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.

4.6.7.130 Rate calculation under the hardship provisions

Summary

This topic explains how to calculate the pension or benefit rate when hardship provisions apply. It discusses:

  • which information is required to calculate the rate, and
  • how to calculate the rate.

Information required to calculate the rate

The following table shows the information required to calculate the pension or benefit rate when hardship provisions apply AND shows the relevant chapter or topic from the SS Guide.

Identify … More detail
unrealisable assets 4.6.7.50 Unrealisable assets - unable or unreasonable to sell or borrow against
exempt assets

Explanation: The VALUE of exempt assets is disregarded, but INCOME is included.

 4.6 Assets
the value of OTHER assets and DIVIDE by $250.00 4.6.6 Determining the value of an asset
personal income earned, received or derived 4.3.1 Income rates & definitions

assessment of superannuation under DVA MRCA.

Excluded income amounts

Application of financial hardship rules

Amounts of superannuation excluded under the SSAct income test (because they have already been used to reduce the rate of Special Rate Disability Pension paid under the MRCA) ARE counted as income when determining hardship under the SSAct.

4.3.5.60 About DVA compensation payments

Note: When calculating a person's 'adjusted annual rate of ordinary income' in the rate calculation below, the task requires the use of 'ordinary income' as defined in subsection 8(1). The definition of ordinary income in subsection 8(1) does not take into account workforce incentives such as work bonus, working credit, and student income bank, that is, the ordinary income used for the hardship rate calculator is not reduced by the application of these income test concessions.

Act reference: SSAct section 11(1)-'unrealisable asset', section 11(1)-'exempt assets', section 8(1)-'income', section 8(8) Excluded amounts-general, section 1130 Application of financial hardship rules-pensions, section 1130C Application of financial hardship rules-pension PP (single), section 1132 Application of financial hardship rules-benefits

Rate calculation

The following table shows the rate calculation for pension and benefit recipients when hardship provisions apply.

Step Action
1 Calculate the person's annual rate of ordinary income (other than income from assets).
2 Calculate any income received from assets that are not assets tested (exempt assets).
3

For each unrealisable asset, calculate the GREATER of:

  • the annual rate of income actually received, OR
  • the annual rate of notional ordinary income (4.6.7.80).
4

Calculate the deductions for assets that are NOT unrealisable and NOT exempt. This is:

  • the assets value ÷ $250.00
  • round this figure down to the nearest $250.00, then
  • for PENSION applicants/recipients MULTIPLY by
    • $19.50 per annum (p.a.)*, OR
    • 75c per fortnight (pf)*.
  • for BENEFIT applicants/recipients MULTIPLY by:
    • $26.00 p.a., OR
    • $1.00 pf.

*Note: Prior to 1 January 2017, this figure was $9.75 p.a. or 37.5c pf.
5

For PENSION applicants/recipients:

  • From the MAXIMUM annual rate of pension SUBTRACT

    • ordinary income (other than income from assets) (Step 1), AND
    • income received from assets that are not assets tested (exempt assets) (Step 2), AND
    • the GREATER of the annual rate of income actually received or the annual rate of notional ordinary from each unrealisable asset (Step 3), AND
    • deductions for assets that are NOT unrealisable and NOT exempt (Step 4).
  • The result is the rate of pension payable under the assets test hardship provisions, SUBJECT to the rate check at Step 6.

For BENEFIT applicants/recipients:

  • From the MAXIMUM annual rate of benefit SUBTRACT

    • ordinary income (other than income from assets) (Step 1), AND
    • income received from assets that are not assets tested (exempt assets) (Step 2), AND
    • the GREATER of the annual rate of income actually received or the annual rate of notional ordinary from each unrealisable asset (Step 3), AND
    • deductions for assets that are NOT unrealisable and NOT exempt (Step 4).
  • The result is the rate of benefit payable under the assets test hardship provisions, SUBJECT to the rate check at Step 6.
6

Rate check

For PENSION applicants/recipients:

  • ADD the rate payable under the assets test hardship provisions (calculated at Step 5) and the person's annual rate of ordinary income. IF

    • the total is less than or equal to the MAXIMUM annual rate of pension, the amount calculated at Step 5 is the amount payable under the assets test hardship provisions
    • the total exceeds the MAXIMUM annual rate of pension, SUBTRACT the excess from the amount calculated at Step 5. This is the amount payable under the assets test hardship provisions.

For BENEFIT applicants/recipients:

  • ADD the rate payable under the assets test hardship provisions (calculated at Step 5) and the person's annual rate of ordinary income. IF

    • the total is less than or equal to the MAXIMUM annual rate of benefit, the amount calculated at Step 5 is the amount payable under the assets test hardship provisions
    • the total exceeds the MAXIMUM annual rate of benefit, SUBTRACT the excess from the amount calculated at Step 5. This is the amount payable under the assets test hardship provisions.

Act reference: SSAct section 1129 Access to financial hardship rules-pensions, section 1130B Access to financial hardship rules-pension PP (single), section 1131 Access to financial hardship rules-benefits

Policy reference: SS Guide 4.6.7.10 General provisions for hardship, 4.6.7.80 Notional ordinary income - overview

Last reviewed: