Social Security Act 1991

Chapter 3—General provisions relating to payability and rates

1068 Rate of widow allowance, jobseeker payment (18 or over), sickness allowance (18 or over), partner allowance, and mature age allowance under Part 2.12B

(1) The rate of:

(a) jobseeker payment; or

(b) sickness allowance; or

(ca) mature age allowance under Part 2.12B; or

(d) widow allowance;

is to be calculated in accordance with the Rate Calculator at the end of this section.

Note: Module A of the Rate Calculator establishes the overall rate calculation process and the remaining Modules provide for the calculation of the component amounts used in the overall rate calculation.

(2) If:

(a) a person has a relationship with another person, whether of the same sex or a different sex (other person); and

(b) the relationship between them is a de facto relationship in the Secretary’s opinion (formed after the Secretary has had regard to all the circumstances of the relationship, including, in particular, the matters referred to in paragraphs 4(3)(a) to (e) and subsection 4(3A));

the person’s benefit rate is not to exceed the rate at which it would be payable to the person if the other person were the person’s partner.

Note: This provision has the effect of taking into account the ordinary income and assets of the partner in applying the ordinary income test and assets test respectively.

Rate of benefit limited for certain armed services widows

(3) If:

(a) an armed services widow is receiving a pension under Part II or IV of the Veterans’ Entitlements Act at a rate determined under or by reference to subsection 30(1) of that Act; and

(b) the widow has been receiving a payment referred to in paragraph (a) continuously since before 1 November 1986; and

the rate of benefit payable to the widow is not to be increased:

(d) if, immediately before 1 November 1986, the widow was receiving a social security benefit at a rate less than $124.90 per fortnight—to a rate greater than $124.90 per fortnight; or

(e) if, immediately before 1 November 1986, the widow was receiving a social security benefit at a rate equal to or greater than $124.90 per fortnight—to a rate greater than the rate at which it was payable immediately before 1 November 1986.

Note 1: A benefit is not payable to a widow who starts to get a payment referred to in subsection (3) after 1 November 1986—see sections 408CF, 614, 660YCF and 771HI.

Note 2: For armed services widow see subsection 4(1).

Benefit Rate Calculator B

Module A—Overall rate calculation process

Method of calculating rate

1068‑A1 The rate of benefit is a daily rate. That rate is worked out by dividing the fortnightly rate calculated according to this Rate Calculator by 14.

Method statement

Step 1. Work out the person’s maximum basic rate using MODULE B below.

Step 1A. Work out the pension supplement amount (if any) using Module BA below.

Step 1B. Work out the energy supplement (if any) using Module C below.

Step 2. Work out the amount per fortnight (if any) of pharmaceutical allowance using MODULE D below.

Step 3. Work out the applicable amount per fortnight (if any) for rent assistance in accordance with paragraph 1070A(a).

Step 4. Add up the amounts obtained in Steps 1 to 4: the result is called the maximum payment rate.

Step 5. Apply the income test using MODULE G below to work out the income reduction.

Step 6. Take the income reduction away from the maximum payment rate: the result is called the provisional fortnightly payment rate.

Step 7. The rate of benefit is the amount obtained by:

(a) subtracting from the provisional fortnightly payment rate any special employment advance deduction (see Part 3.16B); and

(b) if there is any amount remaining, subtracting from that amount any advance payment deduction (see Part 3.16A); and

(c) except where the person is a CDEP Scheme participant in respect of the whole or a part of the period for which the rate of benefit is being worked out, adding any amount payable by way of remote area allowance (see Module J).

Note 1: If a person’s rate is reduced under step 6, the order in which the reduction is to be made against the components of the maximum payment rate is laid down by section 1210.

Note 2: In some circumstances a person may also be qualified for a pharmaceutical allowance under Part 2.22.

Note 3: An amount of remote area allowance is to be added under paragraph (c) of step 7 only if the conditions in point 1068‑J1 are satisfied.

Module B—Maximum basic rate

Maximum basic rate

1068‑B1 The maximum basic rate of a person other than a person who is a CDEP Scheme participant in respect of the whole or a part of the period for which the maximum basic rate is being worked out is worked out using Table B. Work out the person’s family situation and whether the person has a dependent child or not. The maximum basic rate is the corresponding amount in the rate column. The maximum basic rate of a person who is a CDEP Scheme participant in respect of the whole or a part of the period for which the maximum basic rate is being worked out is nil (see sections 408CG, 614A, 660YCH and 771HK).

Table B—Maximum basic rates
Column 1	Column 2	Column 3 Rate
Item	Person’s family situation	Column 3A Person with dependent child	Column 3B Person without dependent child
3.	Not member of couple and person: (a) receives sickness allowance; and (b) has not turned 60	$326.10	$301.50
4.	Not member of couple and person: (a) receives sickness allowance; and (b) has turned 60; and (c) has not been receiving one, or a combination, of social security pension, social security benefit or job search allowance, service pension, income support supplement or veteran payment for a continuous period of at least 9 months	$326.10	$301.50
4A.	Not member of couple and person: (a) receives jobseeker payment or widow allowance; and (b) has not turned 60	$326.10	$301.50
4B.	Not member of couple and person: (a) receives jobseeker payment or widow allowance; and (b) has turned 60; and (c) has not been receiving one, or a combination, of social security pension, social security benefit or job search allowance or service pension, income support supplement or veteran payment for a continuous period of at least 9 months	$326.10	$301.50
5.	Not member of couple and person: (a) has turned 60; and (b) has been receiving one, or a combination, of social security pension, social security benefit or job search allowance or service pension or income support supplement for a continuous period of at least 9 months	$326.10	$326.10
5A.	Not member of a couple and person receives mature age allowance under Part 2.12B	$326.10	$326.10
7.	Partnered	$272.00	$272.00
9.	Member of illness separated couple	$326.10	$326.10
11.	Partnered (partner in gaol)	$326.10	$326.10

Note 1: For member of couple, partnered, illness separated couple and partnered (partner in gaol) see section 4.

Note 2: For dependent child see section 5.

Note 5: The rates in column 3 are indexed 6 monthly in line with CPI increases (see sections 1191 to 1194).

Note 7: Some dependent children will not be taken into account in working out a person’s maximum basic rate (see point 1068‑B2).

Note 8: Some recipients of jobseeker payment have a maximum basic rate based on the maximum basic rate under the Pension PP (Single) Rate Calculator (see point 1068‑B5).

Certain children who are not young persons are to be treated as dependent children

1068‑B1A If:

(a) a person is not a member of a couple; and

(b) the person has at least one natural child, adopted child or relationship child who has turned 16 but has not turned 18; and

(i) a social security benefit is payable to the child; or

(ii) if the person is receiving jobseeker payment—a disability support pension is payable to the child; and

(d) the child is substantially dependent on the person;

the person’s maximum basic rate is worked out as if the person had a dependent child.

Certain children treated as dependent children if in recipient’s care for at least minimum period

1068‑B1B The maximum basic rate for a person receiving jobseeker payment, mature age allowance under Part 2.12B or sickness allowance is worked out as if the person had a dependent child if:

(a) either:

(i) the person is legally responsible (whether alone or jointly with another person) for the day‑to‑day care, welfare and development of a child under 16; or

(ii) under a family law order, registered parenting plan or parenting plan that is in force, a child under 16 is supposed to live or spend time with the person; and

(b) the child is in the person’s care for at least 14% of:

(i) the instalment period in relation to which the maximum basic rate is being worked out; or

(ii) if the Secretary, under point 1068‑B1C, determines another period for the person for the purposes of this subparagraph—that other period; and

(d) the person is not a member of a couple.

Note: For family law order, registered parenting plan and parenting plan see subsection 23(1).

1068‑B1C The Secretary may, in writing, determine a period of either 14 days or 28 days for the purposes of subparagraph 1068‑B1B(b)(ii). In making the determination, the Secretary must have regard to the guidelines (if any) determined under point 1068‑B1E.

1068‑B1D A determination made under point 1068‑B1C is not a legislative instrument.

1068‑B1E The Secretary may, by legislative instrument, determine guidelines to be complied with when making a determination under point 1068‑B1C.

Certain dependent children to be disregarded

1068‑B2 For the purposes of items 3, 4, 4A and 4B of Table B in point 1068‑B1, if:

(a) a person has a dependent child; and

(b) the child has turned 18; and

the child is to be disregarded in working out the person’s maximum basic rate under that point.

Note: For prescribed student child see section 5.

1068‑B3 On 20 March 1994 the amounts specified in items 3, 4, 4A and 4B in column 3B of Table B in point 1068‑B1 are increased by $6.00. The increase is to be made after the indexation of the amounts on that day has occurred.

1068‑B4 The amounts in items 3, 4, 4A and 4B in columns 3A and 3B of Table B in point 1068‑B1 are to be indexed on 20 September 1993 and 20 March 1994 under section 1192 as if Part 2 of the Social Security Amendment Act (No. 2) 1993 had commenced on 1 September 1993.

Maximum basic rate for certain jobseeker payment recipients

1068‑B5 Despite point 1068‑B1, if a person:

(a) is not a member of a couple; and

(b) receives jobseeker payment; and

(c) is not required to satisfy the activity test because of a determination in relation to the person under subsection 602C(3) or (3A);

the person’s maximum basic rate is the amount worked out as follows:

where:

pension PP (Single) maximum basic amount is the sum of:

(a) the amount that would have been the person’s maximum basic rate under Module B of the Pension PP (Single) Rate Calculator if the person was receiving parenting payment; and

(b) the amount that would have been the person’s pension supplement under Module BA of the Pension PP (Single) Rate Calculator if the person was receiving parenting payment.

Note: A person’s maximum basic rate under Module B of the Pension PP (Single) Rate Calculator is indexed 6 monthly in line with increases in Male Total Average Weekly Earnings (see section 1195).

