The parental income test is applied to determine the rate at which the Additional Boarding Allowance will be paid. It is possible for the parental income test to be waived (see 6.1.1).
To calculate parental income:
a. Calculate ‘total parental income’ by ADDING together:
- the taxable income of the person(s) being income tested; and
- any income derived overseas (whether taxed overseas or not) by a person being income tested (see 6.2.15); and
- any maintenance payments to or on behalf of a person being income tested or a dependant of that person, from a former partner (see 6.2.11); and
- the value of any claimed loss from rental property or a passive income earning investment (negative gearing) (see 6.5); and
- the value of certain employer provided fringe benefits (see 6.6) provided to or for a person being income tested; and then
b.DEDUCT from the ‘total parental income’:
- maintenance paid (see 6.2.11) by a person being income tested to or for a former partner and/or dependants or dependent children / student no longer in his or her care.
See 6.3 for details of the person(s) being income tested.
The Parental Income Free Area (PIFA) is the level of income at or below which the maximum rate of Additional Boarding Allowance can be paid. The PIFA will be increased according to the number of other dependent children / students in the family.
See 6.2.7 for how dependent children / students affect the PIFA.
See 6.8.1 for the current PIFA level (unadjusted for other dependent children / students).
The level of parental income (see 6.2.1) above the PIFA reduces the AIC Additional Boarding Allowance entitlement by $1 for every whole $4 of the excess.
The level of boarding costs also affects the rate of the Additional Boarding Allowance.
The Upper Income Limit is the level of income above which no Additional Boarding Allowance can be paid. The Upper Income Limit will be increased according to the number of other dependent children / students in the applicant’s family.
See 6.2.7 for how dependent children / students affect the Upper Income Limit.
See 6.8.2 for the current Upper Income Limit.
Less than the maximum amount of the Additional Boarding Allowance is only payable where the parental income (see 6.2.1) is above the PIFA and at/or below the Upper Income Limit.
The level of boarding costs also affects the rate of the Additional Boarding Allowance. No Additional Boarding Allowance is payable where the parental income is above the Upper Income Limit.
Both the PIFA and the Upper Income Limit are increased according to the number of other dependent children/students (see 6.2.8) in the applicant’s family.
Both the PIFA and the Upper Income Limit are increased by:
- $3,792 for each additional child / student who:
- is aged 16 or over; and
- is in full-time education (whether or not in an approved course); and
- does not qualify as independent under Youth Allowance or ABSTUDY rules; and
- does not receive a social security or DVA pension, benefit or allowance (except Family Payment); or
- is under 16 and eligible for either Boarding Allowance or Second Home Allowance under AIC.
- $1,230 for the first other dependent child / student under 16 not included above; and
- $2,562 for each subsequent dependent child / student under 16 not included above.
Note: The Youth Allowance sibling adjustment (i.e. $7,585) for students from families where two or more tertiary students are receiving the away-from-home rate does not apply.
For purposes of calculating the PIFA and Upper Income Limit (see 6.2.7) a dependent child / student is a person who is under 16, or 16-24 and in full-time study and either:
- a natural or adoptive child of either the applicant or the applicant’s partner; or
- wholly or substantially dependent on the applicant or the applicant’s partner.
See 6.2.9 for children / students who are not considered dependent.
Adjustments to the PIFA and Upper Income Limit cannot be made for the following children for the Additional Boarding Allowance:
- a child / student who is regarded independent under the Youth Allowance/ABSTUDY rules;
- a child / student who is in State authorised substitute care; or
- a child / student who is living with the applicant or applicant’s partner under a student exchange programme; or
- a child / student who does not live with the applicant or applicant’s partner but for whom the applicant or applicant’s partner pays maintenance.
All adjustments for dependent children/students are to be calculated on a continuing basis. This means that the entitlement must be reassessed during the year if the number of dependent children/students in the family changes.
Centrelink AIC Processing Centre officers should ensure that prompt action is taken to reassess entitlement and, where necessary, to carry out reassessments of related claims.
The adjusted parental income takes into account all maintenance received or paid by the applicant or applicant’s partner.
Maintenance received includes all payments from a former partner(s) for the upkeep of the applicant or applicant’s partner and/or dependent(s).
Maintenance paid includes all payments made by the applicant or applicant’s partner for the upkeep of a former partner(s) and/or dependents.
In both instances, payments for household expenses, rent, mortgage, rates, boarding costs, tuition fees and general education expenses or for any other purpose are to be included, even when made to a third party or to the student. Payments made by the Child Support Agency should also be included as these have originated from a non-custodial parent.
The Textiles, Clothing and Footwear (TCF) Special Allowance is not counted in the parental income test as special assessment applies (see 6.4.3). This is paid under an Australian Government scheme to people retrenched from employment in the textiles, clothing and footwear industries.
Negative parental income is treated as zero income for AIC income testing purposes. The negative income of the applicant or the applicant’s partner cannot be deducted from the other’s income.
Note: This is not the same as carrying forward a previous year loss that is an allowable deduction for both income tax and AIC income testing purposes.
For student assistance income testing purposes, parental income cannot be averaged over several years, as allowed for certain Australian Taxation Office purposes (eg primary producers).
Note: This is not the same as carrying forward a previous year loss that is an allowable deduction for both income tax and AIC Scheme income testing purposes.
Gross income earned or received and taxed overseas (less any deductions allowed in that country), and the value of employer provided fringe benefits (see 6.6.1) provided overseas must be included under the parental income test. In addition, income earned in an Australian external territory (eg Norfolk Island) or an overseas country where there are no taxation arrangements must also be included.
Income earned and the value of fringe benefits provided overseas will need to be converted to Australian dollars if the income is included in an overseas country’s taxation assessment notice or similar document.
If the income or fringe benefit is shown on an Australian Taxation Assessment Notice or similar document, it has already been converted from overseas dollars to Australian dollars. In these cases care should be taken not to double count the income.
When a person has income or an employer provided fringe benefit from an overseas source, the overseas figure is converted to Australian dollars at the average exchange rate for the year. The overseas figures are divided by the appropriate exchange rate.
See 6.9 for the rates to be used when converting currency under these guidelines.