Home contents shouldn't always be valued at $10,000

What are household contents?

Household contents and personal effects include:

• Clothing

• Jewellery

• Hobby collections (for example, stamps or coins)

• Furniture

• Paintings and works of art

• Soft furnishings (for example, curtains)

• Electrical appliances other than permanent fixtures (permanent fixtures such as stoves and built-in items are regarded as part of the home, not household and personal effects)

Household contents and personal effects does not include:

• Vehicles, caravans or trailers

• Bullion (gold, silver or platinum bars, ingots or nuggets)

• Collections held for other than personal purposes 

• Fishing and other licences

• Racehorses

• Life interests / Granny flat interests

• Unmounted gems

Valuing household contents and personal effects

Centrelink recipients must provide the net market value of their total household and personal effects. This is not the replacement or insured value. It is the price at which a willing purchaser and a willing, but not anxious vendor, would reach agreement.

The market value of an asset is not reduced by any costs which may be incurred if the asset was to be sold. However, the market value of an asset is decreased by the value of a relevant debt or encumbrance such as:

a) an encumbrance secured against the asset, or 

b) an unsecured loan that is evidenced to have been specifically obtained to purchase the asset.

What is the significance of the $10,000 valuation?

A person's (and their partner's) personal effects and household contents are assessed as being $10,000, UNLESS the person advises a different amount .

Is the client obliged to tell Centrelink a different value?

• If the net market value of the household contents is less than $10,000, then the client is not obligated to advise a different value. However, if they don’t notify the market value, then a value of $10,000 will be used. Therefore, it is in the client’s interest to advise Centrelink of the correct market value. Where household contents are estimated to be less than $10,000, Centrelink will accept the person’s assessment unless there are very strong indications to suggest that the value is significantly understated.

• If the net market value of the household contents is more than $10,000, the client is obligated to advise what the actual net market value is, in which case that is the value that is used for asset test purposes. 

Factors to consider in determining whether the estimate is overstated or understated include:

• Has the client provided a value that appears to include the value of their home, for example $900,000?

• Does the value seem consistent with the client’s circumstances, for example has an estimate of $100,000 been provided for a client who has advised that they have minimal financial assets?

• Will the estimate the client has provided impact their rate of payment? 

If the person's valuation appears to be significantly understated, Centrelink will ask how the value was arrived at and will explain the meaning of market value.

Consequences of providing false or misleading information to Centrelink

If it is determined that the Centrelink recipient has provided false or misleading information regarding the value of their assets (or income), and this has led to them receiving more social security benefits than they should have been entitled to, this overpaid amount may form a debt that the individual must repay to Centrelink.

Centrelink debts can be repaid in several ways , including via instalment payments, or deductions from ongoing Centrelink benefits. There are only limited circumstances where debts may be written off or waived .

Conclusion

Accurately valuing household contents and personal effects is essential for meeting Centrelink’s asset test requirements. By providing a realistic net market value and understanding the $10,000 threshold, individuals can ensure compliance and avoid potential penalties. Supplying correct information helps protect entitlements and prevents unnecessary debts to Centrelink.