3.8.1.108 Assessing RA payable
Summary
This topic discusses how to determine the rent amount that RA should be determined from. Generally, RA is payable only on the amount of rent paid or payable by the RA recipient net of any subsidies or payments from tenants. However, there are a few exceptions. Details of the most common situations are:
- income support recipients who sub-let in community or co-operative housing
- income support recipients who reside in disability program accommodation
- state and territory rent relief schemes
- rent paid by insurance companies
- defence housing
- refugees
- student scholarships
- rent in return for work, and
- income support recipients with a home based business.
Note: Rent paid by a family member or friend is considered as being paid by the RA recipient, in line with the rent liability noted on the formal tenancy agreement.
Income support recipients who sub-let in community or co-operative housing
A recipient who sub-lets a house that is managed by a co-operative or community housing group qualifies for RA based on the amount of rent paid or payable by the recipient. This is usually a given percentage of their income.
Income support recipients who reside in disability program accommodation
Some recipients reside in disability accommodation provided by a government or community agency. The accommodation may be owned by the SHA but managed by the disability service agency. However, for administrative convenience, rent may be paid directly to the SHA. A recipient in disability program accommodation qualifies for RA only for the amount paid or payable by the recipient for accommodation; not for amounts payable for maintenance and service fees.
Note: Recipients who sub-let in community or co-operative housing and recipients who reside in disability program accommodation do not have formal tenancy agreements with the SHA and, as such, are not affected by the rules for sub-tenants of SHA housing and their housing is not considered 'Government rent'. Recipients in these circumstances may therefore qualify for RA. This applies even if these groups (i.e. the community or co-operative housing group or the disability program accommodation group) receive funding or dwellings from the SHA.
Current state & territory rent relief schemes
Some state and territory governments offer rent relief schemes which impact on eligibility for RA. The payments under the government schemes and their treatment under RA provisions are as follows:
| State government | Scheme name | Details of scheme | Effect on RA |
|---|---|---|---|
| NSW | Rent Choice Start Safely | Subsidy paid to people who do not have a stable and secure place to live due to domestic or family violence. | Qualify for RA on amount of rent nominated on their lease. |
| NSW | Rent Choice Youth | Subsidy paid to young people aged 16 to 24 years who are willing to engage in training, education and employment. | Qualify for RA on amount of rent nominated on their lease. |
| NSW | Rent Choice Veterans | Subsidy paid to former members of the permanent Australian Defence Force who have been on active service during wartime and/or in an operational area. This includes peacekeeping after 1 August 1990. | Qualify for RA on amount of rent nominated on their lease. |
| NSW | Rent Choice Assist Trial | Subsidy paid to low-income households in Hurstville, Campbelltown, Blacktown and Newcastle/Lake Macquarie. | Qualify for RA on amount of rent nominated on their lease. |
| NSW | Rent Choice Transition | Rent Choice Transition applies to current social housing tenants who would like to leave public housing and move into a tenancy in the private rental market. | Qualify for RA on amount of rent nominated on their lease. |
| NSW | Private Rental Subsidy | Subsidy to assist clients to access affordable accommodation in the private market while waiting for a suitable social housing property to become available. | Qualify for RA on amount of rent nominated on their lease. |
| Qld | Rental Security Subsidy | Subsidy to provide temporary financial support, up to a maximum of 6 months, to help sustain a rental tenancy. | Qualify for RA on amount of rent nominated on their lease. |
Superseded state & territory rent relief schemes
Some state and territory governments offered rent relief schemes which impacted on eligibility for RA. The payments under the government schemes and their treatment under RA provisions are as follows:
| State government | Scheme name | Details of scheme | Effect on RA |
|---|---|---|---|
| NSW | Private Rental Subsidy - Special (closed to all applicants from 12 June 2012) | Subsidy paid to HIV/AIDS positive people who meet priority housing eligibility criteria. | Qualify for RA on amount of rent nominated on their lease. |
