4.2.5 CP income & assets tests

Summary

This section describes the income and assets (1.1.A.290) tests that apply to a person claiming or receiving CP and the income and assets tests that apply to their care receivers. This includes the following matters:

  • personal income and assets tests for a CP claimant/recipient
  • income and assets tests for care receivers including
    • the appropriate tax year for the income test
    • the income and assets tests for a qualifying child (1.1.Q.17)
    • income and assets tests for a higher ADAT score adult (1.1.H.63)
    • income and assets tests for a lower ADAT score adult (1.1.L.130) and a qualifying child or children
    • income and assets tests for a lower ADAT score adult and dependent child, and
    • discretion, under certain circumstances, to decide that the care receiver assets test does not disqualify a person from CP.

Income & assets tests for a CP claimant/recipient

A person who claims or is receiving CP is subject to the pension income and assets tests.

Act reference: SSAct section 1064-E1 Effect of income on maximum payment rate, section 1064-G1 Effect of assets on maximum payment rate, section 1064-G3 Assets value limit, section 1064-G4 Pension reduction for assets in excess of assets value limit

Policy reference: SS Guide 4.2.1.10 Pensions income test, 4.2.1.20 Additional Free Area for Dependent Children, 4.2.3 Pensions & benefits assets tests

Budget 2009-10 - pension income test changes

Part of the Budget 2009-10 (12 May 2009) the Secure and Sustainable Pension Reform Package includes measures to better target pension payments to those who most need support.

From 20 September 2009, the higher income test threshold for carers with dependent children will be abolished to align the pension income test with the allowance and family payments income tests.

From 20 September 2009, the rate at which extra income above the threshold affects the pension will change from 40 cents to 50 cents in the dollar for singles. For couples, the rate will change from 20 cents to 25 cents in the dollar for each member of a couple.

A transitional safety net will apply for existing carers who would otherwise have their payments reduced by the new income test rules. These carers will continue to receive their existing payment based on the current 40 cent withdrawal rate and the additional free area for dependent children, until they are better off under the new rules, including the 50 cent withdrawal rate.

Carers over age pension age may be able to access the work bonus (3.1.15).

Act reference: SSAct section 1073AA Work bonus, section 1064 Rate of age, disability support, wife pensions and CP (people who are not blind), section 1066 Rate of BVA and WidB, section 1072 General meaning of ordinary income

Policy reference: SS Guide 3.1.15 Work bonus, 5.1.8.40 Pension reform - transitional arrangements

Care receiver income & assets tests

A person may qualify for CP if the income and assets of their care receiver/s (1.1.C.21) meet the requirements of the CP care receiver income and assets tests.

Care receivers satisfy the income test if the combined taxable income of all assessable persons is below the care receiver income limit for CP in SSAct section 198A(1).

Note: From 1 July 2010 parental leave pay is included as taxable income.

Care receivers satisfy the assets test if the combined assessable assets of all assessable persons are below the lower assets test limit for CP in SSAct section 198D.

Note: The income and assets of any person included in the care receiver income and assets tests are not to be taken into account more than once.

The ordinary income and assets tests that apply to all pensions are then applied to the carer to establish his or her rate of CP.

Exception: If the care receiver is a higher ADAT score adult and is receiving a social security pension or benefit, service pension or ISS, then the care receiver income and assets tests do not apply.

Note: According to the SSAct section 23(1):

  • 'service pension' means the following payments made under VEA Part III
    • an age pension
    • an invalidity service pension
    • a partner service pension, or
    • a carer service pension
  • an 'income support supplement' means income support supplement under VEA Part IIIA.

Act reference: SSAct section 198(7) Alternative to income/assets test for higher ADAT score adults, section 198A(1) Passing the income test, section 198D Assets test, section 23(1) Dictionary

Exchanged care (1.1.E.162)

While a separated or divorced parent has a qualifying child in their care, the income and assets of the other parent with whom they exchange the care of the qualifying child are excluded from the care receiver income and assets tests.

Act reference: SSAct section 197F Qualification-exchanged care of children

Appropriate tax year for the care receiver income test

For the calendar year in which the CP is to be paid, the base tax year is used for the care receiver income test. The base tax year is the tax year that ended on 30 June in the previous calendar year.

Example: John claims CP on 4 August 2009. It falls in the calendar year 1 January to 31 December 2009, so the base tax year is the tax year that ended on 30 June 2008 (i.e. the year of income beginning on 1 July 2007).

Change to appropriate tax year upon request

The care receiver, if they are 16 years of age or older, or a parent of a care receiver under 16 years of age, can request an assessment based on the current tax year if CP would not be payable to a person because the care receiver/s would not pass the care receiver income test. The request must be in writing. The tax year in which the request is made can be used if the taxable income/s are likely to be less than the income ceiling. The earliest that the current tax year can be used to assess qualification for CP is the day on which the written request is given.

Current tax year to be retained for consecutive calendar years in certain circumstances

If CP in a calendar year is assessed based on the current tax year for the care receiver income test, the current tax assessment is retained for the following calendar year if:

  • the CP would be continuous from the calendar year to the next calendar year
  • the care receiver's assessable taxable income for the current tax year is less than the taxable income for the base tax year for the new calendar year, and
  • the care receiver's assessable taxable income for the base tax year for the new calendar year is above the income ceiling.

