|
|
||||||||||||||||||||||||
|
|
You are here: ABSTUDY > 6
Income and Rates > 6.2 Income Tests
This chapter describes the income tests which are applied for ABSTUDY assistance.
The student income test is applied to all students’ claims except for those specified below.
Allowances for the following ABSTUDY students are not affected by the student income test:
The student's income test takes into account the assessable income from all sources, less any exemptions listed below.
Maintenance payments received from or paid to a former partner are also taken into account.
Student income includes:
Note: For a dependent student this maintenance would be counted as income in the hands of the (custodial) parent
If early release of superannuation is requested the student obtains a letter from Centrelink to show Commonwealth income support for a set amount of time (see DFACS and Australian Prudential Regulation Authority (APRA) regulations) after which the student must apply to APRA for assessment and release of funds. The decision for early release is entirely between the student and the APRA. The released superannuation funds will then fall under the Income Bank and/or Asset test rules.
Do not give advice to students on taxation/deduction matters. Students must be referred to the Australian Taxation Office.
Where a student is not excluded from ABSTUDY assistance because s/he is receiving another form of government assistance to study (see Policy Manual - 3.1.4), education assistance counts as assessable income if it is paid to or in respect of the student principally or solely for the purpose of assisting the student to study. This includes:
Educational assistance should not be included as student’s income if it is:
Note: Income received under a training agreement is included (see 6.2.1.4).
These benefits and pensions are not included in the personal income test:
The following payments are also not included as part of a student's income:
Maintenance paid by the student for the upkeep of a non-custodial child and/or former partner is deducted from the student’s income for the income test period.
The student income test is based on how much a student may earn each fortnight. A student may earn up to $230 gross (before tax) a fortnight without affecting their Living Allowance
If a student earns between $230 and $310, each $1 the student earns over $230 will reduce the Living Allowance by 50c. Income over $310 a fortnight reduces Living Allowance by 70c in the dollar.
Students will also have access to the Student Income Bank which allows a student to earn money during breaks from study without affecting their Living Allowance (see Policy Manual 6.8).
The student income test period applies to taxable income that students receive during the periods that they are eligible for ABSTUDY. The following table shows how to determine students’ period of ABSTUDY eligibility:
|
Step |
Action |
| 1 | Determine the period that the student will be in approved full-time study. |
| 2 | Adjust for any period that the student cannot get ABSTUDY
because s/he was ineligible or would have had no entitlement, for example,
because the student starts study late.
Note: If a student transfers to ABSTUDY from a FaCS benefit or allowance (eg Newstart Allowance), the student income test starts from the date of transfer. |
The period over which a student's income is assessed in a year for the purposes of the ABSTUDY student income test is the fortnightly entitlement period.
The relevant period begins on the day a student becomes entitled to ABSTUDY income tested allowances and ends on the last day a student is eligible for income tested allowances.
Where a student is a pensioner for a period during the year, this period as a pensioner student does not form part of the relevant period.
Joan studies full-time in first term, part-time in second term and full-time in third term in the same course. The relevant periods apply to the entitlement periods of full-time study only. Income during the part-time period is not taken into account for the student income test
Meredith studied full-time in 1998. She worked full-time in 1999 and 2000, deferring her studies. In 2001, she resumed her course. The relevant period for income testing commences on the first day of her course, which is also when her entitlement commences.
Carol is a pensioner studying a full-time course for the full academic year. Her pension ceases on 2 August. Carol becomes eligible for income tested allowances on 3 August. The relevant period is 3 August to 31 December. See table above at 6.2.1.12.
A student becomes subject to the student income test from her/his 16th birthday or if they have independent status before they turn 16 years. The relevant period also applies from this date regardless of whether income tested allowances were payable before the student turned 16 or gained independent status.
If a full-time student reaches an age during the year where a higher rate of Living Allowance is payable, that new rate commences from the student's birthday.
The following examples show:
Mary is a new student, commencing full-time study in a 3-year Bachelor of Engineering Science course on 4 March. She was in employment before then (and for the previous 4 years).
As Mary had a break in study, she can get ABSTUDY only from the start of her course. This year, Mary’s eligibility period is from the first day of her course (4 March), up to 31 December.
Jill is a full time student applying for ABSTUDY for the whole year. She received ABSTUDY last year to 31 December and is continuing in her course. Jill is therefore considered a ‘continuing student’ (see Policy Manual - 1.2.1.42).