| NSW | Private Rental Subsidy - Disability (closed to all applicants from 12 June 2012) | Subsidy paid to people who meet priority housing eligibility criteria or have reached their turn on the NSW housing register; and have a disability. | Qualify for RA on amount of rent nominated on their lease. |
| NSW | Private Rental Subsidy - Start Safely (changed to Rent Choice Start Safely - see previous table) | Subsidy paid to women with children escaping domestic violence who are homeless or at risk of homelessness. | Qualify for RA on amount of rent nominated on their lease. |
| NSW | Private Rental Subsidy - Youth (changed to Rent Choice Youth - see previous table) | Subsidy paid to youth aged 16 to 24 years who meet housing eligibility criteria and have the capacity and willingness to engage in education, training or employment. | Qualify for RA on amount of rent nominated on their lease. |
| SA | Student Rent Relief (closed to all applicants in February 2007) | Subsidy paid to tertiary students who live more than 75km from home. | Qualify for RA on gross rent payable. |
| SA | Student Housing Program | The household rent under this scheme is 75% of the 'market rent' paid by government housing tenants, regardless of the number or income of people sharing the property. | Rent is paid to the Government therefore it is Government rent and tenants under this scheme do not qualify for RA. |
Rent paid by insurance companies
A rent subsidy or contribution provided by an insurance company will be taken into account when an application for RA is assessed. If the subsidy or contribution is included in a recipient's income and assets test, RA (where recipient otherwise qualifies) will be calculated on the recipient's gross rent liability, i.e. the amount of rent charged for the accommodation overall. If the subsidy or contribution is not included in a recipient's income and assets test, RA (where recipient otherwise qualifies) will be calculated on the recipient's net rent liability, i.e. the amount of rent payable by the recipient, after the subsidy or contribution is subtracted.
| Scenario | Effect on RA |
|---|---|
| Recipient's temporary accommodation is totally, or partially, paid (subsidised) by an insurance company while their compensation claim is being processed. | If the insurance company is providing free accommodation, the individual does not qualify for RA.
If the rent amount is partially paid by an insurance company, the individual qualifies for RA:
|
Defence housing
Defence Force members generally have 2 ways of paying rent, through DHA or a rent subsidy. If members reside in a DHA home, then members qualify for RA on the amount of rent the member pays to DHA - this will be a reduced rate. Accommodation rented through DHA is not considered 'Government rent'.
Example: DHA leases a home for $300 per week and requires the member to pay DHA $140 per week to live in the home. The member qualifies for RA on the rent liability of $140 per week.
Some members rent their own home through the private rental market and then receive a subsidy from the Defence Force. These people qualify for RA on the net rent amount (rent minus subsidy).
Example: A Defence Force member rents a home privately for $250 per week. Defence pays the member a subsidy of $110 per week. The member qualifies for RA on the rent liability of $140 per week ($250 minus $110).
Refugees
Refugees on permanent and humanitarian visas (subclass 200) may qualify for RA subject to meeting other eligibility criteria.
Some humanitarian entrants may receive a short term accommodation subsidy. In these cases, for the period the subsidy is paid, the entrants may only qualify for RA in respect of the net amount of rent paid or payable by the tenant (i.e. the dwelling rent less any rent subsidy).
Policy reference: SS Guide 9.2.4 Visa subclasses 200-299 payment eligibility
Student scholarships
Relocation scholarship is not considered income for social security purposes. The Social Security (Indigenous Student Assistance Scholarships - Excluded Amounts) Instrument 2016 specifies that the Indigenous Education Costs Scholarship, the Indigenous Commonwealth Accommodation Scholarship and the Indigenous Commonwealth Reward Scholarship are not income for social security purposes. Merit equity-based scholarships are treated as exempt income for social security purposes up to a threshold that is indexed annually on 1 January (1.1.M.136). These scholarships are also not to be taken into account when determining qualification for RA. Students may qualify for RA on the amount of rent paid or payable by the student, without discounting it for the scholarship amount.
