4.2.2 Benefits Income Test & Limits
This section contains one topic describing the ordinary income (1.1.O.30) test as it applies to benefits.
This section covers the following matters:
- applicable payments,
- calculating personal and partner income,
- partner income free area limits,
- the benefits income test,
- the effect of the IMP (1.1.I.60),
- variation of payment for farm household allowance, and
- variation for SA.
The benefits income test applies to the following payments:
- newstart allowance,
- sickness allowance,
- PA, UNLESS the primary benefit is SpB,
- widow allowance,
- youth allowance,
- austudy payment, and
- parenting payment (partnered).
The rate paid to a dependent YA recipient is also subject to a parental income test. This is described in a separate topic.
Policy reference: SS Guide 184.108.40.206 Full-time Students - Personal Income Test, Limits & Student Income Bank, 220.127.116.11 PPP income & assets tests & limits, 4.2.7 DRA income test, 4.2.8 YA Means Tests & Limits
Calculating personal & partner income
A person's rate of benefit is worked out using their own income, calculated on a fortnightly basis.
If the person is a member of a couple (1.1.M.120), the rate is also worked out using excess partner income, worked out on a fortnightly basis. The calculation of both the amount of the person's own income and the excess partner income is affected by the type of payment received by the person's partner (1.1.P.85).
The following table shows the way in which income is calculated for benefit purposes for members of a couple.
|If the partner receives…||Personal income is…||Excess partner income is…|
|a social security benefit (1.1.S.190), other than dependent YA,||the amount by which the partner's income exceeds the partner income free area.|
|no payment,||their own income,||the amount by which the partner's income exceeds the partner income free area.|
|a social security pension (1.1.S.220) or a service pension (1.1.S.90),||half the couple's combined income,||zero.|
|dependent YA (1.1.D.100),||their own income,||zero.|
The income used in rate calculations is after any modifications made by the working credit or student income bank arrangements.
Partner income free area limits
The partner income free area is the MAXIMUM amount of ordinary income a person's partner may have without affecting the person's benefit. The following table shows partner income free area limits.
|If a partner is…||And has…||Then the partner income free area is the amount of the partner's income, rounded up to the nearest dollar, beyond which…|
|NOT receiving a social security benefit,||NOT turned 22,||YA would not be payable to the partner if the partner were qualified for YA and were not undertaking full-time study. (The cut out point for YA job seeker recipients is used even where the partner is a student).|
|turned 22,||NSA would not be payable to the partner if the partner were qualified for NSA.|
|turned age pension age,||
NSA would not be payable to the partner if the partner were qualified for NSA.
Note: The partner is assumed to be qualified for NSA even though the person is above the upper age limit for that payment. In such a case the rate of NSA is assumed to include the applicable amount of pension supplement payable under Module BA of Benefit Rate Calculator B to persons of age pension age.
|receiving a social security benefit,||-||the amount of the partner's income beyond which the benefit would not be payable to the partner.|
Act reference: SSAct section 23(1)-'social security benefit'
Benefits income test
The following table shows the 7 steps involved in applying the income test for benefits.
|1||Determine the person's fortnightly ordinary income.|
Does the person's ordinary income exceed the ordinary income free area of $104.00 per fortnight (pf) for NSA, WA, PA, PPP, and SA, or $143.00 for YA job seeker, or $437.00 pf (2017 value) for full-time YA students (including Australian Apprentices) and Austudy recipients?
If the recipient is a member of a couple, determine the partner income free area.
Determine the ordinary income reduction by using step 4A if the person is a full-time YA student (including Australian Apprentices) or an Austudy recipient, or step 4B for a YA job seeker (including YA single principal carer parents), or step 4C for NSA single principal carer parents and 4D for other cases.
(The ordinary income reduction is the amount that will be deducted from the person's rate of payment in respect of their own income.)
For any income between $437.00 and $524.00 pf, multiply by 0.5. The result is amount A.
For remaining income above $524.00 pf, multiply by 0.6. The result is amount B.
Add amount A and amount B.
Go to step 5.
For any income between $143.00 and $250.00 pf, multiply by 0.5. The result is amount A.
For remaining income above $250.00 pf, multiply by 0.6. The result is amount B.
Add amount A and amount B
Go to Step 5
For any income of $104.00 and over, multiply by 0.4.
Go to step 7.
For any income between $104.00 and $254.00 pf, multiply by 0.5. The result is amount A.
For remaining income above $254.00 pf, multiply by 0.6. The result is amount B.
Add amount A and amount B.
If the person is a member of a couple, determine the excess partner income
(see the tables under the previous headings for an explanation of this concept).
Multiply the excess partner income by 0.6.
RESULT: THE PARTNER INCOME REDUCTION.
Determine the person's income reduction by adding:
RESULT: THE PERSON'S INCOME REDUCTION.
For examples of calculations refer to 5.5 Samples of Rate Calculations.
Note: These thresholds and limits are usually indexed annually by CPI on 1 July. However, under the Social Security Legislation Amendment Act 2017, the indexation of income free areas for these payments was paused for 3 years from 1 July 2017. Indexation resumes on 1 July 2020.
Act reference: SSAct section 1068-G1 Effect of ordinary income on maximum payment rate
Effect of IMP
Lump sum leave or termination payments received by a person (or their partner) on paid leave or on termination of employment and not rolled over are treated as income over a period equivalent to that covered by the payment. People are expected to use leave and termination payments to support themselves before being paid a full rate of allowance. For some people, this will mean their rate of payment will be nil. However, some people may have a reduced rate payable for the period covered by the IMP as a result of applying the income test.
Policy reference: SS Guide 4.3.4 Income Maintenance Period
Variation of payment for farm household allowance (FHA)
FHA is paid under the Farm Household Support Act 2014 (FHS Act) on behalf of the Department of Agriculture.
The maximum rate of FHA is linked to, and is the same as the maximum rate of NSA payable under social security law.
Different rates apply depending on a recipient's circumstances, for example whether they are single or partnered.
This means that FHA is also subject to the personal and partner income test in social security law, and the farm and non-farm assets thresholds within the FHS Act.
Variation for SA
Payments from approved friendly societies (1.1.A.215) for the incapacity for which SA is paid are NOT defined as income for SA.
Policy reference: SS Guide 18.104.22.168 Payability of SA - Payments from an Employer