Jill’s eligibility period and income test period is 1 January to 31 December.
Robert enrols in a business college course that runs from 6 May to 20 September. He starts study on 6 May.
Robert’s course runs for 20 weeks. Being a ‘short course’, Robert can get ABSTUDY only for its actual duration.
The following examples show when to adjust the income test period because the student:
Clyde is doing a full-year tertiary course but was not eligible for ABSTUDY until 1 April when he varied his subjects to meet workload requirements. Clyde’s eligibility period for full-time ABSTUDY benefits is 1 April up to 31 December.
Fred is doing Year 12. However, because of the parental income, he first becomes eligible for ABSTUDY when he turns 18 on 27 August (due to a higher rate of Living Allowance being payable).
Fred’s eligibility period is from 27 August to 31 December.
Danny is transferring to ABSTUDY from Newstart Allowance as he is to start full-time study in a BA. Danny will continue to receive the FaCS benefit for the first 3 weeks of his course until 24 March. Danny is eligible to receive ABSTUDY from 25 March.
Danny’s eligibility and income test period is 25 March to 31 December.
Kerry is to continue as a full-time student this year after studying full-time last year. During the long vacation, she is employed full-time on a salary of $3000. As she received ABSTUDY in 2001 she has accumulated a $6000 credit in her income bank during 2001. At the start of her new year of study in 2002 and with her accumulated credit of $6000, she would not lose any of her ABSTUDY Living Allowance. Kerry’s eligibility period remains 1 January to 31 December. Her earnings from 1 January during the long vacation are taken into account under the income bank rules.
The parental income test for taxation purposes from all sources, less any deductions allowable by the ATO. The resulting amount here is taxable income and is shown on the ATO Taxation Assessment Notice.
Maintenance payments received from or paid to a former partner are also taken into account.
The adjusted family income of parents can be up to $26,650 in the parental income test period without affecting ABSTUDY. ABSTUDY Living Allowance is reduced by $1 for every whole $4 by which parental income exceeds $26,650.
Dependent students who are under 16 years old and eligible for Living Allowance, or who are 16 years of age and over, are subject to income testing on the combined taxable income of both their parents/guardians, irrespective of whether they live at home or away from home.
Parental income is taken into account whether or not parents/guardians actually provide financial assistance or support. This is because it would be unfair if more affluent families could get ABSTUDY simply by voluntarily choosing not to support their child’s study. However, also see Policy Manual - 6.3.3 Special Assessment.
Note: Dependent students 16 years of age or over are also subject to the student income test.
Allowances for the following ABSTUDY students are not affected by the parental income test:
For the purposes of income testing, ‘parents’ include:
Students ‘normally live with’ a parent and/or the parent’s partner (married or de facto) if they maintain a permanent home there. Students ‘normally live with’ the parent or parent’s partner (married or de facto) even though they live away while studying, or are temporarily absent from the home on a holiday.
A student should be regarded as not normally living with a person if the student maintains a separate permanent home (including vacation and holiday periods).
Sam has been living at his brother’s home in Brisbane since April last year. Previously he lived with his mother in Cairns. In February last year Sam’s mother married her de facto partner, with whom she had been living for six months. Sam has only returned to his mother’s home for brief visits, including a period of approximately 4 weeks in January this year in order to pack and remove his belongings.
Sam’s mother’s new husband is not included in the parental income test. Sam has established his own permanent home and will not "normally live with" his mother and her partner. Sam’s entitlement is based on the income of the parent with whom he last lived, ie his mother. Also, he may be entitled to the away-from-home rate of allowance if he meets the relevant criteria.
If the natural or adoptive parents are divorced or separated, the parent, for the purposes of the parental income test, is:
If the parents reunite, the student's entitlement is reassessed with effect from the date of the reunion, taking into account the 2000/01 incomes of both parents. In some cases current income may be applicable (see Policy Manual - 6.3.1.1.1).
The income taken into account in the case of divorced or separated parents includes any payments made by way of maintenance to the parent on whom the student is dependent. However, any maintenance payments made to a former partner or in respect of other children are deducted from total income.
Natural or adoptive parents also include step-parents. If the parent or the person on whom the student was last dependent remarries or enters a de facto relationship, the income of the step-parent is taken into account.
The step-parent's income may be disregarded only where:
Note: Any change to YA does not apply for ABSTUDY.