Change to appropriate tax year because of a notifiable event

If a notifiable event occurs while the person is receiving CP and as a result the care receiver's taxable income would exceed the income ceiling in the tax year in which the event occurs, or the following tax year, the appropriate tax year is the year in which the taxable income exceeds the income ceiling. A request may then be made to change the appropriate tax year (see Change to appropriate tax year upon request).

Act reference: SSAct section 198C Appropriate tax year

SS(Admin)Act section 70 Care receiver in respect of whom CP being made

Income & assets tests for a qualifying child

If the qualifying child (or children) lives with his or her parent (natural, adoptive or legal guardian), the child's (or children's) taxable income and assessable assets include the taxable income and assessable assets of the:

  • parent and the parent's partner (1.1.P.85) (where applicable)
  • child/ren, and
  • any other FTB children of the parent and the parent's partner (where applicable).

Note: Where the child/ren does/do not live with their parent or guardian, only the income and assets of the child/ren are assessable for the care receiver income and assets tests.

Act reference: SSAct section 23(1)-'taxable income', section 198B Taxable income, section 198D Assets test

Income & assets tests for a higher ADAT score adult

Income for a higher ADAT score adult includes the taxable income of the adult and the adult's partner (where applicable).

Assessable assets for a higher ADAT score adult include the assets of:

  • the higher ADAT score adult
  • the higher ADAT score adult's partner (where applicable)
  • the assets of any FTB children of the higher ADAT score adult, and
  • the assets of any FTB children of the partner of the higher ADAT score adult (if any).

Income & assets tests for a lower ADAT score adult & qualifying child/ren

Income for a lower ADAT score adult and qualifying child/children includes the taxable income of:

  • the lower ADAT score adult
  • the lower ADAT score adult's partner (where applicable)
  • any FTB children (except the other care receiver/s) of the lower ADAT score adult
  • the child or children with disability or medical condition
  • the parent and the parent's partner (if applicable) of each qualifying child, and
  • any other FTB children of each parent and their partner (where applicable).

Assessable assets for a lower ADAT score adult and qualifying child/ren include the assets of:

  • the lower ADAT score adult
  • the lower ADAT score adult's partner (where applicable)
  • any FTB children (except the other care receiver/s) of the lower ADAT score adult
  • the child or children with disability or medical condition
  • the parent and the parent's partner (if applicable) of each qualifying child, and
  • any other FTB children of each parent and their partner (where applicable).

Note: Where the child/ren does/do not live with their parent, only the income and assets of the child/ren is assessable for the care receiver income and assets tests.

Income & assets tests for a lower ADAT score adult & dependent child

Income for a lower ADAT score adult and dependent child includes the taxable income of:

  • the lower ADAT score adult
  • the dependent child
  • the lower ADAT score adult's partner (where applicable), and
  • any other FTB children (except the other care receiver) of the lower ADAT score adult.

Assessable assets for a lower ADAT score adult and dependent child include the assets of:

  • the lower ADAT score adult
  • the dependent child
  • the lower ADAT score adult's partner (where applicable), and
  • any other FTB children of the lower ADAT score adult.

Act reference: SSAct section 198B Taxable income, section 198D Assets test

Discretion to decide that the care receivers assets test does not disqualify a person from CP

A delegate of the Secretary has the discretion to decide that the care receiver assets test does not disqualify the carer from CP under certain conditions.

This discretion can be applied only if a request is lodged and if the following circumstances are met:

Discretion can be applied under SSAct

if the sum of the value/s of the care receiver/s assets is …

(section 198D)

and the sum of the value/s of the care receiver/s liquid assets is …

(Current liquid assets limit is in section 198N(5))

the sum of the amounts of the care receiver/s accepted estimated taxable income for the current financial year is …

(The threshold amount is worked out under section 198N(6))

section 198N(2) Failing assets test but passing special income test more than the lower assets test limit but not more than the upper assets test limit less than the liquid assets limit, and less than the threshold amount.
section 198N(4) Failing assets test by large margin but passing special income test more than the upper assets test limit less than the liquid assets limit, and less than the threshold amount.
section 198N(3) Failing assets and special income tests more than the lower assets test limit but not more than the upper assets test limit equal to or greater than the liquid assets limit, or equal to or more than the threshold amount.

For current limits see the Carer Payment - Income and assets test page on the DHS website.

Act reference: SSAct section 198A Income test, section 198D Assets test, section 198N Exemption from care receiver assets test

NDIS amounts

NDIS amounts (1.1.N.03) held by, or on behalf of, an NDIS participant (1.1.N.05) to pay for future disability expenses under their NDIS plan (1.1.N.06) are an exempt asset, including for the carer receiver assets test.

NDIS amounts are also not considered to be a liquid asset, including for the care receiver/s liquid assets test.

Explanation: NDIS amounts are to provide care and support for people with disability and are not for the NDIS participant's income support.

Act reference: SSAct section 1118(1) Certain assets to be disregarded in calculating the value of a person's assets, see (sb), section 1118(1AD) NDIS amounts, section 19B Financial hardship (CP) liquid assets test definition, see (i)

Policy reference: SS Guide 4.6.2.10 General provisions for exempt assets

Disposal of assets

The deprivation of assets provisions apply if a care receiver (or other relevant person) disposes of assets (1.1.D.210) with the intention of enabling a carer to qualify for CP. This is covered in 4.2.3.

Act reference: SSAct section 198N Exemption from care receiver assets test, section 198F to section 198M Disposal of assets

Policy reference: SS Guide 4.1 Deprivation of Income & Assets, 4.2.3 Pensions & benefits assets tests

Last reviewed: 6 May 2019