5.1 General Entitlement and Payment Features

The applicable allowance for a student will normally reflect a student’s living arrangements while undertaking the approved course:

• for a student who boards away from home, the applicable allowance will normally be Boarding Allowance;
• for a student who lives in a second family home, the applicable allowance will normally be Second Home Allowance;
• for a student who lives at the principal family home while studying by distance education methods, the applicable allowance will normally be Distance Education Allowance.

Where, however, a student is in receipt of a Disability Support Pension or Parenting Payment (single), the applicable allowance is the Pensioner Education Supplement.                            

Where a student studies by distance education methods and periodically travels away from home to attend a short ‘mini school’ or residential school for their course, Distance Education Allowance remains the applicable allowance.

Where a student needs to stay in town for short periods during the year (eg while access from the principal family home to the school is cut-off due to special weather conditions) short-term Boarding Allowance is available (see 5.2.13).

Where the student must live away from the principal family home in order to undertake approved studies (see 3.4) the allowance payable is primarily determined by the student’s living arrangement.

The applicable allowance will be:

• Boarding Allowance where the student is boarding away from home in order to have daily access to appropriate schooling;
• Second Home Allowance where the student lives in a second family home in order to have daily access to appropriate schooling;
• Second Home Allowance where the student lives in a second family home maintained in order for a sibling to have daily access to appropriate schooling (see 5.3.2);
• Distance Education Allowance where the student lives in a second family home maintained for reasons other than access to appropriate schooling for the student or his/her siblings.

Where the student could undertake distance education studies from the principal family home, the allowance payable will be determined by the student’s mode of study unless the student lives in a second family home maintained in order for a sibling to undertake approved studies.

Provided the eligibility requirements are met (see 1.2.3), AIC allowances are available for the full calendar year, 1 January to 31 December.

If the eligibility requirements are not met for the full year, pro-rata entitlement is calculated on the basis of:

An AIC allowance is payable in respect of a single day in the year.

The following allowances are payable by term instalments:

• Boarding Allowance for students living in schools, hostels, other residential institutions, or participating in the pilot homestay programme of the Queensland Department of Education and the Arts;
• Distance Education Allowance; and
• the Pensioner Education Supplement (PES) for students living in schools, hostels or other institutions.

These payments are made in advance in three or four instalments, depending on the number of school terms in the State or Territory where the student is studying. Each instalment covers a quarter (see 5.1.8) or a third (see 5.1.9) of the calendar year rather than the exact period between the relevant term dates.

The following allowances are payable fortnightly in arrears:

• Boarding Allowance for students boarding privately;
• Second Home Allowance; and
• PES for students boarding privately.

Payment for short term boarders may be made by one of two methods.  If the student is boarding at an institution and the exact period is known in advance, payment may be made in advance.  Otherwise, the allowance should be paid in a lump sum after the period of boarding has ended.

Entitlement for short term boarders is normally calculated on the basis of the number of days the student boards away from home (see 5.2.13).

For four-term States or Territories, the term instalment periods are as follows:

1. 1 January - 31 March (90 days – 91 days in a leap year)
2. 1 April - 30 June (91 days)
3. 1 July - 30 September (92 days)
4. 1 October - 31 December (92 days)

See 5.1.10 regarding the calculation of term payments.

For Tasmania the term instalment periods are as follows:

1. 1 January - 30 April (120 days – 121 days in a leap year)
2. 1 May - 31 August (123 days)
3. 1 September- 31 December (122 days)

see 5.1.10 regarding the calculation of term payments.

Term instalments are calculated on the following basis:

As a result the amount of instalments may vary slightly in accordance with the number of days in the instalment period.

Advice from the Australian Taxation Office indicates that all amounts paid under AIC appear to be ‘supplementary amounts’ for the purposes of section 24ABZF of the Income Tax Assessment Act 1936 and therefore are exempt from income tax.

It is therefore not necessary to deduct tax from any AIC payments, nor is it necessary to provide a Group Certificate to an applicant where the only payments received in respect of that student are AIC allowances.

Allowances may be paid direct to the applicant or to an agent nominated by the applicant (eg the school, private board provider, or the student).

It should be noted, however, that the applicant remains responsible for any overpayment, that may occur (see 1.4.1) irrespective of who receives the payment.