If a student was wholly or substantially dependent at the start of the eligibility period in the year of study on a person who was not her/his natural or adoptive parent, that person is considered to be the student's parent even if one or both of the natural or adoptive parents are living.
If a student claims a person other than a natural or adoptive parent (or the parent’s partner) for parental income test purposes, the case will be considered on its merits to determine if:
A student is not wholly or substantially dependent on another person if the parent (or parent’s partner, married or de facto) is:
The other supporting adult cannot be the student’s partner (married or de facto).
Evidence of support can include that the supporting adult was receiving Family Tax Benefit A & B in respect of the student.
In cases of doubt, CSOs should clarify the circumstances of the student’s natural or adoptive parents and the reasons for and duration of dependency on the other person.
Evidence of support can include that the supporting adult was receiving Family Payments or 'Family Tax Benefit' in respect of the student. Care should betaken not to disadvantage the student if either payment is moved to another person in town to disperse to the student as a matter of convenience because the natural parent is living on a remote community.
A de facto relationship is recognised between a student’s natural or adoptive parent and her/his de facto partner from the date the de facto relationship starts if the student ‘normally lives with’ the parent and the parent’s partner (see 6.2.2.6 What does ‘normally live with’ mean?).
In most cases, the parental income test will apply to the parents on whom the student is dependent at the start of eligibility. However, ABSTUDY will be reassessed if the student’s parents change during the period of eligibility, so that, if a student:
Note: Reassessment is based on the income of the parent(s) for the previous financial year unless the current income concession or special assessment applies.
Where:
it would be unreasonable to require that ABSTUDY be based on the income of the surviving parent given that essentially no parental role (financial support or otherwise) has been played by the surviving parent for a long time, if at all.
CSOs should review the student’s claim under the homeless provisions (see Policy Manual - 5.5.8.4). This is on the basis that it would be unreasonable for students to live in the home of their surviving parent because of extreme family breakdown.
Students would need to apply for Student Homeless Rate in the usual way, including the provision of appropriate evidence/statements to support their claim.
The following indicators should be met before independent status is granted under this provision:
Where separated or divorced parents share custody of the student, the following arrangements apply:
In the very rare cases of shared custody where the student spends an equal amount of time with each parent, the lower family income (taking into account the income of the relevant natural parent and her/his new partner, where applicable) may be used to calculate the student’s entitlement subject to statements being provided confirming and setting out the custodial (ie turnaround period) and maintenance payment arrangements (eg legal documentation from the Family Court or solicitors, or statements from each parent).
Given the information provided in the statement(s), the CSO should consider the following points when deciding whether or not to take account of the lower family income:
Melanie’s parents are separated and she normally lives with her mother. In June her mother remarries.
Melanie’s ABSTUDY is reassessed for the period from the date of marriage on the basis of the combined income of her mother and her mother’s new partner for the financial year ending prior to the end of the year for which ABSTUDY is sought.
Margaret’s parents separate and Margaret will be normally living with her father.
Margaret’s ABSTUDY is reassessed for the period from the date of her parents’ separation based on only her father’s income for the financial year ending prior to the year for which ABSTUDY is sought.
Jim’s parents have been separated for 15 years and Jim lives with his mother. Jim has had no contact with his father for 10 years. During the long vacation Jim’s mother dies and he goes to live with his uncle and aunt.
Jim is a continuing student and is assessed on the basis of his aunt and uncle’s income as he is dependent on them at the start of the eligibility period.
Tony’s father dies in May. Tony’s ABSTUDY is reassessed on his mother’s income only. However, because Tony’s mother gave up her job to care for her husband, she has suffered a substantial and lasting drop in income since the normal parental income test period. In this case, her income in the current income test period (income for the financial year ending in the year of study) can be taken into account.
If his mother starts getting a FaCS sole parent’s pension (or applies for and gets a Low Income Health Care Card), the parental income test is waived because special assessment applies.
The current income concession or special assessment - on both parents’ incomes - could have been granted prior to Tony’s father’s death if the qualifying drop in income or receipt of FaCS benefit started before that time.
Jacki’s parents separate on 14 February. Jacki remains with her mother. Her parents re-unite on 15 October. The parental income test is applied for the period(s):
Ivy’s parents are separated and share custody. Ivy spends one week alternately with each parent The parental income test is applied according to 6.2.2.16.
If a student’s parents live permanently apart, the parental income test applies only to the parent with whom the student normally lives. This applies whether or not the parents are legally divorced.
