4.2.8.20 Dependent YA - Maintenance Income Test

Summary

This topic covers the following matters:

  • commencement of the maintenance income test (MIT),
  • exemptions from the MIT,
  • annualised amount of maintenance income,
  • maintenance income free area (MIFA),
  • calculating the 'MIT result'.

In order to calculate the reduction for parental income (4.2.8.05) a dependent YA claimant/recipient must have a 'MIT result' determined. The MIT only assesses maintenance income received by the YA recipient's parent for the purposes of supporting the individual YA recipient. Other maintenance income received by the parent in respect of other dependent children is not counted in this test.

In situations where the YA claimant/recipient is exempt from the MIT or where their parent's maintenance income does not exceed the MIFA, then the 'MIT result' is determined to be nil.

Commencement of MIT

The MIT commenced on 1 January 2017. It cannot affect a person's rate of YA prior to this date.

Exemptions from the MIT

YA claimants/recipients are exempt from the MIT if the claimant/recipient's parent or parent's partner is permanently blind and is receiving:

  • an age pension,
  • a disability support pension,
  • a service pension, OR
  • an income support supplement (VEA Part IIIA).

If the YA claimant/recipient is exempt from the MIT then the 'MIT result' for the YA claimant/recipient is nil.

Act reference: SSAct section 1067G-GA2 Parent exempt from FTB maintenance income test

FAAct Schedule 1 clause 19B Application of maintenance income test to certain pension and benefit recipients and their partners

Annual amount of maintenance income

To work out the annual amount of maintenance income for a parent of the claimant/recipient:

  • assume that the YA claimant/recipient is an FTB child of the parent, and
  • only take into account maintenance income received in relation to the YA claimant/recipient, and
  • take into account all maintenance income received in relation to the YA claimant/recipient including voluntary periodic maintenance paid in cash or in kind (e.g. the payment of school or university fees), and
  • in working out whether maintenance income is received in relation to the person, have regard to the considerations that would apply under the FAAct, and
  • have regard to maintenance income for the financial year current at the point-in-time at which the YA MIT is applied.

Act reference: SSAct section 1067G-GA3 Annualised amount of maintenance income

FAAct Schedule 1 clause 20 Effect of maintenance income on family tax benefit rate

Policy reference: FA Guide 3.1.7 Maintenance income test

Maintenance income free area (MIFA)

The MIFA is the amount of maintenance income the parent of a YA claimant/recipient can receive in relation to the YA recipient, before it affects the claimant/recipient's rate of YA.

The MIFA for a parent of a YA claimant/recipient draws on some of the principles and thresholds that are used to calculate the FTB Part A MIFA.

The value of the MIFA for each maintained YA claimant/recipient may depend on whether the parent also receives maintenance income for other dependent YA claimants/recipients, or FTB children.

As for the FTB Part A MIFA, the MIFA for YA has 2 components:

  1. A component for 'fixed costs' allocated in relation to a first 'maintained' child/young person (the 'first child MIFA amount'). In 2017-18 this amount is $1,587.75.
  2. A component allocated for each second and subsequent 'maintained' child/young person (the 'additional child MIFA amount'). In 2017-18 this amount is $529.25 for each additional child.

The rules for extending a MIFA in respect of each 'maintained' child/young person under the MIT for YA coordinate the allocation of the MIFA component for 'fixed costs' so that this is applied once only to a parent receiving maintenance. This includes checking whether recognition for 'fixed costs' of maintenance income received has been, or is likely to be, extended under the FTB Part A MIT (where an individual has 'maintained' children across FTB and YA).

This creates an 'order of precedence' in the extension of the MIFA component for 'fixed costs' whereby:

  • If there is a maintained YA recipient and a maintained FTB Child, the FTB Child gets the 'first child MIFA amount', and the YA recipient gets the 'additional child MIFA amount'.
  • If there is no maintained FTB Child, but there is only one maintained YA dependent, then the YA dependent gets the 'first child MIFA amount'.
  • If there is no maintained FTB Child, but there is more than one maintained YA dependent, then the YA dependents share the 'first child MIFA amount' and the 'additional child MIFA amounts'.

Table 1: Calculating the MIFA

Step Action
1

If there are no other dependent YA claimants/recipients, or FTB children, for whom the parent receives maintenance then the MIFA is: $1,587.75 (2017-18). (This is known as the FTB MIFA 'Column 2 amount').

