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You are here: ABSTUDY > 6
Income and Rates > 6.5 Family Actual Means Test
This chapter explains the Family Actual Means Test which is applied to ABSTUDY.
Family Actual Means Test (FAMT) is a test applied to dependent students whose parent(s)/guardian(s), or the parent/guardian’s partner is in a designated category (see Policy Manual 6.5.2) for the FAMT. The spending and savings of all assessable family members are taken into account to determine the dependent student’s rate of ABSTUDY. The lesser of the two rates calculated under the Income Test and FAMT is the student’s entitlement.
Note: The designated parent(s)/guardian(s) for the FAMT can be the student’s natural or adoptive parent(s) or parent’s partner
Families are exempt from the FAMT while receiving an Exceptional Circumstances Relief Payment (ECRP) for the remainder of the calendar year. It should be noted that the holding of a Drought Exceptional Circumstances Certificate while not in receipt of ECRP, or the receiving of a payment under the Farm Family Restart Scheme does not give an exemption from FAMT.
The FAMT is only applied to dependent students when their parent’s circumstances come under one or more of the following 7 designated categories.
A student’s natural or adoptive parent, or their partner is a designated parent if they:
All trusts are included in assessing FAMT categories except the following:
A person holds an interest in a trust if they are a trustee, beneficiary, or unit holder, but not an agent creditor or employee of a trust.
The most common type of company an assessor will encounter is a private or family company, normally identified by ‘Proprietary Limited’, ‘Pty Limited’ or ‘Pty Ltd’ after its name. A private company has shares issued to family members and office holders are usually family members. These shares are usually not transferable without the consent of all shareholders.
An unlisted public company is not listed on the Australian Stock Exchange or any Stock Exchange.
A self-employed person is defined as someone who works for gain or reward other than under a contract of employment or apprenticeship, whether or not the person employs one or more employees.
Indications that a parent is self-employed are:
A partnership does not need a written agreement to exist. Sharing profits and losses may indicate a partnership exists. A joint owner of an asset is not necessarily in a partnership for the purposes of the FAMT, even if they derive an income from that ownership.
A parent involved in a partnership must:
The $A2,500 threshold relates to any income a parent receives from overseas.
Income from a taxable overseas pension should be shown as overseas income under the parental income test. Parents are also included in this category if they earn $A2,500 or more by working overseas in the base tax year.
A parent is a salary or wage earner if they earn income on a regular basis under a contract of employment, whether implied or expressed.
An asset is an overseas asset valued at or above $A2,500 if:
A parent may move in and out of this category as the value of their overseas assets changes during the year. Only the value of the parent’s interest in the asset must be $A2,500 or more. Parents must provide evidence of:
An asset is exempt if it is normally held in Australia, but is temporarily overseas, or an Australian resident invests in a company in Australia, independent of their family, and the company invests the money in overseas investments.
A parent in the business migrant category is assessed under the FAMT on a full calendar year. This includes the year they arrived in Australia. A parent is in this category if within 10 years before 1 January in the calendar year in which ABSTUDY is payable, the parent first entered Australia under a permanent visa or entry permit. A parent remains in the business migrant category for 10 years from their arrival in Australia.
The spending and savings of all family members in the base tax year are taken into account to determine a family’s actual means. This excludes spending or savings equivalent to the income received from exempt funds (see Policy Manual 6.5.4).
Where the applicant and/or other members of the assessable family live away from home all of their separate expenses under the various areas of spending must be included.
All spending and savings must be included from all sources including related entities, third parties and financial institutions eg. payments made by the business, friends and relatives for and on behalf of the family.
The following table shows the main areas of family spending and examples of each. Each area includes repayments of principal and interest on any loans for associated costs from a financial institution, taken out before the beginning of the base tax year.
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Area of Spending |
Examples |
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Principal Home |
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Transport |
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Education |
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General living |
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Other |
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The following table shows the main areas of family saving and examples of each. Each area includes repayments of principal and interest on any loans for associated costs from a financial institution, taken out before the beginning of the base tax year.
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Area of Saving |
Examples |
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Financial institutions |
The net increase, including interest, in any bank, building society or credit union account. A decrease in the amount owed on loan or credit card is a repayment under the spending categories. |
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Retained profits |
The value of a family member’s base tax year share of:
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Superannuation |
Contributions above:
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Other |
Loans by a family member to a related entity. |
The following are exempt from the FAMT:
Funds from the following sources are exempt for the FAMT and are able to count as a deduction because they do not affect a dependent applicant’s entitlement. These are:
However, the spending from such sources must be included ie. the amount of the deduction must correspond with the amount of spending.
All tax deductible business spending necessarily incurred in carrying on the business is exempt from the FAMT, except:
The income assistance payments that are exempt from FAMT are:
Spending or savings equivalent to income sourced from the sale of assets may be excluded from the FAMT. However, the assets must have been held before the commencement of the appropriate tax year.
A non-taxable compensation payment is the amount of a compensation payment that is not required to be included in taxable income under the Income Tax Assessment Act 1936 or 1997. This is usually because the payment does not represent lost income. The deduction may relate to some or all of the compensation payment.
Families are able to claim a deduction of up to a maximum of $6,000 for each eligible family member from independent employment. However, only amounts earned after the dependent child has reached 16 years of age may be claimed, and all amounts claimed must be earned income and declared to the Australian Taxation Office.
The cost of boarding for AIC or secondary boarders is exempted from the FAMT, including an ABSTUDY student if s/he is a dependent secondary student who:
Only the maximum concession rate of $5,274 will be allowed.
Where a family has experienced a substantial reduction in their actual means from the base tax year to the following financial year, they can request that their actual means be assessed on the current tax year ie the tax year immediately following the base tax year.
Substantial is taken to mean that if a payment or an increase in payment is able to be granted by using the current income test , it shall be regarded as being substantial.
The conditions for using a current year assessment are similar to those used for the parental income test. The criteria are as follows:
In addition the drop in the actual means must be expected to last for at least 2 years from 1 January in the year of ABSTUDY payment or the date of the event whichever is the later.
Finally the same rule applies as to an assessment using the base tax year ie. the lesser amount using both the Income Test and FAMT for the current year is the amount payable.
The following table shows the period of effect of current year assessment according to the date of the event that caused the decrease in actual means.
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If…. |
The period of effect is….. |
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the event occurred on or before 1 January of the current year |
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the event occurred after 1 January of the current year |
from the date of the event until the earlier of:
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no event can be tied to the decrease in the current year |
from the date after 1 January when the decrease started, until the end of:
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Documentary evidence of financial decreased actual means may be required before a current year assessment is granted.
For a current year assessment to be used, the reasons for the decrease in actual means must be beyond the control of a:
Documentary evidence may be required to substantiate the claim.
Current year actual means assessment is used if total family actual means decrease because a parent or a dependent student gives up substantial employment to take up full-time study.
The base tax year means the financial year that ended on 30 June in the calendar year before the year in which the ABSTUDY allowance is being claimed.
An applicant’s assessable family for the purposes of FAMT are:
Note: That only the details of the spending, savings and deductions for those person covered by this definition are to be provided for the purposes of this FAMT. For example, if any grandparents or non-dependent children live with the family, then exclude all of their spending, savings and deductions from the amounts in the FAMT.
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