Students who receive other scholarships generally have their scholarships assessed as income or 'valuable consideration' and therefore treated as income. Where scholarships are income tested, even if the scholarships may be specifically for the purposes of rent or accommodation costs, the student may qualify for RA on the gross rent payable by the student and not discounted for the scholarship amount.
Explanation: The income-tested scholarship (whether paid as a lump sum, fortnightly payments or as a reduction in rent) has already had an effect on the recipient's income support payment through the income test. To further income test the scholarship against the recipient's eligibility for RA would be unreasonable.
In most cases where a scholarship is not income tested, a student may qualify for RA on the amount of net rent paid or payable by the student, discounted by the scholarship amount above the threshold (indexed annually).
Explanation: The non-income tested scholarship has not had an effect on the recipient's income support payment through the income test therefore it is reasonable to determine qualification for RA based on the discounted amount of rent paid.
Example: Bill receives an equity-based scholarship of $100 per week in 2010. This scholarship is paid to Bill by the institution to reduce the accommodation fees Bill incurs. Bill's total rent for his accommodation before the subsidy is applied is $150 per week. Bill's scholarship is not considered as income for the purposes of social security law and is also not income tested, as the total scholarship amount is under the threshold (indexed annually). Bill's assessed rent liability for the purposes of RA is $150 per week.
Act reference: SSAct section 8(8AAA) The Secretary may …, section 8(8)(zja)(ia) Excluded amounts-general
Higher Education Support Act 2003 Part 2-2A Indigenous student assistance grants
Social Security (Indigenous Student Assistance Scholarships - Excluded Amounts) Instrument 2016 section 5 Excluded Amounts
Policy reference: SS Guide 4.3.9.40 Income from scholarships, 4.3.2.30 Income exempt from assessment - legislated, 1.1.I.115 Indigenous Commonwealth Scholarship, 1.1.M.136 Merit or equity-based scholarship
Rent in return for work
Where an income support recipient provides services in exchange for accommodation, the value of the accommodation cannot be considered as rent for RA purposes, and neither should it be assessed as income for the purposes of the social security law.
Where an amount of money is deducted from a recipient's salary or wage to pay for accommodation, the amount deducted would be considered rent for RA purposes. The amount deducted for the purposes of rent should also be assessed as income for the purposes of the social security law.
Example: A student works part-time at the hall of residence where they also reside. The student receives an award wage from which an amount is deducted for accommodation costs. This deduction is considered rent paid by the student and qualification for RA is based on this amount.
Note: In these circumstances, if the amount deducted is for the cost of food and accommodation provided to the student, the board and lodging two-thirds rule may apply to the amount deducted to determine RA qualification.
Example: A YA recipient has an informal accommodation arrangement whereby they stay in a room rent free. In return the recipient does some gardening and odd repair jobs for the homeowner as needed. This recipient may not qualify for RA.
Act reference: SSAct section 13(2) Amounts are rent …, section 8(8)(za) the value of board or lodging received by the person
Policy reference: SS Guide 3.8.1.70 Board & lodging for RA, 4.3.2.30 Income exempt from assessment - legislated
Income support recipients with a home based business
A person who runs a business from their home may claim, for taxation purposes, a proportion of any rent paid on their home as a business expense. In situations where a recipient claims part of their rent as a tax deduction, this amount does not qualify for RA. Only the portion of the rent attributed to private and domestic purposes may qualify for RA if the recipient otherwise meets RA eligibility criteria.
Explanation: RA is targeted at assisting income support recipients meet the costs of housing in the private rental market. The costs of running a business are offset through the taxation system. Where a business is run from a person's principal home, the ATO has specific rules relating to the separation of business expenses from other 'household' expenses. Once a cost is accepted as a business expense, it ceases being an amount payable as a condition of occupancy of premises occupied by the person as the person's principal home.