Module BA—Pension supplement

Pension supplement

1068‑BA1 A pension supplement amount is to be added to the person’s maximum basic rate if the person is residing in Australia, has reached pension age and:

(a) is in Australia; or

(b) is temporarily absent from Australia and has been so for a continuous period not exceeding 6 weeks.

1068‑BA2 The person’s pension supplement amount is:

(a) if an election by the person under subsection 1061VA(1) is in force—the amount worked out under point 1068‑BA4; and

(b) otherwise—the amount worked out under point 1068‑BA3.

Amount if no election in force

1068‑BA3 The person’s pension supplement amount is the amount worked out by:

(a) applying the applicable percentage in the following table to the combined couple rate of pension supplement; and

(b) dividing the result by 26; and

(i) the person is not partnered; and

(ii) the amount resulting from paragraph (b) is not a multiple of 10 cents;

rounding the amount up or down to the nearest multiple of 10 cents (rounding up if the amount is not a multiple of 10 cents but is a multiple of 5 cents).

Item	Person’s family situation	Use this %
1	Not member of couple	66.33%
2	Partnered	50%
3	Member of illness separated couple	66.33%
4	Member of respite care couple	66.33%
5	Partnered (partner in gaol)	66.33%

Note: For combined couple rate of pension supplement, see subsection 20A(1).

Amount if election in force

1068‑BA4 The person’s pension supplement amount is the amount worked out as follows:

(a) work out the amount for the person under point 1068‑BA3 as if the election were not in force;

(b) from that amount, subtract 1/26 of the person’s minimum pension supplement amount.

Module C—Energy supplement

1068‑C1 An energy supplement is to be added to the person’s (the recipient’s) maximum basic rate if the recipient is residing in Australia and:

(a) is in Australia; or

(b) is temporarily absent from Australia and has been so for a continuous period not exceeding 6 weeks.

However, this Module does not apply if quarterly energy supplement is payable to the recipient.

Note: Section 918 may affect the addition of the energy supplement.

Recipient has reached pension age

1068‑C2 If the recipient has reached pension age and is not covered by point 1068‑B5, the recipient’s energy supplement is the amount worked out using the following table:

Energy supplement
Item	Recipient’s family situation	Amount of energy supplement
1	Not a member of a couple	$14.10
2	Partnered	$10.60
3	Member of an illness separated couple	$14.10
4	Member of a respite care couple	$14.10
5	Partnered (partner in gaol)	$14.10

Recipient has not reached pension age

1068‑C3 If the recipient has not reached pension age and is not covered by point 1068‑B5, the recipient’s energy supplement is the amount worked out using the following table:

Energy supplement
Item	Recipient’s family situation for maximum basic rate	Amount of energy supplement
1	If the recipient’s maximum basic rate is worked out under column 3A of item 3, 4, 4A, 4B, 5, 9 or 11 of the table in point 1068‑B1	$9.50
2	If the recipient’s maximum basic rate is worked out under column 3A of item 7 of the table in point 1068‑B1	$7.90
3	If the recipient’s maximum basic rate is worked out under column 3B of item 3, 4, 4A or 4B of the table in point 1068‑B1	$8.80
4	If the recipient’s maximum basic rate is worked out under column 3B of item 5, 9 or 11 of the table in point 1068‑B1	$9.50
5	If the recipient’s maximum basic rate is worked out under column 3B of item 7 of the table in point 1068‑B1	$7.90

Recipient covered by point 1068‑B5

1068‑C4 If the recipient is covered by point 1068‑B5, the recipient’s energy supplement is $12.00.

Module D—Pharmaceutical allowance

Qualification for pharmaceutical allowance

1068‑D1 Subject to points 1068‑D3A, 1068‑D4, 1068‑D5, 1068‑D6 and 1068‑D8, an additional amount by way of pharmaceutical allowance is to be added to a person’s maximum basic rate if:

(i) the person is receiving sickness allowance;

(ia) the person is receiving mature age allowance under Part 2.12B;

(ii) the person is receiving widow allowance, jobseeker payment or partner allowance and point 1068‑D2, 1068‑D2A, 1068‑D2B or 1068‑D3 applies to the person.

Incapacity for work—jobseeker payment

1068‑D2 This point applies to a person if the person is receiving jobseeker payment and the person is, under Subdivision BA of Division 1 of Part 2.12, exempt from the activity test.

Incapacity for work—widow allowance and partner allowance recipients

1068‑D2A This point applies to a person who is receiving widow allowance or partner allowance if the person is incapacitated for work.

Jobseeker payment recipients who have a partial capacity to work or are principal carers

1068‑D2B This point applies to a person who is receiving jobseeker payment if the person:

(a) has a partial capacity to work; or

(b) is the principal carer of at least one child and is not a member of a couple.

Note 1: For partial capacity to work see section 16B.

Note 2: For principal carer see subsections 5(15) to (24).

Long term recipients over 60

1068‑D3 This point applies to a person if the person:

(a) has turned 60; and

(b) has been receiving income support payments in respect of a continuous period of at least 9 months (whether or not the kind of payment received has changed over the period and whether the period or any part of it occurred before or after the commencement of this paragraph).

Note 1: For income support payment see subsection 23(1).

Note 2: For the determination of the continuous period in respect of which a person received income support payments see section 38B.

No pharmaceutical allowance if person receiving pension supplement

1068‑D3A Pharmaceutical allowance is not to be added to a person’s maximum basic rate if a pension supplement amount has been added to that rate.

No pharmaceutical allowance if person receiving certain supplements under other Acts

1068‑D4 Pharmaceutical allowance is not to be added to a person’s maximum basic rate if the person is receiving:

(a) veterans supplement under section 118A of the Veterans’ Entitlements Act; or

(b) MRCA supplement under section 300 of the Military Rehabilitation and Compensation Act; or

(c) pharmaceutical supplement under Part 3A of the Australian Participants in British Nuclear Tests and British Commonwealth Occupation Force (Treatment) Act 2006; or

(d) pharmaceutical supplement under Part 4 of the Treatment Benefits (Special Access) Act 2019.

No pharmaceutical allowance if partner receiving certain supplements under other Acts

1068‑D5 Pharmaceutical allowance is not to be added to a person’s maximum basic rate if:

(a) the person is a member of a couple; and

(b) the person’s partner is receiving:

(i) veterans supplement under section 118A of the Veterans’ Entitlements Act; or

(ii) MRCA supplement under section 300 of the Military Rehabilitation and Compensation Act; or

(iii) pharmaceutical supplement under Part 3A of the Australian Participants in British Nuclear Tests and British Commonwealth Occupation Force (Treatment) Act 2006; or

(iv) pharmaceutical supplement under Part 4 of the Treatment Benefits (Special Access) Act 2019; and

No pharmaceutical allowance before advance payment period ends

1068‑D6 Pharmaceutical allowance is not to be added to a person’s maximum basic rate if:

(a) the person has received an advance pharmaceutical allowance under Part 2.23 of this Act; and

(b) the person’s advance payment period has not ended.

Note: For advance payment period see point 1068‑D7.

Advance payment period

1068‑D7 A person’s advance payment period:

(a) starts on the day on which the advance pharmaceutical allowance is paid to the person; and

(b) ends after the number of paydays worked out using the following formula have passed:

where:

amount of advance is the amount of the advance paid to the person;

pharmaceutical allowance rate is the fortnightly amount of pharmaceutical allowance which would be added to the person’s maximum basic rate in working out the social security benefit instalment for the day on which the advance is paid if a social security benefit were payable to the person and pharmaceutical allowance were to be added to the person’s maximum basic rate on that day.

Note: The person may have come on social security benefit after having been a pension recipient and have received an advance while a pension recipient.

No pharmaceutical allowance if annual limit reached

1068‑D8 Pharmaceutical allowance is not to be added to a person’s maximum basic rate if:

(a) the person has received an advance pharmaceutical allowance during the current calendar year; and

(b) the total amount paid to the person for that year by way of:

(i) pharmaceutical allowance; and

(ii) advance pharmaceutical allowance;

equals the total amount of pharmaceutical allowance that would have been paid to the person during that year if the person had not received any advance pharmaceutical allowance.

Note 1: For the amount paid to a person by way of pharmaceutical allowance see subsections 19A(2) to (6).

Note 2: The annual limit is affected by:

• how long during the calendar year the person was on pension or benefit;

• the rate of pharmaceutical allowance the person attracts at various times depending on the person’s family situation.

Amount of pharmaceutical allowance

1068‑D10 The amount of pharmaceutical allowance is the amount per fortnight worked out using the following Table:

Pharmaceutical allowance amount table
Column 1 Item	Column 2 Person’s family situation	Column 3 Amount per fortnight
1.	Not member of couple	$5.20
2.	Partnered	$2.60
4.	Member of illness separated couple	$5.20
5.	Member of respite care couple	$5.20
6.	Partnered (partner getting service pension)	$2.60
7.	Partnered (partner in gaol)	$5.20

Note 1: For member of couple, partnered, illness separated couple, respite care couple and partnered (partner in gaol) see section 4.

Note 2: The amounts in column 3 are indexed or adjusted annually in line with CPI increases (see sections 1191 to 1194 and 1206A).

Module G—Income test

Effect of ordinary income on maximum payment rate

1068‑G1 This is how to work out the effect of a person’s ordinary income, and the ordinary income of a partner of the person, on the person’s maximum payment rate:

Method statement

Step 1. Work out the amount of the person’s ordinary income on a fortnightly basis.

Note: For the treatment of amounts received from friendly societies, see point 1068‑G4.

Step 2. If the person is a member of a couple, work out the partner income free area using point 1068‑G9.

