1.1.I.40 Indexation factor

Definition

The PPL income limit is indexed to the CPI. The indexation factor is used to calculate the indexed estimate or indexed actual income that may be used to establish the PPL income limit is derived by dividing the index number for the reference December quarter (i.e. the most recent December quarter before the indexation day) by the index number for the base December quarter (the December quarter that has the highest index number of the December quarters before the reference December quarter, but no earlier than December 2007).

The index number for a quarter means the All Groups Consumer Price Index number that is the weighted average of the 8 capital cities and is published by the Australian Statistician.

The indexation factor is worked out to 3 decimal places but rounded upwards by 0.001 if the fourth decimal place is more than 4.

If the indexation factor would be less than one, it is to be increased to one.

Act reference: PPLAct section 43 The indexation factor

Policy reference: PPL Guide 2.2.3.30 Indexation of PPL Income Limit for PLP

Last reviewed: 8 May 2017