In general, the parental income test will apply to the incomes of the approved applicant and, where applicable, their partner. This will usually be the student’s parents however, see 2.1 for details.
The parental income test does not take into account the incomes of the approved applicant and their partner (see 2.1) where the parental income test is waived (see 6.4).
Where the student’s parents are separated or divorced, they share joint custody of the student and neither has a new partner the income of both parents will be taken into account under the parental income test, regardless of who is considered to be the approved applicant (see 2.1).
Likewise, if parents are separated but living under the same roof, both incomes must be taken into account, whether or not the parents share joint custody.
Where the student's parents are separated or divorced, they share joint custody of the student, and one or both has a new partner, only the applicant and the applicant's new partner will be income tested.
Generally, the parental income test will apply to the approved applicant and partner as at 1 January of the year of study. However, AIC will be reassessed (subject to 6.3.2) if the applicant and/or the applicant’s partner change during the period of eligibility, that is, if the approved applicant changes or gains or loses a partner. As a result, if the approved applicant:
- loses a partner by death or separation, AIC is reassessed from the date of the change in circumstance with the adjusted parental income taking account of the income of the applicant only; or
- gains a partner (for example: remarries, or gains a defacto partner), AIC is reassessed from the date of change of circumstance with the adjusted parental income taking account of the combined income of the applicant and the new partner.
Note: Reassessment is based on the adjusted family income for the previous tax year (see 6.1.2) unless special assessment (see 6.4.2) or current income assessment applies (see 6.7).
If the approved applicant changes, the parental income test will apply to the new approved applicant and, where applicable, partner, from the date of the change of circumstance.
The effect of a change in the applicant or the loss or gain of an applicant’s partner is illustrated in the following examples.
Example 1
Up to 14 August Sonia’s parents live together in an isolated area and Sonia’s mother is an eligible applicant under AIC. On 14 August Sonia’s parents separate and her father commences a defacto relationship on that date. It is decided that Sonia’s father and his de facto wife will have responsibility for care of Sonia from that date.
Prior to 14 August Sonia’s mother was entitled to AIC on the basis of her income and that of Sonia’s father. From 14 August onwards Sonia’s mother is no longer eligible to receive AIC in respect of Sonia. From that date Sonia’s father becomes the approved applicant and will need to submit a new AIC claim. Entitlement will be calculated on the basis of the incomes of Sonia’s father and his new partner.
Example 2
Jordan's parents separate on 14 February. Jordan’s mother who is the approved applicant retains custody, pays his boarding fees, and Jordan stays with her in the school holidays. His parents re-unite on 15 October.
The previous tax year’s parental income test is applied to both parents' incomes to determine Jordan’s entitlement for the periods 1 January to 13 February and 15 October to 31 December. The test is applied only to the mother’s income for the period 14 February to 14 October.
Example 3
Adam’s parents separated on 19 April when he was 3 years old. Since that time Adam has been in the care of his mother who is the approved applicant. Adam’s father has limited contact with him but agrees with Adam’s mother to pay Adam’s boarding fees. On 16 August of the year of study Adam’s parents reunite.
The previous tax year’s parental income test is applied to Adam’s mother to determine entitlement for the period 1 January to 16 August. The payments Adam’s father is making in respect of his boarding fees during this period must also be taken into account as maintenance received by Adam’s mother. From 16 August the test is applied to the incomes of both of Adam’s parents.
Where, in respect of a person who is income tested:
- refuses to disclose income details; or
- income details are not known or not supplied; or
- acceptable proof of income is not provided (see 6.1.4);
Additional Boarding Allowance should not be paid (except if the income test is waived - see 6.4). Basic Boarding Allowance may be paid pending provision of income details and evidence.