Note: The partner income free area is the maximum amount of ordinary income the person’s partner may have without affecting the person’s benefit.

Step 3. Use paragraphs 1068‑G10(a), (b) and (c) to work out whether the person has a partner income excess.

Step 4. If the requirements of paragraphs 1068‑G10(a), (b) and (c) are not satisfied then the person’s partner income excess is nil.

Step 5. If the requirements of paragraphs 1068‑G10(a), (b) and (c) are satisfied, the person’s partner income excess is the partner’s ordinary income less the partner income free area.

Step 6. Use the person’s partner income excess to work out the person’s partner income reduction using point 1068‑G11.

Step 7. Work out whether the person’s ordinary income exceeds the person’s ordinary income free area under point 1068‑G12.

Note: A person’s ordinary income free area is the maximum amount of ordinary income the person may have without affecting the person’s benefit rate.

Step 8. If the person’s ordinary income does not exceed the person’s ordinary income free area, the person’s ordinary income excess is nil.

Step 9. If the person’s ordinary income exceeds the person’s ordinary income free area, the person’s ordinary income excess is the person’s ordinary income less the person’s ordinary income free area.

Step 10. Use the person’s ordinary income excess to work out the person’s ordinary income reduction using points 1068‑G14, 1068‑G15, 1068‑G16 and 1068‑G17.

Step 11. Add the person’s partner income reduction and ordinary income reduction: the result is the person’s income reduction referred to in Step 5 of point 1068‑A1.

Note 1: For ordinary income see section 8.

Note 2: See point 1068‑A1 (Steps 6 to 9) for the significance of the person’s income reduction.

Note 3: The application of the ordinary income test is affected by provisions concerning:

• the general concept of ordinary income (sections 1072 and 1073);

• business income (sections 1074 and 1075);

• income from financial assets (including income streams (short term) and certain income streams (long term)) (Division 1B of Part 3.10);

• income from income streams not covered by Division 1B of Part 3.10 (Division 1C of Part 3.10);

• disposal of income (sections 1106 to 1111).

Ordinary income of members of certain couples

1068‑G2 Subject to point 1068‑G3, if a person is a member of a couple and the person’s partner is receiving a social security pension, a service pension, income support supplement or a veteran payment, the person’s ordinary income is taken to be one half of the sum of:

(a) the amount that would be the person’s ordinary income if he or she were not a member of a couple; and

(b) the amount that would be the ordinary income of the person’s partner if the partner were not a member of a couple.

Friendly society amounts

1068‑G4 The ordinary income of a person:

(a) to whom, or to whose partner, sickness allowance is payable; or

(c) to whom, or to whose partner, jobseeker payment is payable and who, or whose partner, under Subdivision BA of Division 1 of Part 2.12, is not required to satisfy the activity test;

is not to include any amount received by the person or partner from an approved friendly society in respect of the incapacity because of which the person or partner is qualified for the sickness allowance or is not required to satisfy the activity test, as the case may be.

Board and lodging

1068‑G6 A person’s ordinary income is not to include a payment to the person for board or lodging provided by the person to a parent, child, brother or sister of the person.

Lump sum payments arising from termination of employment

1068‑G7 Subject to points 1068‑G7AF to 1068‑G7AR (inclusive), if:

(a) a person’s employment has been terminated; and

(b) as a result the person is entitled to a lump sum payment from the person’s former employer;

the person is taken to have received the lump sum payment on the day on which the person’s employment was terminated.

Ordinary income to include certain sick leave entitlements

1068‑G7AA If a person is a person who is qualified for sickness allowance, the person’s ordinary income is taken to include an amount equal to the amount in respect of sick leave worked out under points 1068‑G7AB, 1068‑G7AC and 1068‑G7AD.

1068‑G7AB If:

(a) a person has sick leave entitlements on a day that the person is incapacitated for work; and

(b) the person has the right to claim payment from the person’s employer by way of sick leave payment in respect of that day; and

(d) the person is not receiving a leave payment (other than a sick leave payment) in respect of that day;

the person is, for the purposes of this point, taken to have received a sick leave payment equal to the person’s sick leave entitlements in respect of that day, assuming that the person does not exercise any rights the person may have in relation to the amount to be paid in respect of that day.

1068‑G7AC If point 1068‑G7AB has applied to a person in respect of a day, then, for the purposes of any subsequent consecutive applications of the point, the person’s sick leave entitlements are to be taken to be reduced by a day.

1068‑G7AD A person’s ordinary income is not to include a payment received by the person in respect of sick leave to the extent that an amount equal to the payment has been included in the person’s ordinary income under point 1068‑G7AA.

1068‑G7AE If:

(a) point 1068‑G7AA has applied to a person while the person was qualified for sickness allowance; and

(b) that allowance has been cancelled; and

(c) at least 6 weeks after the day on which the sickness allowance was cancelled, the person is granted sickness allowance again;

point 1068‑G7AA applies to the person in respect of the person’s sick leave entitlements.

Directed termination payments excluded

1068‑G7AF If:

(a) a person’s employment has been terminated; and

(b) as a result the person is entitled to a lump sum payment from the person’s former employer; and

(c) the payment, or part of the payment, is a directed termination payment within the meaning of section 82‑10F of the Income Tax (Transitional Provisions) Act 1997;

the payment, or that part, is to be disregarded in working out the ordinary income of the person for the purposes of Module G of section 1068.

Certain leave payments taken to be ordinary income—employment continuing

1068‑G7AG If:

(a) a person is employed; and

(b) the person is on leave for a period; and

(c) the person is or was entitled to receive a leave payment (whether as a lump sum payment, as a payment that is one of a series of regular payments or otherwise) in respect of a part or all of a leave period;

the person is taken to have received ordinary income for a period (the income maintenance period) equal to the leave period to which the leave payment entitlement relates.

Certain termination payments taken to be ordinary income

1068‑G7AH If:

(a) a person’s employment has been terminated; and

(b) the person receives a termination payment (whether as a lump sum payment, as a payment that is one of a series of regular payments or otherwise);

the person is taken to have received ordinary income for a period (the income maintenance period) equal to the period to which the payment relates.

Exception to points 1068‑G7AG and 1068‑G7AH

1068‑G7AI Point 1068‑G7AG or 1068‑G7AH does not apply in relation to a person’s entitlement referred to in paragraph 1068‑G7AG(c) or in relation to a person’s termination payment referred to in paragraph 1068‑G7AH(b) if:

(a) the person makes a claim for jobseeker payment on or after the commencement of this point; and

(b) the person makes the claim after the death of the person’s partner on or after the commencement of this point; and

(c) if the person is a man or a woman who was not pregnant when her partner died—the person makes the claim in the period of 14 weeks starting on the day of the death of the partner; and

(d) if the person is a woman who was pregnant when her partner died—the person makes the claim:

(i) in the period of 14 weeks starting on the day of the death of the partner; or

(ii) in the period starting on the day of the death of the partner and ending when the child is born or the woman otherwise stops being pregnant;

whichever ends later; and

(e) the entitlement referred to in paragraph 1068‑G7AG(c) arose, or the termination payment referred to in paragraph 1068‑G7AH(b) was paid, in the period applicable under paragraph (c) or (d) of this point.

More than one termination payment on a day

1068‑G7AJ If:

(a) the person is covered by point 1068‑G7AH; and

(b) the person receives more than one termination payment on a day;

the income maintenance period is worked out by adding the periods to which the payments relate.

Start of income maintenance period—employment continuing

1068‑G7AK If the person is covered by point 1068‑G7AG, the income maintenance period starts on the first day of the leave period to which the leave payment entitlement relates.

Start of income maintenance period—employment terminated

1068‑G7AKA Subject to point 1068‑G7AKC, if the person is covered by point 1068‑G7AH, the income maintenance period starts, subject to point 1068‑G7AKB, on the day the person is paid the termination payment.

Commencement of income maintenance period where there is a second termination payment

1068‑G7AKB If a person who is covered by point 1068‑G7AH is subject to an income maintenance period (the first period) and the person is paid another termination payment during that period (the second leave payment), the income maintenance period for the second termination payment commences the day after the end of the first period.

Start of income maintenance period where liquid assets test waiting period applies

1068‑G7AKC If a person to whom point 1068‑G7AKA applies is subject to a liquid assets test waiting period, the income maintenance period is taken to have started on the day on which the liquid assets test waiting period started.

Leave payments or termination payments in respect of periods longer than a fortnight

1068‑G7AL Subject to points 1068‑G7AA to 1068‑G7AE (inclusive), if:

(a) a person receives a leave payment or termination payment; and

(b) the payment is in respect of a period greater than a fortnight;

the person is taken to receive in a payment fortnight or part of a payment fortnight an amount calculated by:

(d) multiplying the daily rate by the number of days in the payment fortnight that are also in the period.

1068‑G7AM If the Secretary is satisfied that a person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure while an income maintenance period applies to the person, the Secretary may determine that the whole, or any part, of the period does not apply to the person.

Note 1: For in severe financial hardship see subsection 19C(2) (person who is not a member of a couple) and 19C(3) (person who is a member of a couple).

Note 2: For unavoidable or reasonable expenditure see subsection 19C(4).

Note 3: If an income maintenance period applies to a person, then, during that period:

(a) the payment or allowance claimed may not be payable to the person; or

(b) the amount of the payment or allowance payable to the person may be reduced.

When a person receives a leave payment or a termination payment

1068‑G7AN For the purposes of points 1068‑G7AB and 1068‑G7AD to 1068‑G7AM (inclusive), a person (the first person) is taken to receive a leave payment or termination payment if the payment is made to another person:

(a) at the direction of the first person or a court; or

(b) on behalf of the first person; or

(d) the first person waives or assigns the first person’s right to receive the payment.