If there are other dependent YA claimants/recipients, or FTB children, for whom the parent receives maintenance, go to Step 2.

2

If the parent also receives maintenance for an FTB child, or for both an FTB child and another YA claimant/recipient, then the MIFA is: $529.25 (2017-18). (This is known as the FTB MIFA 'Column 3 amount').

If the parent does not receive maintenance for an FTB child go to Step 3.

3

If the parent also receives maintenance for another YA claimant/recipient, but does not receive maintenance for any FTB child, then the MIFA is worked out using this formula:

(Column 2 amount + Column 3 amount for each other YA recipient) ÷ (1 + Number of other recipients)

See the example below.

Example: Maggie is a YA recipient. She has 2 brothers, Andrew and Joe, who also receive YA. All 3 siblings live with their mother who receives maintenance for each of them from their father.

The formula for calculating the MIFA for the purpose of Maggie's YA MIT is:

(Column 2 amount (Maggie) + Column 3 amount for other YA recipient (Andrew) + Column 3 amount for other YA recipient (Joe)) ÷ (1 (Maggie) + Number of other recipients (Andrew and Joe))
= ($1,587.75 + $529.25 + $529.25) ÷ (1 + 2)
= $2,646.25 ÷ 3
= $882.08

Therefore for Maggie the MIFA is $882.08. The MIFA for Andrew and Joe will also be $882.08 each.

Note: For the purposes of calculating a YA claimant's/recipient's MIFA, only FTB children and other dependent YA claimants/recipients for whom the parent receives maintenance income are taken into account. Dependents who are neither FTB children nor dependent YA recipients (e.g. dependents who attract AIC additional boarding allowance or a means tested ABSTUDY payment, but are not in receipt of YA and are not considered to be FTB children are not taken into account.

Act reference: SSAct section 1067G-GA4 to GA8 Maintenance income free area

FAAct Schedule 1 clause 22 How to calculate an individual's maintenance income free area

Calculating the 'MIT result'

The YA 'MIT result' is $0.50 for every $1.00 over the MIFA.

Table 2: Calculating the 'MIT result'

Step Action
1 Work out whether the YA claimant/recipient is exempt from the MIT (this topic). If the YA claimant/recipient is exempt, then the 'MIT result' for the YA claimant/recipient is nil.
2 If the YA claimant/recipient is not exempt, work out the annual amount of the parent's maintenance income.
3 Work out the parent's MIFA (Table 1).
4 Work out whether the parent's maintenance income (step 2) exceeds the parent's MIFA (step 3). If the parent's maintenance income does not exceed the parent's MIFA then the 'MIT result' for the YA claimant/recipient is nil.
5

If the parent's maintenance income exceeds the parent's MIFA, multiply the excess by 0.5. The result, divided by 26, is the (fortnightly) 'MIT result' for the YA claimant/recipient.

Act reference: SSAct section 1067GA Maintenance Income Test

Rate increase or decrease determination due to a 'revised estimate of maintenance income'

If a recipient's rate of YA has been recalculated as a result of a 'revised estimate of maintenance income' either made by or given to DHS, and DHS is satisfied that the revised estimate is reasonable, then the date of effect of the recalculation is the day when the revised estimate was made by or given to DHS. The recalculation will not be backdated beyond that date.

Example: Xia's rate of YA is originally calculated on 31 August using an estimate of maintenance income for her. Following a revised estimate of maintenance income, based on new information provided about Xia DHS determines, on 8 June the following year, that Xia's rate of YA must be recalculated resulting in a decrease. The date of effect of the decrease is taken to be 8 June (i.e. the date new information was provided) and therefore while Xia's YA rate has dropped from that date, Xia does not have a debt for previous YA payments made using an earlier estimate of maintenance income.

Example: Yilpi's rate of YA is originally calculated on 22 July using an estimate of maintenance income for him. Following a revised estimate of maintenance income DHS determines, on 17 November, that Yilpi's rate of YA must be recalculated resulting in an increase. The date of effect of the increase is taken to be 17 November, and therefore while Yilpi's YA rate has increased from that date, Yilpi is not owed any arrears for YA payments made using an earlier estimate of maintenance income.

Act reference: SS(Admin)Act section 109A Date of effect of determination under…, section 110(11A) If the Secretary makes a determination…, section 118(2C) If an adverse determination is made to give…, section 118(2D) If the Secretary makes a determination…

Last reviewed: 3 July 2017