4.5.1 Validation of the historical use of income apportionment
Introduction
The Social Security and Other Legislation Amendment (Technical Changes No. 2) Act 2025 validates historical use of income apportionment. Debt decisions affected by income apportionment are now valid and enforceable. Specifically, Schedule 1 to this Act inserts Part 3.11 – Income earned from employment between 1 July 1991 and 6 December 2020 into the SSAct.
The effect of Division 2 of Part 3.11 to the SSAct is the validation of the historical use of income apportionment to assess employment income relating to periods between 1 July 1991 and 6 December 2020 inclusive. Taken together with the ongoing methodology for assessing pre-7 December 2020 employment income introduced in the same Act (4.5.2), the assessment of employment income is treated the same regardless of when it was assessed.
Act reference: SSAct section 1117 Validation of income apportionment—social security benefits and social security pensions, section 1117A Validation of income apportionment—youth training allowance, section 1117B Validation of income apportionment—former farm household support
Social Security and Other Legislation Amendment (Technical Changes No. 2) Act 2025 Schedule 1—Income apportionment
Policy reference: SS Guide 4.5.2 Further assessment of employment income earned between 1 July 1991 & 6 December 2020
How was income apportionment used?
A person’s rate of entitlement to income support in a given social security instalment period (referred to as entitlement periods in Part 3.11), can be affected by employment income. Under the SSAct, as it was in force prior to 7 December 2020, income for allowances was required to be allocated to the fortnight in which the income was ‘first earned, derived or received’. For pensions, from 20 September 2003, the employment income of people receiving a social security pension who were below pension age was required to be taken into account during the whole of the instalment period in which the person was taken to have ‘earned, derived or received’ that income. From 20 September 2009 this requirement was extended to pensioners who had reached pension age.
Income apportionment was used to assess pre-7 December 2020 employment income in circumstances where the available evidence did not allow Services Australia (and its predecessors) to work out the exact amount earned by a person in each entitlement period (1.1.E.125). This was common where payslips did not show amounts earned per working day, and where work periods and payslips did not align with social security instalment periods (referred to as entitlement periods in Part 3.11).
In the absence of more detailed evidence, income apportionment involved apportioning employment income received by a person for work undertaken in a payroll period (reflecting the employer’s payroll arrangements) by dividing the amount of the income by the number of days in the payroll period, then allocating that daily amount to each day in the payroll period. The daily amount was then attributed to the social security entitlement period (generally, a 14-day period over which social security payments are payable) in which a particular workday occurred. The sum of all employment income amounts allocated to an entitlement period were then taken to be the employment income 'earned, derived or received' in the entitlement period.
Example: Duncan was a student in 1998, receiving YA. When Duncan started a job at a café, Centrelink was reviewing Duncan’s entitlement and asked how much income they had earnt from their job in the past fortnight, to establish the correct amount of YA they should be paid. Duncan only had their payslip which showed they earned $700 over 2 weeks, but not the exact days they worked. The payslip crossed 2 entitlement periods. Centrelink used income apportionment to allocate Duncan’s income to Duncan’s entitlement periods.
Without any additional available information of when exactly Duncan worked, Centrelink assumed Duncan earned $50 each day across the payroll period ($700 ÷ 14 = $50). Duncan’s payslip was mainly in one entitlement period, with only 2 days crossing into another entitlement period. Because of this, Duncan had $600 assessed in one entitlement period, and $100 assessed in another entitlement period.
On 7 December 2020, amendments under the Social Services and Other Legislation Amendment (Simplifying Income Reporting and Other Measures) Act 2020 took effect. Though those measures were not specifically aimed at addressing income apportionment, they simplified employment income reporting by introducing a method of daily employment income attribution, based on the instalment period in which an employment income amount was 'paid', rather than 'earned' or 'received'. Using paid made it unnecessary to use income apportionment for employment income earned on or after 7 December 2020 because the new method is based on information that is more readily available to the decision maker, and it specifically overrides the requirements to take employment income into account in the fortnight it is first 'earned'.
Act reference: SSAct section 1117 Validation of income apportionment—social security benefits and social security pensions, section 1117A Validation of income apportionment—youth training allowance, section 1117B Validation of income apportionment—former farm household support
Policy reference: SS Guide 1.1.E.125 Entitlement period
What historical decisions are being validated?
The Social Security and Other Legislation Amendment (Technical Changes No. 2) Act validates the historical use of income apportionment and any debts arising from this method of assessing employment income, with retrospective application from 1 July 1991 to 6 December 2020 inclusive, for all cases in which income apportionment was not consistent with a requirement to assess employment income in the fortnight it was first earned, derived or received, or a similar requirement.
The validation provisions also operate to validate anything that would otherwise have been invalid or ineffective because it was indirectly affected by the use of income apportionment, including possible indirect consequences on other payments.
Example: Debts can arise under the FA(Admin)Act if it is later found that a person (or their partner) was not entitled to a social security payment for part of an income year in which they received family assistance. The validation provisions operate to preserve the income apportionment affected debt under the SSAct, as well as the consequential family assistance debt.
The validation also applies to any determination of the rate of youth training allowance payable under the Student Assistance Act 1973 before 30 June 1998 and any determination of the rate of Farm Household Supplement payable under the Farm Household Support Act 1992 before 30 June 2014, where those payments were affected by income apportionment being used to determine the entitlement payable to a person, and where income apportionment would not have been valid in the circumstances.
The ordinary income tests relevant to the use of income apportionment operate on the amount of a person’s ordinary income generally. However, these changes only affect the assessment of employment income that comes within the definition of work income in Division 2 of Part 3.11 to the SSAct where income apportionment was contrary to the law in force at the time. Division 2 of Part 3.11 to the SSAct does not affect employment income that was lawfully attributed to a particular fortnight on another basis set out in the SSAct or the Student Assistance Act. For example, where Division 2 work income related to a leave payment, in respect of which an income maintenance period would arise under a rate calculator, the validation provision does not affect the lawful application of the income maintenance period.
Act reference: SSAct section 1117 Validation of income apportionment—social security benefits and social security pensions, section 1117A Validation of income apportionment—youth training allowance, section 1117B Validation of income apportionment—former farm household support
Farm Household Support Act 1992 pre-1 July 2014
Social Security and Other Legislation Amendment (Technical Changes No. 2) Act 2025
Preservation of general law rights
The validation of income apportionment does not affect a person's rights to pursue certain kinds of legal proceedings. Section 1117C of the SSAct (as amended by the Social Security and Other Legislation Amendment (Technical Changes No. 2) Act) provides for the preservation of any cause of action in respect of an accrued general law right.
Any legal proceeding or remedy in respect of a cause of action in respect of an accrued general law right that would, apart from the operation of subsection 1117C(1), be affected by the enactment of the Social Security and Other Legislation Amendment (Technical Changes No. 2) Act may be instituted, continued or enforced as if that Act had not been enacted. The Federal Court will have jurisdiction over such matters.
A person can pursue a valid claim in relation to income apportionment unless that person is offered and accepts a resolution payment under the Income Apportionment Resolution Scheme (4.5.3).
Any review (including by a Services Australia ARO, the ART, or a court) would be undertaken having regard to the rules for future decisions in (further assessment of employment income earned between 1 July 1991 and 6 December 2020 (4.5.2)), and to the validation measures in Division 2 of Part 3.11 of the SSAct. Reviews and appeals can also continue to be made in respect of decisions about the debt unrelated to income apportionment (for example, decisions around qualification, couple status, waiver decisions, etc.).