Single payment in respect of different kinds of termination payments

1068‑G7AP If a person who is covered by point 1068‑G7AH receives a single payment in respect of different kinds of termination payments, then, for the purposes of the application of points 1068‑G7AG to 1068‑G7AN (inclusive), each part of the payment that is in respect of a different kind of termination payment is taken to be a separate payment and the income maintenance period in respect of the single payment is worked out by adding the periods to which the separate payments relate.

Definitions

1068‑G7AQ In points 1068‑G7AG to 1068‑G7AP (inclusive):

payment fortnight means a fortnight in respect of which a sickness allowance or a jobseeker payment, as the case requires, is paid, or would be paid, apart from the application of an income maintenance period, to a person.

period to which the payment relates means:

(a) if the payment is a leave payment—the leave period to which the payment relates; or

(b) if the payment is a termination payment and is calculated as an amount equivalent to an amount of ordinary income that the person would (but for the termination) have received from the employment that was terminated—the period for which the person would have received that amount of ordinary income; or

(c) if the payment is a termination payment and paragraph (b) does not apply—the period of weeks (rounded down to the nearest whole number) in respect of which the person would have received ordinary income, from the employment that was terminated, of an amount equal to the amount of the termination payment if:

(i) the person’s employment had continued; and

(ii) the person received ordinary income from the employment at the rate per week at which the person usually received ordinary income from the employment prior to the termination.

redundancy payment includes a payment in lieu of notice, but does not include a directed termination payment within the meaning of section 82‑10F of the Income Tax (Transitional Provisions) Act 1997.

termination payment includes:

(a) a redundancy payment; and

(b) a leave payment relating to a person’s employment that has been terminated; and

1068‑G7AR In points 1068‑G7AA to 1068‑G7AQ (inclusive):

leave payment includes a payment in respect of sick leave, annual leave, maternity leave and long service leave, but does not include:

(a) an instalment of parental leave pay; or

(b) dad and partner pay.

Ordinary income generally taken into account when first earned, derived or received

1068‑G7A Subject to points 1068‑G7B, 1068‑G7C, 1068‑G8 and 1068‑G8A and section 1073, ordinary income is to be taken into account in the fortnight in which it is first earned, derived or received.

Claimant or recipient receives lump sum amount for remunerative work

1068‑G7B If a person whose claim for a payment or an allowance has been granted receives a lump sum amount after the claim was made that:

(a) is paid to him or her in relation to remunerative work; and

(b) is not a payment to which point 1068‑G8 applies; and

the person is, for the purposes of this Module, taken to receive one fifty‑second of that amount as ordinary income during each week in the 12 months commencing on the day on which the person becomes entitled to receive that amount.

Partner of claimant or recipient receives lump sum amount for remunerative work

1068‑G7C If:

(a) a person whose claim for a payment or an allowance has been granted is a member of a couple; and

(b) after the person has made the claim, the person’s partner receives a lump sum amount that:

(i) is paid to him or her in relation to remunerative work; and

(ii) is not a payment to which point 1068‑G8 applies; and

(iii) is not an exempt lump sum;

the partner is, for the purposes of this Module, taken to receive one fifty‑second of that amount as ordinary income during each week in the 12 months commencing on the day on which the partner becomes entitled to receive that amount.

Reference to payment or allowance

1068‑G7D A reference in point 1068‑G7B or 1068‑G7C to a payment or an allowance is a reference to a payment or an allowance the rate of which is calculated under this Rate Calculator.

Operation of points 1068‑G7B and 1068‑G7C

1068‑G7E Points 1068‑G7B and 1068‑G7C have effect even if the person who has made the claim:

(a) has to serve an ordinary waiting period or a liquid assets test waiting period in respect of the payment or allowance claimed; or

(b) is subject to an income maintenance period in respect of the payment or allowance claimed; or

during the period of 12 months referred to in those points.

Ordinary income received at intervals longer than one fortnight

1068‑G8 Subject to points 1068‑G7AF to 1068‑G7AR (inclusive), if:

(a) a person receives a number of ordinary income payments; and

(b) each payment is in respect of a period (in this point called the work period) that is greater than a fortnight; and

(d) there is reasonable predictability as to the quantum of the payments;

the person is taken to receive in a fortnight falling within, or overlapping with, a work period an amount calculated by:

(e) dividing the amount received by the number of days in the work period (the result is called the daily rate); and

(f) multiplying the daily rate by the number of days in the fortnight that are also within the work period.

EXAMPLE OF HOW ORDINARY INCOME RECEIVED AT INTERVALS LONGER THAN A FORTNIGHT IS ALLOCATED TO FORTNIGHTLY PERIODS

Facts: Fred receives $600 each 25 days from remunerative work. The social security benefit becomes payable to Fred such that the first 25 days of his earnings that are counted as ordinary income for the purposes of the ordinary income test are spread over 3 social security benefit payment fortnights as follows:

• 5 days of the first fortnight;

• all of the second fortnight;

• 6 days of the third fortnight.

In this example, it is assumed that Fred remains qualified for the social security benefit during the three fortnights and that nothing prevents it from being payable to him. The problem is then to work out what proportion of Fred’s earnings to allocate to each fortnight for ordinary income testing purposes.

Application: To work out the amount that Fred is taken to receive in the first fortnight first divide the total amount received for the 25 day work period ($600) by the number of days in the work period (25). This gives a daily rate. The daily rate is:

Then multiply the daily rate ($24) by the number of days in the fortnight that are also within the work period. The result is:

For the second fortnight the calculation is:

For the third fortnight the calculation is:

plus

Note that the amount of $192 added for the third fortnight comes from the given fact that Fred receives $600 each 25 days. So, for as long as there is reasonable predictability as to the timing and quantum of Fred’s ordinary income from remunerative work where receipt is at intervals longer than a fortnight, then this provision should be used to allocate that income to fortnightly periods for the purposes of the ordinary income test.

Payment of arrears of periodic compensation payments

1068‑G8A If:

(a) at the time of an event that gives rise to an entitlement of a person to compensation, the person is receiving jobseeker payment, sickness allowance, or mature age allowance under Part 2.12B; and

(b) in relation to that entitlement, the person receives a payment of arrears of periodic compensation;

the person is taken to receive in a fortnight falling within, or overlapping with, the periodic payments period, an amount calculated by:

(c) dividing the amount received by the number of days in the periodic payments period (the result is called the daily rate); and

(d) multiplying the daily rate by the number of days in the fortnight that are also within the periodic payments period.

Note: For periodic payments period see section 17.

Partner income free area

1068‑G9 The partner income free area for a person is:

(a) if the person’s partner is not receiving a social security benefit and has not turned 22—the amount of income of the partner (rounded up to the nearest dollar) beyond which youth allowance would not be payable to the partner if the partner were qualified for a youth allowance and were not undertaking full‑time study (see section 541B); or

(b) if the person’s partner is not receiving a social security benefit and has turned 22—the amount of income of the partner (rounded up to the nearest dollar) beyond which jobseeker payment would not be payable to the partner if the partner were qualified for a jobseeker payment; or

(c) if the person’s partner is receiving a social security benefit—the amount of income of the partner (rounded up to the nearest dollar) beyond which that benefit would not be payable to the partner.

1068‑G9A For the purposes of paragraph 1068‑G9(a), disregard steps 2, 2A and 3 of the method statement in point 1067G‑A1.

1068‑G9B For the purposes of paragraph 1068‑G9(b), disregard steps 2 and 3 of the method statement in point 1068‑A1.

Partner income excess

1068‑G10 If:

(a) a person is a member of a couple; and

(b) the person’s partner is not receiving a social security pension, a service pension, income support supplement or a veteran payment; and

then:

(d) the person has a partner income excess; and

(e) the person’s partner income excess is the amount by which the partner’s ordinary income exceeds the partner income free area.

Partner income reduction

1068‑G11 If a person has a partner income excess, the person’s partner income reduction is an amount equal to 60% of the part of the partner’s ordinary income that exceeds the partner income free area.

Example:

Facts: Susan’s partner Colin has an ordinary income of $800. Assume that the partner income free area under point 1068‑G9 is $640.

Application: Colin’s ordinary income exceeds the partner income free area. He therefore has a partner income excess under point 1068‑G10 of:

Susan’s partner income reduction under point 1068‑G11 is therefore:

Ordinary income free area

1068‑G12 A person’s ordinary income free area is $100.

Note 1: The amount specified is indexed in line with CPI increases (see sections 1190 to 1194).

Note 2: The income free area is used in the ordinary income test in relation to fortnightly income.

Ordinary income excess

1068‑G13 If a person’s ordinary income exceeds the person’s ordinary income free area:

(a) the person has an ordinary income excess; and

(b) the person’s ordinary income excess is the amount by which the person’s ordinary income exceeds the person’s ordinary income free area.

Ordinary income reduction—general

1068‑G14 Subject to point 1068‑G17, if a person has an ordinary income excess, the person’s ordinary income reduction is the sum of:

(a) the person’s lower range reduction (see point 1068‑G15); and

(b) the person’s upper range reduction (if any) (see point 1068‑G16).

Lower range reduction

1068‑G15 The person’s lower range reduction is an amount equal to 50% of the part of the person’s ordinary income excess that does not exceed $150.

Upper range reduction

1068‑G16 The person’s upper range reduction is an amount equal to 60% of the part (if any) of the person’s ordinary income excess that exceeds $150.

Ordinary income reduction for certain recipients of jobseeker payment

1068‑G17 If:

(a) a person has an ordinary income excess; and

(b) the person is receiving jobseeker payment; and

(d) the person is the principal carer of a child;

the person’s ordinary income reduction is an amount equal to 40% of the person’s ordinary income excess.

Module J—Remote area allowance

Remote area allowance—person physically in remote area

1068‑J1 An amount by way of remote area allowance is to be added to a person’s rate if:

(aa) any of the following subparagraphs applies:

(i) apart from this point, the person’s rate would be greater than nil;

(ii) apart from this point, the person’s rate would be nil merely because an advance pharmaceutical allowance has been paid to the person under Part 2.23 of this Act;

(iii) apart from this point, the person’s rate would be nil merely because an election by the person under subsection 1061VA(1) is in force;

(iv) apart from this point, the person’s rate would be nil merely because of both of the matters mentioned in subparagraphs (ii) and (iii); and

(a) the person’s usual place of residence is situated in the remote area; and

(b) the person is physically present in the remote area.

Note 1: For remote area see subsection 14(1).

Note 2: A person may be considered to be physically present in a remote area during temporary absences—see subsection 14(2).

Rate of remote area allowance

1068‑J3 The rate of remote area allowance payable to a person is worked out using Table J. Work out which family situation in the Table applies to the person. The rate of remote area allowance is the corresponding amount in column 3 plus an additional corresponding amount in column 4 for each FTB child, and regular care child, of the person.

Table J Remote area allowance
Column 1 Item	Column 2 Person’s family situation	Column 3 Basic allowance	Column 4 Additional allowance for each FTB child and regular care child
1.	Not member of couple	$18.20	$7.30
2.	Partnered	$15.60	$7.30
3.	Member of illness separated couple	$18.20	$7.30
5.	Partnered (partner in gaol)	$18.20	$7.30

Meaning of remote area allowance

1068‑J4 In Table J, remote area allowance means:

(a) an amount added to a person’s social security pension or benefit by way of remote area allowance; or

(b) a remote area allowance payable under point SCH6‑G1 of the VEA.

In remote area

1068‑J5 For the purposes of Table J in point 1068‑J3, a person is in the remote area if:

(a) the person’s usual place of residence is in the remote area; and

(b) the person is physically present in the remote area.

Special rule where partner has an FTB or regular care child but is not receiving a pension

1068‑J7 If:

(a) a person who is a member of a couple is qualified for an amount by way of additional allowance; and

(b) the person’s partner is not receiving a pension or benefit; and

the child is taken, for the purposes of this Module, to be an FTB child, or a regular care child, (as the case requires) of the person.

Special rule where partner has an FTB or regular care child but is not receiving additional allowance for the child

1068‑J8 If:

(a) a person who is a member of a couple is qualified for an amount by way of remote area allowance; and

(b) the person’s partner has an FTB child or a regular care child; and

the child is taken, for the purposes of this Module, to be an FTB child, or a regular care child, (as the case requires) of the person.

Special rule dealing with the death of an FTB or regular care child

1068‑J9 If an FTB child, or a regular care child, of a person dies, this Module has effect, for a period of 14 weeks after the death of the child, as if the child had not died.

Note: This point does not prevent this Module having the effect it would have had if the child would otherwise have ceased to be an FTB child, or a regular care child, during that 14 weeks.

Part 3.6A—Parenting Payment Rate Calculator

1068A Rate of parenting payment—pension PP (single)

(1) If a person is not a member of a couple, the person’s rate of parenting payment is the pension PP (single) rate.

(2) The pension PP (single) rate is worked out in accordance with the rate calculator at the end of this section.

Note: For rate of a person who is a member of a couple see section 1068B.

(3) If:

(a) a person has a relationship with another person, whether of the same sex or a different sex (the other person); and

the person’s pension PP (single) rate is not to exceed the benefit PP (partnered) rate which would be payable to the person if the other person were the person’s partner.

Pension PP (Single) Rate Calculator

Module A—Overall rate calculation process

Method of calculating rate

1068A‑A1 The rate of pension PP (single) is a daily rate. That rate is worked out by dividing the annual rate calculated according to this Rate Calculator by 364 (fortnightly rates are provided for information only).

Method statement

Step 1. Work out the person’s maximum basic rate using Module B below.

Step 1A. Work out the amount of pension supplement using Module BA below.

Step 1B. Work out the energy supplement (if any) using Module BB below.

Step 2. Work out the amount per year (if any) of pharmaceutical allowance using Module C below.

Step 3. Work out the amount per year (if any) for rent assistance in accordance with paragraph 1070A(b).

Step 4. Add up the amounts obtained in Steps 1, 1A, 1B, 2 and 3: the result is called the maximum payment rate.

Step 5. Apply the ordinary income test using Module E below to work out the income reduction.

Step 6. Take the income reduction away from the maximum payment rate: the result is called the provisional annual payment rate.

Step 7. The rate of pension PP (single) is the amount obtained by:

(a) subtracting from the provisional annual payment rate any special employment advance deduction (see Part 3.16B); and

(b) if there is any amount remaining, subtracting from that amount any advance payment deduction (see Part 3.16A); and

Note 1: If a person’s rate is reduced under Step 6, the order in which the reduction is to be made against the components of the maximum payment rate is laid down by section 1210.

Note 2: In some circumstances a person may also be qualified for a pharmaceutical allowance under Part 2.22.

Note 3: An amount of remote area allowance is to be added under Step 7 only if the person’s provisional payment rate under Step 6 is greater than nil.

Module B—Maximum basic rate

Maximum basic rate

1068A‑B1 A person’s maximum basic rate is $9,042.80 per year ($347.80 per fortnight).

Note: The maximum basic rate is indexed 6 monthly in line with CPI increases (see sections 1191 to 1194).

Module BA—Pension supplement

Pension supplement

1068A‑BA1 A pension supplement amount is to be added to the person’s maximum basic rate.

Residents of pension age who are in Australia etc.

1068A‑BA2 If the person is residing in Australia, has reached pension age and:

(a) is in Australia; or

(b) is temporarily absent from Australia and has been so for a continuous period not exceeding 6 weeks;

the person’s pension supplement amount is:

(d) otherwise—the amount worked out under point 1068A‑BA3.

Residents of pension age in Australia etc.—no election in force

1068A‑BA3 The person’s pension supplement amount is the amount worked out by:

(a) working out 66.33% of the combined couple rate of pension supplement; and

(b) if the result is not a multiple of $2.60, rounding the result up or down to the nearest multiple of $2.60 (rounding up if the result is not a multiple of $2.60 but is a multiple of $1.30).

Note: For combined couple rate of pension supplement, see subsection 20A(1).

Residents of pension age in Australia etc.—election in force

1068A‑BA4 The person’s pension supplement amount is the amount worked out as follows:

(a) work out the amount for the person under point 1068A‑BA3 as if the election were not in force;

(b) from that amount, subtract the person’s minimum pension supplement amount.

Other persons

1068A‑BA5 If the person is not covered by point 1068A‑BA2, the person’s pension supplement amount is the person’s pension supplement basic amount.

Module BB—Energy supplement

1068A‑BB1 An energy supplement is to be added to the person’s (the recipient’s) maximum basic rate if the recipient is residing in Australia and:

(a) is in Australia; or

(b) is temporarily absent from Australia and has been so for a continuous period not exceeding 6 weeks.

However, this Module does not apply if quarterly energy supplement is payable to the recipient.

Note: Section 918 may affect the addition of the energy supplement.

Recipient has reached pension age

1068A‑BB2 If the recipient has reached pension age, the recipient’s energy supplement is $366.60.

Recipient has not reached pension age

1068A‑BB3 If the recipient has not reached pension age, the recipient’s energy supplement is $312.00.

Module C—Pharmaceutical allowance

Qualification for pharmaceutical allowance

1068A‑C1 Subject to points 1068A‑C1A, 1068A‑C2, 1068A‑C3 and 1068A‑C5, an additional amount by way of pharmaceutical allowance is to be added to a person’s maximum basic rate if the person is an Australian resident.

No pharmaceutical allowance if person has reached pension age

1068A‑C1A Pharmaceutical allowance is not to be added to a person’s maximum basic rate if the person has reached pension age.

No pharmaceutical allowance if person receiving certain supplements under other Acts

1068A‑C2 Pharmaceutical allowance is not to be added to a person’s maximum basic rate if the person is receiving:

(a) veterans supplement under section 118A of the Veterans’ Entitlements Act; or

(b) MRCA supplement under section 300 of the Military Rehabilitation and Compensation Act; or

(c) pharmaceutical supplement under Part 3A of the Australian Participants in British Nuclear Tests and British Commonwealth Occupation Force (Treatment) Act 2006; or

(d) pharmaceutical supplement under Part 4 of the Treatment Benefits (Special Access) Act 2019.

No pharmaceutical allowance before advance payment period ends

1068A‑C3 Pharmaceutical allowance is not to be added to a person’s maximum basic rate if:

(a) the person has received an advance pharmaceutical allowance under Part 2.23 of this Act; and

(b) the person’s advance payment period has not ended.

Note: For advance payment period see point 1068A‑C4.

Advance payment period

1068A‑C4(1) A person’s advance payment period starts on the day on which the advance pharmaceutical allowance is paid to the person.

(2) The period ends after the number of paydays worked out using the following formula have passed:

where:

amount of advance is the amount of the advance paid to the person.

pharmaceutical allowance rate is the yearly amount of pharmaceutical allowance which would be added to the person’s maximum basic rate in working out the person’s rate of pension PP (single) on the day on which the advance is paid if pharmaceutical allowance were to be added to the person’s maximum basic rate on that day.

No pharmaceutical allowance if annual limit reached

1068A‑C5 Pharmaceutical allowance is not to be added to a person’s maximum basic rate if:

(a) the person has received an advance pharmaceutical allowance during the current calendar year; and

(b) the total amount paid to the person for that year by way of:

(i) pharmaceutical allowance; and

(ii) advance pharmaceutical allowance;

equals the total amount of pharmaceutical allowance that would have been paid to the person during that year if the person had not received any advance pharmaceutical allowance.

