1.1.S.125 Severe financial hardship - OWP, SWPP, LAWP, IMP
Not a member of a couple
Recipients who are not a member of a couple are considered to be in severe financial hardship when the total value of their liquid assets (1.1.L.50) is less than their fortnightly maximum payment rate.
Member of a couple
Members of a couple are considered to be in severe financial hardship when the total value of their joint liquid assets is less than twice the recipient's fortnightly maximum payment rate. In this test it is important to double the maximum payment rate of the recipient who is seeking to rely on the severe financial hardship test, NOT to add together the separate maximum payment rates of both members of the couple.
Example: A married NSA recipient has $620 in joint liquid assets. The recipient's fortnightly entitlement is comprised of $293.80 NSA, and $25.00 RA. The recipient's partner is working casually, and as a result receives only $250.00 NSA and $25.00 RA.
- Twice the recipient's maximum payment rate is 2 × (293.80 + 25.00) = $637.60.
- It is NOT 293.80 + 250.00 +50.00 = $593.80.
- This recipient satisfies the severe financial hardship test, as the joint liquid assets ($620) are less than twice the recipient's maximum payment rate ($637.60).
Unavoidable or reasonable expenditure
Unavoidable or reasonable expenditure by a recipient serving a waiting period includes the day-to-day cost of living, (referred to as the reasonable cost of living) for that part of the waiting period already served, plus other unavoidable or reasonable expenditure.
Act reference: SSAct section 19C(4) Meaning of unavoidable or reasonable expenditure
Maximum payment rate (1.1.M.54)
Personal financial crisis - OWP
From 1 July 2017, an exemption from the OWP on the basis of severe financial hardship only applies if the person is also experiencing a personal financial crisis. A person will be taken to be experiencing a personal financial crisis because at some time in the 4 weeks immediately before the person's start day:
- they have been subjected to domestic violence,
- they incurred unavoidable or reasonable expenditure,
- the person was in gaol or psychiatric confinement,
- the person first entered Australia and was the holder of a humanitarian visa on that entry to Australia, OR
- the person's principal place of residence was lost or sustained major damage as a result of an extreme circumstance.