188.8.131.52 Assessment of Gainful Employment for Standard Rate MOB
To qualify for the standard rate MOB, recipients must also adhere to the 32 hours every 4 weeks rule. Refer to 184.108.40.206.
Act reference: SSAct section 1035(1) Qualification for MOB
Policy reference: SS Guide 220.127.116.11 Qualification for MOB, 18.104.22.168 Assessment of 32 hours every 4 weeks rule for standard rate MOB, 22.214.171.124 Assessment of Continuing Basis for Standard Rate MOB, 126.96.36.199 Continuation of MOB during Leave from Employment & Training
Recipients in home based employment
The following factors must be considered in assessing whether a recipient in home based employment is gainfully employed (1.1.G.10):
- the type of work being undertaken,
- who the work is being undertaken for, and
- the level of remuneration received.
There must be clear evidence that the work performed by the recipient is the consequence of an employer/employee relationship.
Example 1: A recipient employed by an organisation engaged in telephone selling or consumer surveys would be regarded as gainfully employed because they are clearly engaged as an employee.
Example 2: A recipient who undertakes piece work would also be gainfully employed, as their remuneration is based on meeting a quota.
Level of remuneration
It is irrelevant that the level of remuneration may be less than that which other employees in similar work may earn. The remuneration should not be a token payment however, as these situations are not regarded as gainful employment. If a recipient claims to be employed by a family member it must be clear that the recipient is performing work and is being paid a realistic amount of money for the work.
Example: A recipient who receives $2.00 per week for domestic duties in a relative's house would not be considered gainfully employed.
Recipients in paid employment
Salaried employees or wage earners are considered to be gainfully employed because they are in paid employment.
Recipients in self-employment
A self-employed recipient is regarded as gainfully employed if they are substantially involved in running a business that is of a commercial character and that is intended to produce financial gain.
For self-employed recipients, indicators of gainful employment include:
- there is more than just an intention to engage in business,
- Example: A person still setting up or preparing to start a business may not yet be engaging in business.
- a decision to commence business has been made,
- Example: An opening date for a small retail outlet has been advertised.
- the activity is planned, organised and carried on in a business-like manner,
- Example: This may be indicated by business records, books of account, business premises, licences, qualifications and a registered business name.
- a contract exists to produce results (see example 1) or for labour (see example 2),
- Example 1: A contract with a publisher to write a book or a commission to produce a piece of artwork.
- Example 2: A signed and accepted quote to undertake landscaping of a garden.
- the work is done for the business or as part of the business, and
- the risk of the profit or loss from the work rests with the person or the business.
In addition, for a person's self-employment to be considered gainful employment there must be a clear purpose and prospect of profit. That is, there must be both an intention and the potential to make a profit, even if a profit is unlikely to be made in the short term.
Whether a business is currently running at a profit or loss or whether income is currently being received is not conclusive in determining whether a self-employed person is gainfully employed for MOB purposes. However, where a business is not currently making a profit, the decision maker must be satisfied that the business has a purpose and prospect of profit, taking into consideration factors such as:
- the length of time the business has been running at a loss, and
- the nature of the business, and
- the person's work in organising the business.
If it is determined that a person's business is not, or is no longer, operating with a purpose and prospect of profit the person is not gainfully employed for MOB purposes.
Example: A self-employed claimant has been operating at a loss for 3 years; however they provide a business plan and letter from their accountant indicating that the business is expected to make a profit in the near future. Based on the evidence provided, the decision maker is satisfied that the business has a purpose and prospect of profit. The claimant is therefore considered to be gainfully employed.
Recipients will not be gainfully employed in self-employment if:
- the activity is better described as a hobby, recreation or sporting activity,
- Example: A person who makes quilts for family and friends for the cost of the materials is not engaged in a business.
- the activity is speculative in nature,
- Example: A person who writes poetry in their spare time in the hope of one day producing a book for publication is not engaged in a business.
- they invest capital, but not time and effort in a business, or
- the sole purpose for the business is to qualify for MOB.