Note 1: For the amount paid to a person by way of pharmaceutical allowance see subsections 19A(2) to (7).

Note 2: The annual limit is affected by the following:

(a) how long during the calendar year the person was on pension or benefit;

(b) the rate of pharmaceutical allowance the person attracts at various times depending on the person’s family situation.

Amount of pharmaceutical allowance

1068A‑C7 The amount of pharmaceutical allowance is $140.40 per year ($5.40 per fortnight).

Note: The annual amount is adjusted annually in line with CPI increases (see section 1206A).

Module E—Ordinary income test

Effect of income on maximum payment rate

1068A‑E1 This is how to work out the effect of a person’s ordinary income on the person’s maximum payment rate:

Method statement

Step 1. Work out the amount of the person’s ordinary income on a yearly basis.

Step 2. Work out the person’s ordinary income free area (see points 1068A‑E14 to 1068A‑E18 below).

Note: A person’s ordinary income free area is the amount of ordinary income that the person can have without any deduction being made from the person’s maximum payment rate.

Step 3. Work out whether the person’s ordinary income exceeds the person’s ordinary income free area.

Step 4. If the person’s ordinary income does not exceed the person’s ordinary income free area, the person’s ordinary income excess is nil.

Step 5. If the person’s ordinary income exceeds the person’s ordinary income free area, the person’s ordinary income excess is the person’s ordinary income less the person’s ordinary income free area.

Step 6. Use the person’s ordinary income excess to work out the person’s reduction for ordinary income using points 1068A‑E19 and 1068A‑E20 below.

Note 1: See point 1068A‑A1 (Steps 5 and 6) for the significance of the person’s reduction for ordinary income.

Note 2: The application of the ordinary income test is affected by provisions concerning the following:

(a) the general concept of ordinary income (sections 1072 and 1073);

(b) business income (sections 1074 and 1075);

(c) income from financial assets (including income streams (short term) and certain income streams (long term)) (Division 1B of Part 3.10);

(d) income from income streams not covered by Division 1B of Part 3.10 (Division 1C of Part 3.10);

(e) disposal of income (sections 1106 to 1111).

Directed termination payments excluded

1068A‑E2 If:

(a) a person’s employment has been terminated; and

(b) as a result the person is entitled to a lump sum payment from the person’s former employer; and

(c) the payment, or part of the payment, is a directed termination payment within the meaning of section 82‑10F of the Income Tax (Transitional Provisions) Act 1997;

the payment, or that part, is to be disregarded in working out the ordinary income of the person for the purposes of this Module.

Certain leave payments taken to be ordinary income—employment continuing

1068A‑E3 If:

(a) a person is employed; and

(b) the person is on leave for a period; and

the person is taken to have received ordinary income for a period (the income maintenance period) equal to the leave period to which the leave payment entitlement relates.

Certain termination payments taken to be ordinary income

1068A‑E4 If:

(a) a person’s employment has been terminated; and

(b) the person receives a termination payment (whether as a lump sum payment, as a payment that is one of a series of regular payments or otherwise);

the person is taken to have received ordinary income for a period (the income maintenance period) equal to the period to which the payment relates.

More than one termination payment on a day

1068A‑E5 If:

(a) the person is covered by point 1068A‑E4; and

(b) the person receives more than one termination payment on a day;

the income maintenance period is worked out by adding the periods to which the payments relate.

Start of income maintenance period—employment continuing

1068A‑E6 If the person is covered by point 1068A‑E3, the income maintenance period starts on the first day of the leave period to which the leave payment entitlement relates.

Start of income maintenance period—employment terminated

1068A‑E7 If the person is covered by point 1068A‑E4, the income maintenance period starts, subject to point 1068A‑E8, on the day the person is paid the termination payment.

Commencement of income maintenance period where there is a second termination payment

1068A‑E8 If a person who is covered by point 1068A‑E4 is subject to an income maintenance period (the first period) and the person is paid another termination payment during that period (the second leave payment), the income maintenance period for the second termination payment commences on the day after the end of the first period.

1068A‑E9 If the Secretary is satisfied that a person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure while an income maintenance period applies to the person, the Secretary may determine that the whole, or any part, of the period does not apply to the person.

Note 1: For in severe financial hardship see subsection 19C(2) (person who is not a member of a couple).

Note 2: For unavoidable or reasonable expenditure see subsection 19C(4).

Note 3: If an income maintenance period applies to a person, then, during that period:

(a) the pension PP (single) claimed may not be payable to the person; or

(b) the amount of the pension PP (single) payable to the person may be reduced.

When a person receives a leave payment or a termination payment

1068A‑E10 For the purposes of points 1068A‑E2 to 1068A‑E9 (inclusive), a person (the first person) is taken to receive a leave payment or termination payment if the payment is made to another person:

(a) at the direction of the first person or a court; or

(b) on behalf of the first person; or

the first person waives or assigns the first person’s right to receive the payment.

Single payment in respect of different kinds of termination payments

1068A‑E11 If a person who is covered by point 1068A‑E4 receives a single payment in respect of different kinds of termination payments, then, for the purposes of the application of points 1068A‑E3 to 1068A‑E10 (inclusive), each part of the payment that is in respect of a different kind of termination payment is taken to be a separate payment and the income maintenance period in respect of the single payment is worked out by adding the periods to which the separate payments relate.

Definitions

1068A‑E12 In points 1068A‑E3 to 1068A‑E12 (inclusive):

leave payment includes a payment in respect of sick leave, annual leave, maternity leave and long service leave, but does not include:

(a) an instalment of parental leave pay; or

(b) dad and partner pay.

period to which the payment relates means:

(a) if the payment is a leave payment—the leave period to which the payment relates; or

(i) the person’s employment had continued; and

(ii) the person received ordinary income from the employment at the rate per week at which the person usually received ordinary income from the employment prior to the termination.

termination payment includes:

(a) a redundancy payment; and

(b) a leave payment relating to a person’s employment that has been terminated; and

Payment of arrears of periodic compensation payments

1068A‑E13 If:

(a) at the time of an event that gives rise to an entitlement of a person to compensation, the person is receiving a compensation affected payment; and

(b) in relation to that entitlement, the person receives a payment of arrears of periodic compensation;

the person is taken to receive, on each day in the periodic payments period, an amount calculated by dividing the amount received by the number of days in the periodic payments period.

Note: For compensation affected payment and periodic payments period see section 17.

How to calculate a person’s ordinary income free area

1068A‑E14 A person’s ordinary income free area is worked out using Table E. The ordinary income free area is the amount in Column 2 plus the additional amount in Column 4 for each dependent child of the person.

Table E—Ordinary income free area
1	$2,600	$100	$639.60	$24.60

Table E—Ordinary income free area

Column 1

Item

Column 2

Basic free area per year

Column 3

Basic free area per fortnight

Column 4

Additional free area per year

Column 5

Additional free area per fortnight

$2,600

$100

$639.60

$24.60

Note 1: For dependent child see section 5 and point 1068A‑E21.

Note 2: The basic free area per year is indexed annually in line with CPI increases (see sections 1191 to 1194).

No additional free area for certain prescribed student children

1068A‑E15 No additional free area is to be added for a dependent child who:

(a) has turned 18; and

(b) is a prescribed student child;

unless the person whose rate is being calculated receives carer allowance for the child.

Reduction of additional free area for dependent children

1068A‑E16 The additional free area for a dependent child is reduced by the annual amount of any payment received by the person for or in respect of that particular child. The payments referred to in point 1068A‑E17 do not result in a reduction.

Payments that do not reduce additional free area

1068A‑E17 No reduction is to be made under point 1068A‑E16 for a payment:

(a) under this Act; or

(b) of maintenance income; or

(d) under an Aboriginal study assistance scheme; or

(e) under the Assistance for Isolated Children Scheme.

Note: For Aboriginal study assistance scheme see subsection 23(1).

Examples of payments reducing additional free area

1068A‑E18 Examples of the kinds of payments that result in a reduction under point 1068A‑E16 are:

(a) amounts received from State authorities or registered public benevolent institutions in respect of the boarding out of the child; or

(b) amounts of superannuation or compensation paid in respect of the child; or

(d) foster care allowance payments made by a State welfare authority.

Ordinary income excess

1068A‑E19 A person’s ordinary income excess is the person’s ordinary income less the person’s ordinary income free area.

Reduction for ordinary income

1068A‑E20 A person’s reduction for ordinary income is:

1068A‑E21 In this Module:

dependent child, in relation to a person, includes any child of the person who is under 18 and is receiving a youth allowance.

Module F—Remote area allowance

Remote area allowance

1068A‑F1 An amount by way of remote area allowance is to be added to a person’s rate if:

(a) any of the following subparagraphs applies:

(i) apart from this point, the person’s rate would be greater than nil;

(ii) apart from this point, the person’s rate would be nil merely because an advance pharmaceutical allowance has been paid to the person under Part 2.23 of this Act;

(iii) apart from this point, the person’s rate would be nil merely because an election by the person under subsection 1061VA(1) is in force;

(iv) apart from this point, the person’s rate would be nil merely because of both of the matters mentioned in subparagraphs (ii) and (iii); and

(b) the person’s usual place of residence is situated in a remote area; and

Note: For remote area and physically present in the remote area see section 14.

Rate of remote area allowance

1068A‑F2 The rate of remote area allowance payable to a person is worked out using Table F. The rate of remote area allowance is the amount in Column 2 plus the additional corresponding amount in Column 4 for each FTB child, and each regular care child, of the person.

