Chapter 116 Income Testing

This chapter details ABSTUDY allowances subject to income tests and the types of income tests applied in the year that the student is studying.

Chapter content

This chapter covers the following topics:

Types of Income Tests

Income-tested allowances

Allowances not subject to income-testing

Applying income tests

Summary of income tests

Income testing periods

Proof of Income

Overseas Income

116.1 Types of Income Tests

Some ABSTUDY allowances are subject to income tests. Tests are normally made on:

• student income

• for all students, except those under 16 years of age

and either

• parental income

• for all dependent students, or

• partner income

• for all independent students who have a partner.

Note: Special assessment may apply where a parent/guardian/partner is receiving certain government income support payments).

116.2 Income-tested allowances

Allowances subject to income testing are:

• Living Allowance
• Group 2 School Fees Allowance greater than the non-income tested threshold, and
• Masters and Doctorate Award Living Allowance, Relocation Allowance, Thesis Allowance and payment of compulsory course fees or HECS.

Note: School Term Allowance and Group 1 (`at home' rate) School Fees Allowance are indirectly income tested on the basis of qualifying or receiving other government income support assistance.

116.3 Allowances not subject to income-testing

Allowances not subject to income testing are:

• Group 2 School Fees Allowance less than the non-income tested threshold
• Pensioner Education Supplement
• Incidentals Allowance
• Additional Incidentals Allowance
• Fares Allowance
• Lawful Custody Allowance
• Away-from-base entitlements
• Remote Area Allowance, and
• Pharmaceutical Allowance.
  

Note: Rent Assistance is indirectly income tested on the basis of qualifying or receiving other government income support assistance.

116.4 Applying income tests

The status and age of the student determines which of the income tests apply, as follows:

• Dependent students are subject to:

• the student income test unless the student is under 16, and
• the parental income test

• Independent students are subject to:

• the student income test, and
• the partner income test if the student has a partner.

116.5 Summary of income tests

The following table summarises the main features of each test.

Type of Test	Definition of Income	Income Period
Student	Taxable income (income less all deductions allowed by ATO), plus or minus maintenance payments.	Relevant period as detailed in 117.2.
Parental	Taxable income (income less all deductions allowed by ATO), plus or minus maintenance payments.	Previous financial year, unless current income applies.
Partner	Taxable income (income less all deductions allowed by ATO), plus or minus maintenance payments.	Relevant period as detailed in 119.2.

116.6 Income testing periods

116.6.1 Normal testing

Income testing normally applies to the fortnightly income of the student in the year of study (the relevant year) and to the combined taxable income of the student's parents/guardians for the financial year ending on 30 June of the preceding year.

116.6.2 Different tax accounting periods

If the student's parents, under Section 18 of the Income Tax Assessment Act 1936, adopted a 12 month accounting period which ends on a dateother than 30 June in the year preceding the relevant year, the assessment is based on taxable income (plus or minus maintenance payments if applicable, see 131.7.1) in that accounting period.

This does not alter income test period principles. In particular:

• the normal test period remains the 12 month accounting period ending before the current year of study i.e, before 1 January in the year of study. This applies whether or not the student is eligible or qualifies for ABSTUDY from that date;
• the current income test period remains the 12 months accounting period ending during the current year of study ie, 1 January to 31 December in the year of study. This applies whether or not the student is eligible or qualifies for ABSTUDY for the whole or part of the year; and
• there is no provision to take into account a 12 month accounting period which finished after the current year of study, that is after 31 December in the year of study. This applies whether or not the student is eligible or qualifies for ABSTUDY until the end of the year.

116.6.3 Current income assessment

In certain cases the income test may be applied to the parents'/guardians' income for the financial year ending on 30 June in the year of study. The current income assessment applies when there has been:

• a marked and sustained fall in income, or
• a 25% or more increase in the parents' income since the previous financial year.

116.7 Proof of Income

116.7.1 Documentation

Parents/guardians and the partner applying for Living Allowance are required, prior to payment, to submit documentation supporting income details provided on the ABSTUDY claim.

Persons receiving a FaCS or DVA pension are exempt from the requirements to provide proof of income.

116.7.2 Certification that income details are correct

Parents'/guardians'/partners' signatures, certifying that income details provided are correct, are required on the ABSTUDY claim form.

116.7.2.1 Difficulty obtaining signatures

If Centrelink is satisfied that it is difficult to obtain a signature for reasons such as long illness, mental incapacity, prolonged absence of the parent/guardian/partner (for example because they are in lawful custody), entitlement may be determined without any signatures on the basis of the proof of income provided.

If a student who is 16 years or older, or independent, is unable to obtain signatures because of the parent's/guardian's/partner's unwillingness to sign, benefits may not be paid unless proof of income has been provided.

116.8 Overseas Income

116.8.1 Calculating Overseas Income

116.8.1.1 Converting taxable overseas income to Australian amounts

Taxable income earned overseas will need to be converted to Australian dollars if the income is included in the taxable income figure on an overseas country's tax notice of assessment or similar document.

If the income is shown on an Australian notice of assessment, it has already been converted from overseas dollars to Australian dollars.

Non taxable income earned in an overseas country is not to be included in the income tests but will be included in the family actual means test.

116.8.1.2 Use of exchange rates to convert overseas income

When a person has taxable income from an overseas source, the overseas figure is converted to Australian dollars by the appropriate exchange rate from the CBA.