4.2.8.55 Full-time Australian Apprentice - Personal Income Test, Limits & Australian Apprentice Income Bank

Summary

This topic covers the following matters:

  • personal income test and limits for full-time Australian Apprentices,
  • access to the Australian Apprentice income bank (1.1.A.323) and higher income free area,
  • rules of the Australian Apprentice income bank,
  • carryover of Australian Apprentice income bank balance to working credits,
  • carryover of YA and Austudy Australian Apprentice income bank to student income bank, and
  • operation of the Australian Apprentice income bank.

The Australian Apprentice income bank operates in the same way as the student income bank except that the maximum level of credits is $1,000.00.

Act reference: SSAct section 1067G-H1 Effect of ordinary income on maximum payment rate (YA), section 1067G-J1 Student income bank (YA), section 1067L-D1 Effect of ordinary income on maximum payment rate (Austudy), section 1067L-E1 Student income bank (Austudy)

Personal income test & limits for full-time Australian Apprentices

The personal income test for full-time Australian Apprentices is the same as the ordinary income test for benefits with the following modifications:

  • the income free area is $437.00 per fortnight which is higher than the income free area for other payments, AND
  • the income bank may affect the assessment of an Australian Apprentice's income.

The income free area for full-time Australian Apprentices is usually indexed to the CPI on 1 January each year.

Note 1: The income free area has been paused for 3 years, from 1 January 2018. The next indexation will occur on 1 January 2021.

Note 2: The income free area for NSA, WA, PA, PPP and SA is $104.00 per fortnight and $143.00 for fortnight for YA job seeker.

Act reference: SSAct section 1190 Indexed and adjusted amounts

Policy reference: SS Guide 4.2.2 Benefits Income Test & Limits

Access to the Australian Apprentice income bank & higher income free area

Recipients have access to both the income bank and the higher income free area in any fortnight in which they are payable YA or Austudy as a full-time Australian Apprentice.

The following table shows when access to the income bank and the higher income free area starts for recipients in different situations.

A recipient who is… Has access from the…
a new YA recipient, date they satisfy the definition of an Australian Apprentice (1.1.A.324).
an existing YA recipient, date of the first fortnight the recipient is paid as an Australian Apprentice.
a NSA recipient, aged 22 to 24, who starts an Australian Apprenticeship and transfers to YA as an Australian Apprentice, first fortnight of YA qualification, if the course runs for 12 months or more.
aged 25 or more, who starts an Australian Apprenticeship. date their income support payment commences.

Rules of the Australian Apprentice income bank

The following rules apply to the Australian Apprentice income bank:

  • the maximum credit that can be saved is $1,000.00,
  • the maximum credit is not indexed each year,
  • the balance is NOT set to zero annually, and
  • all credits are annulled when an Australian Apprentice loses eligibility for payment.

Carryover of Australian Apprentice income bank balance to working credits

Recipients transferring from YA (Australian Apprentice) or Austudy to a payment eligible for working credit may be able to transfer all or part of their Australian Apprentice income bank to their working credit balance.

$1.00 Australian Apprentice income bank credit = 1 working credit

The following table lists possible carryover situations.

Recipient situation Carryover
A YA (Australian Apprentice) or Austudy (Australian Apprentice) recipient transfers to a non-student social security pension or benefit that has access to working credit. Unused Australian Apprentice income bank becomes a new working credit opening balance.
A recipient is granted a social security pension or benefit that has access to working credit within 12 months of their YA (Australian Apprentice) or Austudy (Australian Apprentice) being suspended or cancelled. Unused Australian Apprentice income bank becomes a new working credit opening balance.

Note: The recipient becomes eligible for working credit from the day they start receiving their social security pension or benefit and the carryover amount is available for use from that day.

Carryover of YA & Austudy Australian Apprentice income bank to student income bank

Recipients transferring from YA (Australian Apprentice) or Austudy (Australian Apprentice) to YA (student) or Austudy may be able to transfer their Australian Apprentice income bank balance to their student income bank

$1.00 Australian Apprentice income bank credit = $1.00 student income bank.

The following table lists possible carryover situations.

Recipient situation Carryover
A recipient who has Australian Apprentice income bank credits transfers from YA (Australian Apprentice) or Austudy (Australian Apprentice), to YA (student) or Austudy. Unused Australian Apprentice income bank balance becomes new student income bank opening balance.
A recipient ceases a social security pension or benefit that has access to Australian Apprentice credit and after a break of no more than 12 months commences YA (student) or Austudy that has access to student income bank. Unused Australian Apprentice income bank balance becomes the new student income bank opening balance.

Note: These carryover situations also apply to recipients receiving ABSTUDY.

Operation of the Australian Apprentice income bank

The following table shows how the student income bank operates when an Australian Apprentice has ordinary income (1.1.O.30) in a fortnight.

If the income is…   And…
LESS than the income free area, subtract the income from the income free area to determine the saved amount, add the saved amount to the recipient's income bank balance.
EQUAL to the income free area, there is no effect on payment, there is no effect on the income bank.
GREATER than the income free area, subtract the income free area from the income to determine the reduction for income,

if the reduction for income is LESS than or EQUAL to the income bank credit then subtract the reduction for income from the income bank credit.

If the reduction for income is GREATER than the income bank credit then reduce the income bank credit to zero.

Example 1: Belinda has been studying full-time for the last 2 years. Belinda finishes studies and commences work as an Australian Apprentice. At the time she finishes her studies she has credits in her student income bank of $6,000.00. Her fortnightly income from her Australian Apprenticeship is $537.00. On transfer from YA (student) to YA (Australian Apprentice) the income bank balance reduces from $6,000.00 to $1,000.00, as this is the maximum amount of credits that can be accumulated for a YA (Australian Apprentice). For the first 10 fortnights she works, she has enough credits in her income bank to reduce her ordinary income to zero. That means she is paid her usual rate of YA. Her Australian Apprentice income bank balance is then zero.

Example 2: Rod has a $300.00 credit in his income bank. He has ordinary income in one fortnight of $900.00 that is reduced by his $300.00 credit. The remaining $600.00 of ordinary income is subject to the personal income test, and Rod's rate of YA for that fortnight is reduced by $89.10 (50% of the amount between $437.00 and $524.00 ($43.50) and 60% of the amount over $524.00 ($45.60)). Rod has zero credits in his income bank. In the following fortnight Rod has ordinary income of $200.00, so his rate of YA is not reduced and he accrues $237.00 in his income bank (the difference between $437.00 and $200.00).

Example 3: Des has been working as a full-time Australian Apprentice for 6 months and is receiving YA. His income bank balance is zero. The factory in which Des works shuts down for 4 weeks and Des receives no payments from his employer during this time. Des continues to qualify as an Australian Apprentice. After this 4-week period Des accumulates credits in his income bank of $874.00, which he can use to offset his pay when he resumes his Australian Apprenticeship.

Example 4: Nick is unemployed and gets NSA and has built up 500 working credits. He starts an Australian Apprenticeship and his status changes to YA (Australian Apprentice). His 500 working credits are automatically converted to $500 in his Australian Apprentice income bank.

Act reference: SSAct section 1073E Opening balance

Policy reference: SS Guide 3.1.11.50 Working Credit Opening Balances & Carryovers, 3.1.11.20 Working Credit Accrual

Last reviewed: 2 January 2018