for 25 years for little return and this may constitute forgone earnings.
You would need to speak to the Financial Information Service (FIS officer) at Centrelink to help you with this, as this area can be quite complex. This may help you getting around the ‘no-consideration’ issue.
If the farm was on one title and your father continued to live there and you continued to work on the farm, your Dad may get an exemption on the ‘asset’ test part of the Centrelink aged pension assessment and this may get the desired result for your Dad without having to transfer the farm to you and without significant expense. This is under the extended land use test.
If there were multiple titles involved it would make it more difficult in the above scenario, but it would depend on the number of titles and value, however the ‘home farm’ title should be exempt from the Centrelink assets test.
The land needs to have been owned for 20 years and Centrelink assess based on the below:
Extended land use test
To meet this test, you need to be using the land to make an income, if possible. This could mean either:
- you or a family member are running a farming business on the land
- leasing the land to someone else for a commercial rate of return
- having little or no scope to earn income from the land.
When applying the extended land use test Centrelink consider all of the following:
- where the land is
- your family situation, for example caring responsibilities
- your health
- if any of your family have their own house on the land
- if the land supports you and your family or a younger generation of your family
- any commercial land use
- any scope for commercial land use
- environmental issues, like a drought
- if the land combines 2 or more blocks or titles.
Some other points of consideration would be farm succession planning if you have been working on the farm for 25 years with little return, what is the long-term plan for the farm and what would happen if your Dad passed way tomorrow?
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