If a student’s parents live permanently apart, but the student does not normally live with either parent, the parental income test applies:
Where parents are ‘separated but living under the one roof’ for Family Law purposes, and the student normally lives in or last lived in the house shared by both parents, the income of both parents is taken into account.
Where parents live apart temporarily, (for example, because of absence due to work commitments as with some mining, fishing, sales representative or other occupations) and the student normally lives with, or last lived with, both parents, the income of both parents is taken into account (see 6.2.2.16 about shared custody arrangements).
The parental income test of parents during the financial year ending before the year of study. For most students, this financial year ends on 30 June of the previous year. That is, for ABSTUDY assistance in 2002, parental income is normally calculated on the financial year 1 July 2000 to 30 June 2001. However, the most recently completed financial year accounting period may end on another date if:
Note 1: Where combined adjusted family income increases by 25% or more, ie from the 2000/01 to 2001/02 financial year, the student's entitlement is reassessed with effect from 1 October 2002 (see Policy Manual - 6.3.2).
Note 2: Where parental income suffers a substantial and lasting fall, a concession is available to take into account income in a financial year (or accounting period) no later than the financial year or last accounting period which ends during the year in which ABSTUDY is sought, that is, no later than the 2001/02 financial year for assistance in 2002 (see Policy Manual - 6.3.1).
Historical income (that is, assessable income from the previous financial year) is used as the basis of the parental income test to minimise the scope for overpayments of ABSTUDY.
Using a historical test period means that actual parental income is known when student is applying for ABSTUDY. It avoids the need for parents to guess what their future earnings might be, or to supply proof of ongoing earnings throughout the year.
While having these benefits, historical income remains a fair indication of the need for ABSTUDY. Research has confirmed that historical income is normally a reliable indicator of current circumstances and financial barriers to education.
Most family incomes do not fluctuate disproportionately between financial periods, significant changes are the exception.
These exceptional cases are handled with special rules that apply when use of historical income is unreasonable. These apply where:
The partner income test takes into account the assessable income for taxation purposes from all sources, less any deductions allowable by the ATO. The resulting amount here is taxable income and is shown on the ATO Tax Assessment Notice.
Maintenance payments received from or paid to a former partner are also taken into account.
Independent students are subject to income testing on the income of their partner if relevant. Students below the age of 21 years are aligned to YA rates, students 21 years and over are aligned with Newstart rates. However, also see Policy Manual - 6.3.3 Special Assessment.
A student’s partner can have income up to the disqualifying income limits of YA if the student is under 21 years or Newstart if the student is 21 years and over without it affecting the student’s ABSTUDY Living Allowance. The ABSTUDY Living Allowance is reduced by $1 for every whole $2 by which the partner’s income exceeds the disqualifying limit.
Note:
Following on from the policy changes of 2000, there is no minimum annual Living Allowance entitlement of $250. A student can be paid whatever entitlement is due from ABSTUDY.When an independent student under 16 years old has a partner, the partner is subject to the partner income test.
For the purposes of partner income, a partner is defined as:
Note: For an ABSTUDY student who is in a de facto relationship and whose partner is receiving a social security pension or benefit align entitlement with Social Security Law.
A relevant period is generally the income test period when a partnered student is eligible to receive ABSTUDY assistance.
The partner’s income test is not applied for any period in a year when students:
Note: Where the student and her/his partner are ‘separated but living under the same roof’ for Family Law purposes, the partner’s income is taken into account.
Nigel separates from his wife on 4 March, but they re-unite on 6 June.
The partner income test is not applied for the period 4 March to 5 June. The student is regarded as single independent for this period.
The partner income test is applied as normal for the periods 1 January to 3 March and from 6 June to 31 December.
A single independent student is eligible for assistance from 1 January. She marries on 1 October. The partner income test is applied from 1 October.
An independent student living in a recognised de facto relationship separates from his partner on 4 April. He then marries on 16 July. The claim of the partner income test is:
About Us
| Careers |
Education |
Higher Education |
Indigenous |
International
New Apprenticeships |
Research |
Schools |
Science |
Training
contact details | publications | search | site map | subscribe
Any comments or queries should be sent to: wwweditor@dest.gov.au
This page was
last updated on
Saturday, 23 April 2005
Department of Education, Science and Training
Copyright © Commonwealth of
Australia
DEST Web Site Privacy Statement
Disclaimer