Table F—Remote area allowance
1	$473.20	$18.20	$189.80	$7.30

Table F—Remote area allowance

Column 1

Item

Column 2

Basic allowance per year

Column 3

Basic allowance per fortnight

Column 4

Additional allowance per year

Column 5

Additional allowance per fortnight

$473.20

$18.20

$189.80

$7.30

1068B Rate of parenting payment—PP (partnered)

(1) If a person is a member of a couple, the person’s rate of parenting payment is the benefit PP (partnered) rate.

(2) The benefit PP (partnered) rate is worked out in accordance with the rate calculator at the end of this section.

Note: For member of a couple see section 4.

Benefit PP (Partnered) Rate Calculator

Module A—Overall rate calculation process

Method of calculating rate—general

1068B‑A1 The rate of benefit PP (partnered) is a daily rate. That rate is worked out by dividing the fortnightly rate calculated according to this Rate Calculator by 14. There are 2 ways of working out the fortnightly rate:

(a) one for a person who is not a partner of a non‑independent YA recipient (see point 1068B‑A2); and

(b) one for a person who is a partner of a non‑independent YA recipient (see point 1068B‑A3).

Note: For partner of a non‑independent YA recipient see subsection 23(1).

Method of calculating rate for person who is not a partner of a non‑independent YA recipient

1068B‑A2 If a person is not the partner of a non‑independent YA recipient, the fortnightly rate of benefit PP (partnered) for the person is worked out as follows:

Method statement

Step 1. Work out the person’s maximum basic rate using Module C below.

Step 2. Work out the amount per fortnight (if any) of rent assistance in accordance with paragraph 1070A(a).

Step 2A. Work out the pension supplement amount (if any) using Module DA below.

Step 2B. Work out the energy supplement (if any) using Module DB below.

Step 3. Work out the amount per fortnight (if any) of pharmaceutical allowance using Module E below.

Step 4. Add up the amounts obtained in steps 1 to 3: the result is called the maximum payment rate.

Step 5. Apply the income test using Module D below to work out the person’s income reduction.

Step 6. Take the income reduction away from the maximum payment rate: the result is called the provisional payment rate.

Step 7. The rate of benefit PP (partnered) is the difference between:

(a) the provisional payment rate; and

(b) any advance payment deduction (see Part 3.16A);

plus, except where the person is a CDEP Scheme participant in respect of the whole or part of the period for which the rate of payment is being worked out, any amount by way of remote area allowance that, under Module G, is to be added to the person’s rate of benefit PP (partnered).

Note 1: For partner of a non‑independent YA recipient see subsection 23(1).

Note 2: If a person’s rate is reduced under step 6, the order in which the reduction is to be made against the components of the maximum payment rate is laid down by section 1210 (maximum basic rate first, then rent assistance).

Method of calculating rate for partner of a non‑independent YA recipient

1068B‑A3 If a person is the partner of a non‑independent YA recipient, the fortnightly rate of benefit PP (partnered) for the person is worked out as follows:

Method statement

Step 1. Work out the person’s maximum basic rate using Module C below.

Step 2. Work out the amount per fortnight (if any) of rent assistance in accordance with paragraph 1070A(a).

Step 2A. Work out the pension supplement amount (if any) using Module DA below.

Step 2B. Work out the energy supplement (if any) using Module DB below.

Step 3. Work out the amount per fortnight (if any) of pharmaceutical allowance using Module E below.

Step 4. Add up the amounts obtained in steps 1 to 3: the result is called the maximum payment rate.

Step 5. Apply the income test using Module E of the Rate Calculator in section 1068A to work out the person’s income reduction.

Step 6. Take the income reduction away from the maximum payment rate: the rate is called the provisional payment rate.

Step 7. The rate of benefit is the difference between:

(a) the provisional payment rate; and

(b) any advance payment deduction (see Part 3.16A);

Note 1: For partner of a non‑independent YA recipient see subsection 23(1).

Module C—Maximum basic rate

Maximum basic rate

1068B‑C2 If a person is not a CDEP Scheme participant in respect of the whole or part of the period for which the rate of payment is being worked out, the person’s maximum basic rate is worked out using Table C. Work out the person’s family situation. The maximum basic rate is the corresponding amount in Column 3.

Table C—Maximum basic rates
Column 1 Item	Column 2 Person’s family situation	Column 3 Rate
1	Person not covered by item 2, 3 or 4	$290.10
2	Member of illness separated couple	$347.80
3	Member of respite care couple	$347.80
4	Partnered (partner in gaol)	$347.80

Note 1: For illness separated couple, respite care couple and partnered (partner in gaol) see section 4.

Note 2: The rates are indexed 6 monthly in line with CPI increases (see sections 1191 to 1194).

Maximum basic rate—CDEP Scheme participant

1068B‑C3 The maximum basic rate of a person who is a CDEP Scheme participant in respect of the whole or a part of the period for which the maximum basic rate is being worked out is nil (see section 500W).

Module D—Income test

Effect of income on maximum payment rate

1068B‑D1 This is how to work out the effect of a person’s ordinary income, and the ordinary income of the person’s partner, on the person’s maximum payment rate:

Method statement

Step 1. Work out the amount of the person’s ordinary income on a fortnightly basis.

Note: The amount of the person’s ordinary income is affected by points 1068B‑D2 to 1068B‑D21.

Step 2. Work out the partner income free area using point 1068B‑D22.

Note: The partner income free area is the maximum amount of ordinary income the person’s partner can have without affecting the person’s rate.

Step 3. Use point 1068B‑D23 to work out the person’s partner income excess.

Step 4. Use the person’s partner income excess to work out the person’s partner income reduction using point 1068B‑D24.

Step 5. Work out whether the person’s ordinary income exceeds the person’s ordinary income free area (see point 1068B‑D27).

Note: A person’s ordinary income free area is the maximum amount of ordinary income the person can have without affecting the person’s rate.

Step 6. If the person’s ordinary income does not exceed the person’s ordinary income free area, the person’s ordinary income excess is nil.

Step 7. If the person’s ordinary income exceeds the person’s ordinary income free area, the person’s ordinary income excess is the person’s ordinary income less the person’s ordinary income free area.

Step 8. Use the person’s ordinary income excess to work out the person’s ordinary income reduction using points 1068B‑D29 to 1068B‑D31.

Step 9. Add the person’s ordinary income reduction and partner income reduction: the result is the person’s income reduction referred to in step 5 of the method statement in point 1068B‑A2.

Note 1: For ordinary income see section 8.

Note 2: See point 1068B‑A2 (step 6) for the significance of the person’s income reduction.

Note 3: The application of the ordinary income test is affected by provisions concerning the following:

(a) the general concept of ordinary income (sections 1072 and 1073);

(b) business income (sections 1074 and 1075);

(c) income from financial assets (including income streams (short term) and certain income streams (long term)) (Division 1B of Part 3.10);

(d) income from income streams not covered by Division 1B of Part 3.10 (Division 1C of Part 3.10);

(e) disposal of income (sections 1106 to 1111).

Ordinary income of members of certain couples

1068B‑D2 If a person’s partner is receiving a social security pension, a service pension, income support supplement or a veteran payment, the person’s ordinary income is taken to be one half of the sum of:

(a) the amount that would be the person’s ordinary income if he or she were not a member of a couple; and

(b) the amount that would be the ordinary income of the person’s partner if the partner were not a member of a couple.

Friendly society amounts

1068B‑D4 The ordinary income of a person to whose partner a sickness allowance is payable is not to include any amount received by the person from an approved friendly society in respect of the incapacity because of which the partner is qualified for the sickness allowance.

Note: For approved friendly society see subsection 23(1).

Board and lodging

1068B‑D6 A person’s ordinary income is not to include a payment to the person for board or lodging provided by the person to a parent, child, brother or sister of the person.

Lump sum payments arising from termination of employment

1068B‑D7 Subject to points 1068B‑D8 to 1068B‑D18 (inclusive), if:

(a) a person’s employment has been terminated; and

(b) as a result, the person is entitled to a lump sum payment from the person’s former employer;

the person is taken to have received the lump sum payment on the day on which the person’s employment was terminated.

Directed termination payments excluded

1068B‑D8 If:

(a) a person’s employment has been terminated; and

(b) as a result the person is entitled to a lump sum payment from the person’s former employer; and

(c) the payment, or part of the payment, is a directed termination payment within the meaning of section 82‑10F of the Income Tax (Transitional Provisions) Act 1997;

the payment, or that part, is to be disregarded in working out the ordinary income of the person for the purposes of this Module.

Certain leave payments taken to be ordinary income—employment continuing

1068B‑D9 If:

(a) a person is employed; and

(b) the person is on leave for a period; and

the person is taken to have received ordinary income for a period (the income maintenance period) equal to the leave period to which the leave payment entitlement relates.

Certain termination payments taken to be ordinary income

1068B‑D10 If:

(a) a person’s employment has been terminated; and

(b) the person receives a termination payment (whether as a lump sum payment, as a payment that is one of a series of regular payments or otherwise);

the person is taken to have received ordinary income for a period (the income maintenance period) equal to the period to which the payment relates.

More than one termination payment on a day

1068B‑D11 If:

(a) the person is covered by point 1068B‑D10; and

(b) the person receives more than one termination payment on a day;

the income maintenance period is worked out by adding the periods to which the payments relate.

Start of income maintenance period—employment continuing

1068B‑D12 If the person is covered by point 1068B‑D9, the income maintenance period starts on the first day of the leave period to which the leave payment entitlement relates.

Start of income maintenance period—employment terminated

1068B‑D13 If the person is covered by point 1068B‑D10, the income maintenance period starts, subject to point 1068B‑D14, on the day the person is paid the termination payment.

Commencement of income maintenance period where there is a second termination payment

1068B‑D14 If a person who is covered by point 1068B‑D10 is subject to an income maintenance period (the first period) and the person is paid another termination payment during that period (the second leave payment), the income maintenance period for the second termination payment commences the day after the end of the first period.

