Policies
7. Means Test
7.5. Income test
7.5.1 Recipients of maximum rate Centrelink payments
An applicant receiving a Centrelink income support payment at the maximum rate satisfies the income test. See 7.5.7 below for more details.
7.5.2 All other applicants
The following table is the income test which applies to all other applicants.
| Applicant's net assessable income | Do they satisfy the income test? |
|---|---|
| $400 or less per week | Yes |
Greater than $400 per week | Only in exceptional circumstances see (7.10.1 – 7.10.3) |
NOTE 1: Successful applicants must pay an income contribution in all matters except those listed in 7.8.6. See 7.8.3 on how initial contributions are determined.
NOTE 2: All applicants must also satisfy the assets test (see 7.6) and the ability to pay legal costs test (see 7.7).
7.5.3 How to calculate net assessable income
The income test is applied to the applicant's net assessable income.
Net assessable income is:
- the applicant's gross assessable income, less
- allowable deductions
7.5.4 Gross assessable income - what is included?
Income from all sources is included in gross assessable income, except:
- Family Tax Benefit Part A
- Family Tax Benefit Part B
- Carer Allowance
- Rent Assistance, and
- NDIS amounts
Gross assessable income includes, but is not limited to, the following:
- pensions, benefits and allowances (except Family Tax Benefit Part A, Family Tax Benefit Part B, Carer Allowance and Rent Assistance)
- income from wage/salary, including overtime
- income from self-employment
- periodic receipts, including payments from investments, dividends, interest earned and payment of debts owed to the applicant
- board or rent received
- spousal maintenance and child support received
- workers' compensation or other insurance payments, and
- superannuation payments
- Commonwealth Government Parental Leave Pay and employer funded parental leave payments.
NOTE: Income is calculated net of business overheads/expenses reasonably incurred in or for the purposes of gaining or producing that income. Such overheads/expenses will not be considered reasonably incurred merely because they have been, or are likely to be allowed or allowable deductions by the Commissioner of Taxation for the purposes of the Income Tax Assessment Act 1997.
7.5.5 Allowable deductions
The following table sets out the allowable deductions in the income test.
| Allowable deduction | Maximum weekly amount |
|---|---|
| Income tax (including Medicare levy) | Income tax paid |
| Housing costs | Sydney residents - $455 All others - $320 |
| Financially associated person allowance | $200 |
| Dependant allowance (per dependant) | $120 |
| Child support (maximum per child) | $120 |
| Childcare costs | $325 |
7.5.6 Information about allowable deductions
(a) General information
Except for financially associated person allowance and dependant allowance, applicants may only deduct the amount they actually pay for each allowable deduction, up to the maximum set out above.
(b) Housing costs
An applicant is a Sydney resident for the purposes of the Means Test if he or she lives in the area bounded by Cowan in the north, Richmond in the north-west, Emu Plains in the west, Menangle Park in the south-west and Waterfall in the south. This area is covered by the following postcodes:
2000-2249, 2555-2567, 2740-2753, 2759-2770
Housing costs include amounts paid for any style of housing as a place of residence on a regular basis and include rent, half board, mortgage instalments and municipal and water rates.
(c) Child care costs
Child care costs may only be deducted if they are necessarily incurred by the applicant in order to work or study.
(d) Financially associated person allowance
A financially associated person allowance is to be deducted for each financially associated person whose income is included in assessable income.
(e) Dependant allowance
A dependant allowance is to be deducted for all genuine dependants whether or not they reside with the applicant (except dependent children who do not reside with the applicant).
(f) Child support
A deduction may be made for child support or child maintenance payments made for children who do not reside with the applicant.
7.5.7 The income test for Centrelink recipients
(a) Centrelink income support payment at the maximum rate
An applicant receiving a Centrelink income support payment at the maximum rate satisfies the income test if:
- he or she has no financially associated person, or
- any financially associated person is also receiving a Centrelink income support payment at the maximum rate.
Centrelink recipients must also satisfy the assets test (see 7.6) and the ability to pay legal costs test (see 7.7).
Applicants who are granted legal aid under this policy are required to pay an income contribution of $75.00 unless the matter is exempt from initial contributions (see 7.8.6).
The Centrelink income support payments to which this policy applies are set out in the following table.
Centrelink income support payments | |
ABSTUDY Scheme payments Age Pension Austudy Payment Carer Payment Disability Support Pension Mature Age Allowance Parenting Payment (single) Farm Household Allowance | Partner Allowance Sickness Allowance Special Benefit Wife Pension Widow Allowance Widow B pension Youth Allowance JobSeeker Allowance |
NOTE: A current Centrelink Statement of Benefit which states that the applicant or financially associated person is currently entitled to a Centrelink benefit or pension payable at the maximum rate is evidence of that fact.
(b) Partial Centrelink income support payment
If:
- the applicant
- any financially associated person, or
- both
receive a partial Centrelink income support payment, the applicant must satisfy the standard income test (see 7.5.2 – 7.5.6), the assets test (see 7.6) and the ability to pay legal costs test (see 7.7).
Date Last Published: 23/12/2016
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