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You are here: ABSTUDY > 6
Income and Rates > 6.1 Income Requirements
This chapter explains the general income requirements for ABSTUDY eligibility.
Where a student meets the ABSTUDY general eligibility criteria (see Policy Manual - 3.1.1), income details must be provided to assess the level of assistance that student may receive.
A student is not eligible for ABSTUDY if s/he receives other government assistance for education, training or formal study, except if receiving certain pensions (see Policy Manual - 3.1.4).
Students undertaking full-time apprenticeships or traineeships in accordance with a training agreement are excluded from ABSTUDY assistance.
The student, parental and partner income tests take into account income from all sources which is assessable for ABSTUDY purposes, less any deductions allowable by the Australian Taxation Office (ATO). The resulting amount is taxable income and is shown on the ATO Tax Assessment Notice (TAN).
All assessable income is taken into account for the income tests. Where a payment in the nature of income is not specifically exempt, it should be regarded as income for ABSTUDY purposes.
Amounts paid for the maintenance of children or a former partner are deducted from assessable income to arrive at a figure for total income, and any maintenance received is added to assessable income to arrive at a figure for total income (see Policy Manual - 6.7.1.26).
It is not possible for one parent's loss or negative income to reduce the effect of the other parent's positive income. The loss should be treated as zero income and the other parent's income will be the family's total taxable income.
Income averaging for self employed primary producers is not provided for under the ABSTUDY income test.
Compensation is a payment that is made wholly or partly in respect of lost earnings or lost capacity to earn within or outside of Australia.
For the purposes of assessing entitlements to ABSTUDY, the following payments, ordinarily considered to be compensatory in nature, are not considered to fall within the definition of compensation given immediately below.
NOTE: Indigenous peoples who were employed under the former Community Wages Scheme on Queensland settlements and reserves between 1975 and 1986, have been awarded compensation with a one off payment of $7000. For ABSTUDY purposes this payment is not to be included for any ABSTUDY income or means tests. Minister Kemp made this determination on 30 November 1999.
The following compensation payments do affect ABSTUDY:
The following ABSTUDY entitlements are affected by compensation:
Taxable compensation payments which are paid in a lump sum are regarded for ABSTUDY purposes as the assets of the person to whom the compensation payment was made and affect the student in accordance with the personal assets and family assets tests.
Non –taxable compensation payments paid in a lump sum are not regarded as an asset for ABSTUDY purposes.
Living Allowance is affected by compensation payments as follows:
Where a compensation payment is paid in a lump sum:
Where a compensation payment is taxable and paid on a regular and ongoing basis to:
ABSTUDY School Fees Allowance (Group 2) is affected by compensation payments made to the parent(s)/guardian(s) of a dependent student to the extent that a Compensation payment forms part of the parent(s)/guardian(s) taxable income in the application of the Parental Income Test.
DIFFERENT TO YA/AUSTUDY PAYMENT
In some circumstances, people can be eligible for both Community Development Employment Projects (CDEP) and ABSTUDY.
Full-time independent students in receipt of a CDEP wage for employment are assessed against their personal and (where relevant partner's) income for eligibility for the ABSTUDY Living Allowance.
For dependent students, where either parent is in receipt of a CDEP wage as a participant in the scheme (not as an administrator), the parental income test is waived. This provision also applies to other low income earners, such as social security pensioners of holders of a currently Health Care Card.
CDEP participants who receive wagers for employment may also be eligible for ABSTUDY supplementary benefits.
If, however, a student were to be granted CDEP wages to undertake study or training, the student would not be eligible for ABSTUDY. This reflects ABSTUDY policy that students cannot generally receive ABSTUDY if they are entitled to other Government financial assistance to study.
Following changes to Taxation legislation and the introduction of the Goods and Services Tax, from 1 July 2000, group certificates and tax assessment notices for financial years will show Fringe Benefits entitlement which need to be taken into account for assessment. Assessors should include the amount shown in the Fringe Benefits box for assessment.
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. For 2002 eligibility, this is the 2000/01 financial year.
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 date other 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 Policy Manual - 6.7.1.26) in that accounting period.
This does not alter income test period principles. In particular:
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:
Some ABSTUDY allowances are subject to income tests.
Tests are normally made on:
Note 1: Some exceptions apply (see Policy Manual - 6.2.1.2 and 6.2.2.4).
Note 2: Special assessment may apply where a parent guardian is receiving certain government income support payments (see Policy Manual - 6.3.3).
Allowances subject to income testing are:
Note: School Term Allowance and Group 1 (‘at home’ rate) School Fees Allowance are indirectly income tested (see Policy Manual - 7.2.3 and 7.8.2) on the basis of qualifying or receiving other government income support assistance.
Allowances not subject to income testing are:
The status and age of the student determine which of the three tests apply, as follows:
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 Policy Manual - 6.2.1.13. |
|
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 Policy Manual – 6.2.3.7. |
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 (see Policy Manual - 2.1.4.3.3 for acceptable documentation and provision of documentation).
Persons receiving a FaCS or DVA pension are exempt from the requirements to provide proof of income
Parents’/guardians’/partners’ signatures certifying that income details provided are correct, are required on the ABSTUDY claim form. If income details are provided without these signatures and without acceptable proof of income (except for those exempt - see above) no assessment should be made.
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.
This topic describes how to calculate taxable income earned overseas in Australian currency.
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. In these cases care should be taken not to double count the income.
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 (see Policy Manual 6.5.2.5).
Graham is a Torres Strait Islander studying in Cairns. His parents are resident in the USA. They earn income and pay tax in the USA for the entire 1999/00 Australian financial year. Their USA income in 1999/00 is $US20,000. The overseas income is to be converted to Australian dollars using the average exchange rate for the 1999/00 Australian financial year. The conversion is:
$US20,000 ¸ 0.7823 = $A25,565.64.
Suzy is studying full-time at college in Melbourne. Her parents earn income in England during the 1999/00 Australian financial year. Suzy’s parents declare their overseas income in their Australian tax returns. The taxable income figure shown on their taxation notices of assessment includes the overseas income already expressed in Australian dollars. It will not have to be converted to Australian dollars again.
Barry is a full-time tertiary student. His parents are currently residing in Saudi Arabia where they earn income They do not pay tax on the income in Saudi Arabia as there is no such thing as income tax in that country. The income is not to be included in the income test, but will be added for the family actual means test.
When a person has taxable income from an overseas source, the overseas figure is converted to Australian dollars at the appropriate exchange rate from the CBA or Reserve Bank. This process is the same as Youth Allowance.
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