The Guides to Social Policy Law is a collection of publications designed to assist decision makers administering social policy law. The information contained in this publication is intended only as a guide to relevant legislation/policy. The information is accurate as at the date listed at the bottom of the page, but may be subject to change. To discuss individual circumstances please contact Services Australia.

1.1.S.125 Severe financial hardship - OWP, SWPP, LAWP, IMP


This severe financial hardship test is applied when establishing whether recipients serving a LAWP, SWPP, IMP or OWP are in severe financial hardship.

Not a member of a couple

Recipients who are not a member of a couple are considered to be in severe financial hardship when the total value of their liquid assets (1.1.L.50) is less than their fortnightly maximum payment rate.

Member of a couple

Members of a couple are considered to be in severe financial hardship when the total value of their joint liquid assets is less than twice the recipient's fortnightly maximum payment rate. In this test it is important to double the maximum payment rate of the recipient who is seeking to rely on the severe financial hardship test, NOT to add together the separate maximum payment rates of both members of the couple.

Example: A married JSP recipient has $900 in joint liquid assets. The recipient's fortnightly entitlement is comprised of $573.30 JSP, and $67.30 RA. The recipient's partner is working casually, and as a result receives only $420.00 JSP and $67.30 RA.

  • Twice the recipient's maximum payment rate is 2 √ó ($573.30 + $67.30) = $1,281.20.
  • It is NOT $573.30 + $420.00 + $134.60 = $1,127.90.
  • This recipient satisfies the severe financial hardship test, as the joint liquid assets ($900.00) are less than twice the recipient's maximum payment rate ($1,281.20).

Unavoidable or reasonable expenditure

Unavoidable or reasonable expenditure by a recipient serving a waiting period includes the day-to-day cost of living, (referred to as the reasonable cost of living) for that part of the waiting period already served, plus other unavoidable or reasonable expenditure.

Act reference: SSAct section 19C(4) Meaning of unavoidable or reasonable expenditure

Maximum payment rate (1.1.M.54)

The maximum payment rate includes RA, pension supplement, ES and PhA if payable in the recipient's circumstances. It does not include family assistance or add-ons such as RAA.

Personal financial crisis - OWP

From 1 July 2017, an exemption from the OWP on the basis of severe financial hardship only applies if the person is also experiencing a personal financial crisis. A person will be taken to be experiencing a personal financial crisis because at some time in the 4 weeks immediately before the person's start day:

  • they have been subjected to domestic violence
  • they incurred unavoidable or reasonable expenditure
  • the person was in gaol or psychiatric confinement
  • the person first entered Australia and was the holder of a humanitarian visa on that entry to Australia, OR
  • the person's principal place of residence was lost or sustained major damage as a result of an extreme circumstance.

Act reference: SSAct section 19C Severe financial hardship definitions, section 19DA(4) Other circumstances

Policy reference: SS Guide 1.1.P.236 Personal financial crisis - OWP

Last reviewed: