Why does SASSA consider outstanding debt or loans as income with regard to the means test when applying for the old age grant?

The long answer

Thank you for your email asking why outstanding debts or loans are considered income with regard to the SASSA means test for the old age grant.

Just to be clear: SASSA does not regard outstanding debt or loans as income, but it does regard outstanding debt or loans as assets. SASSA has different thresholds for income and assets.

In the current SASSA old age means test, these are the income thresholds (i.e. the maximum amount you can earn and still qualify for the grant: A single person should not earn more than R97,320 per year (i.e. R8,110 per month).

A married person’s joint income with their spouse should not be more than R194,640 per year (i.e. R16 220 per month).

The current grant assets thresholds are:

Single persons: R1,372,800

Married couples: R2,745,600

This is what SASSA considers assets:

• Cash in the bank or any account with a bank or building society.
• The value of a house or land that you or your spouse own. If the property has a bond registered over it, it is regarded as having a nil value.
• A home that you own is not counted as an asset if you live in it.
• Investments like shares, retirement annuities if retired.
• Outstanding debts.

Sassa says that applicants must fall below the stipulated income and asset thresholds for their respective grant. If their finances exceed the threshold, they are not eligible for the grant. For married applicants, SASSA evaluates both partners’ finances collectively, and it does not matter whether a couple is married in community of property or not.

It is certainly difficult to understand why outstanding debt or loans are considered assets, but this is generally accepted, not just by Sassa.

Investopedia.com defines an asset as follows:

“An asset is a resource with economic value that an individual, a company, or a country owns or controls with the expectation that it will provide a future benefit.”

rcs.co.za in an article on the difference between assets and debts, says the following: “A loan may be considered both an asset and a liability (debt). When you initially take out a loan and it is received by you in cash, it becomes an asset, but it simultaneously becomes a debt on your balance sheet because you have to pay it back. Loans that are payable within one year are current assets and loans which have to be paid over a longer period are called non-current assets."

Wishing you the best,
Athalie