1068B‑D15 If the Secretary is satisfied that a person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure while an income maintenance period applies to the person, the Secretary may determine that the whole, or any part, of the period does not apply to the person.

Note 1: For in severe financial hardship see subsection 19C(3) (person who is a member of a couple).

Note 2: For unavoidable or reasonable expenditure see subsection 19C(4).

Note 3: If an income maintenance period applies to a person, then, during that period:

(a) the benefit PP (partnered) claimed may not be payable to the person; or

(b) the amount of the benefit PP (partnered) payable to the person may be reduced.

When a person receives a leave payment or a termination payment

1068B‑D16 For the purposes of points 1068B‑D8 to 1068B‑D15 (inclusive), a person (the first person) is taken to receive a leave payment or termination payment if the payment is made to another person:

(a) at the direction of the first person or a court; or

(b) on behalf of the first person; or

the first person waives or assigns the first person’s right to receive the payment.

Single payment in respect of different kinds of termination payments

1068B‑D17 If a person who is covered by point 1068B‑D10 receives a single payment in respect of different kinds of termination payments, then, for the purposes of the application of points 1068B‑D9 to 1068B‑D16 (inclusive), each part of the payment that is in respect of a different kind of termination payment is taken to be a separate payment and the income maintenance period in respect of the single payment is worked out by adding the periods to which the separate payments relate.

Definitions

1068B‑D18 In points 1068B‑D9 to 1068B‑D18 (inclusive):

leave payment includes a payment in respect of sick leave, annual leave, maternity leave and long service leave, but does not include:

(a) an instalment of parental leave pay; or

(b) dad and partner pay.

period to which the payment relates means:

(a) if the payment is a leave payment—the leave period to which the payment relates; or

(i) the person’s employment had continued; and

(ii) the person received ordinary income from the employment at the rate per week at which the person usually received ordinary income from the employment prior to the termination.

termination payment includes:

(a) a redundancy payment; and

(b) a leave payment relating to a person’s employment that has been terminated; and

Period over which ordinary income taken into account

1068B‑D19 Subject to points 1068B‑D8 to 1068B‑D18 (inclusive), a person’s ordinary income is to be taken into account over such period, not exceeding 52 weeks, as the Secretary determines.

Note: This point, in conjunction with point 1068B‑D20, enables the Secretary to determine the person’s fortnightly income amount that best represents the person’s income situation.

Fortnightly rate of ordinary income

1068B‑D20 For the purposes of this Module, the person’s ordinary income for such a period is to be reduced to a fortnightly rate rounded to the nearest cent (rounding 0.5 cents downwards).

Payment of arrears of periodic compensation payments

1068B‑D21 If:

(a) at the time of an event that gives rise to an entitlement of a person to compensation, the person is receiving a compensation affected payment; and

(b) in relation to that entitlement, the person receives a payment of arrears of periodic compensation;

the person is taken to receive, on each day in the periodic payments period, an amount calculated by dividing the amount received by the number of days in the periodic payments period.

Note: For compensation affected payment and periodic payments period see section 17.

Partner income free area

1068B‑D22 The partner income free area for a person is:

1068B‑D22A For the purposes of paragraph 1068B‑D22(a), disregard steps 2, 2A and 3 of the method statement in point 1067G‑A1.

1068B‑D22B For the purposes of paragraph 1068B‑D22(b), disregard steps 2 and 3 of the method statement in point 1068‑A1.

Partner income excess

1068B‑D23 If:

(b) the person’s partner is not receiving a social security pension, a service pension, income support supplement or a veteran payment; and

the person’s partner income excess is the amount by which the partner’s ordinary income exceeds the partner income free area. Otherwise, the person’s partner income excess is nil.

Partner income reduction

1068B‑D24 If a person has a partner income excess, the person’s partner income reduction is an amount equal to 60% of the part of the partner’s ordinary income that exceeds the partner income free area.

Ordinary income free area

1068B‑D27 A person’s ordinary income free area is $100.

Note 1: The amount specified is indexed in line with CPI increases (see sections 1190 to 1194).

Note 2: The income free area is used in the ordinary income test in relation to fortnightly income.

Ordinary income excess

1068B‑D28 If a person’s ordinary income exceeds the person’s ordinary income free area:

(a) the person has an ordinary income excess; and

(b) the person’s ordinary income excess is the amount by which the person’s ordinary income exceeds the person’s ordinary income free area.

Ordinary income reduction

1068B‑D29 If a person has an ordinary income excess, the person’s ordinary income reduction is the sum of:

(a) the person’s lower range reduction (see point 1068B‑D30); and

(b) the person’s upper range reduction (if any) (see point 1068B‑D31).

Lower range reduction

1068B‑D30 The person’s lower range reduction is an amount equal to 50% of the part of the person’s ordinary income excess that does not exceed $150.

Upper range reduction

1068B‑D31 The person’s upper range reduction is an amount equal to 60% of the part (if any) of the person’s ordinary income excess that exceeds $150.

Module DA—Pension supplement

Pension supplement

1068B‑DA1 A pension supplement amount is to be added to the person’s maximum basic rate if the person is residing in Australia, has reached pension age and:

(a) is in Australia; or

(b) is temporarily absent from Australia and has been so for a continuous period not exceeding 6 weeks.

1068B‑DA2 The person’s pension supplement amount is:

(a) if an election by the person under subsection 1061VA(1) is in force—the amount worked out under point 1068B‑DA4; and

(b) otherwise—the amount worked out under point 1068B‑DA3.

Amount if no election in force

1068B‑DA3 The person’s pension supplement amount is the amount worked out by:

(a) applying the applicable percentage in the following table to the combined couple rate of pension supplement; and

(b) dividing the result by 26; and

(i) the person is not partnered; and

(ii) the amount resulting from paragraph (b) is not a multiple of 10 cents;

rounding the amount up or down to the nearest multiple of 10 cents (rounding up if the amount is not a multiple of 10 cents but is a multiple of 5 cents).

Item	Person’s family situation	Use this %
1	Partnered	50%
2	Member of illness separated couple	66.33%
3	Member of respite care couple	66.33%
4	Partnered (partner in gaol)	66.33%

Note: For combined couple rate of pension supplement, see subsection 20A(1).

Amount if election in force

1068B‑DA4 The person’s pension supplement amount is the amount worked out as follows:

(a) work out the amount for the person under point 1068B‑DA3 as if the election were not in force;

(b) from that amount, subtract 1/26 of the person’s minimum pension supplement amount.

Module DB—Energy supplement

1068B‑DB1 An energy supplement is to be added to the person’s (the recipient’s) maximum basic rate if the recipient is residing in Australia and:

(a) is in Australia; or

(b) is temporarily absent from Australia and has been so for a continuous period not exceeding 6 weeks.

However, this Module does not apply if quarterly energy supplement is payable to the recipient.

Note: Section 918 may affect the addition of the energy supplement.

Recipient has reached pension age

1068B‑DB2 If the recipient has reached pension age, the recipient’s energy supplement is the amount worked out using the following table:

Energy supplement
Item	Recipient’s family situation	Amount of energy supplement
1	Partnered	$10.60
2	Member of an illness separated couple	$14.10
3	Member of a respite care couple	$14.10
4	Partnered (partner in gaol)	$14.10

Recipient has not reached pension age

1068B‑DB3 If the recipient has not reached pension age, the recipient’s energy supplement is the amount worked out using the following table:

Energy supplement
Item	Recipient’s family situation for maximum basic rate	Amount of energy supplement
1	If the recipient’s maximum basic rate is worked out under item 1 of the table in point 1068B‑C2	$7.90
2	If the recipient’s maximum basic rate is worked out under item 2, 3 or 4 of the table in point 1068B‑C2	$9.50

Module E—Pharmaceutical allowance

Qualification for pharmaceutical allowance

1068B‑E1 Subject to points 1068B‑E1A, 1068B‑E2, 1068B‑E3, 1068B‑E4 and 1068B‑E6, an additional amount by way of pharmaceutical allowance is to be included in a person’s maximum payment rate in points 1068B‑A2 and 1068B‑A3 if:

(b) the person is an Australian resident, or has a qualifying residence exemption for parenting payment; and

(d) one or more of the following applies:

(i) the person has turned 60, and has been receiving income support payments in respect of a continuous period of at least 9 months (whether or not the kind of payment received has changed over the period and whether the period or any part of it occurred before or after the commencement of this paragraph);

(ii) under section 502H, the person is covered by a participation exemption under Division 3A of Part 2.10;

(iii) the person has a partial capacity to work.

Note 1: For income support payment see subsection 23(1).

Note 2: For the determination of the continuous period in respect of which a person received income support payments see section 38B.

Note 3: For Australian resident and qualifying residence exemption see section 7.

Note 4: For partial capacity to work see section 16B.

No pharmaceutical allowance if person receiving pension supplement

1068B‑E1A Pharmaceutical allowance is not to be added to a person’s maximum basic rate if a pension supplement amount has been added to that rate.

No pharmaceutical allowance if person receiving certain supplements under other Acts

1068B‑E2 Pharmaceutical allowance is not to be included in a person’s maximum basic rate if the person is receiving:

(a) veterans supplement under section 118A of the Veterans’ Entitlements Act; or

(b) MRCA supplement under section 300 of the Military Rehabilitation and Compensation Act; or

(c) pharmaceutical supplement under Part 3A of the Australian Participants in British Nuclear Tests and British Commonwealth Occupation Force (Treatment) Act 2006; or

(d) pharmaceutical supplement under Part 4 of the Treatment Benefits (Special Access) Act 2019.

No pharmaceutical allowance if partner receiving certain supplements under other Acts

1068B‑E3 Pharmaceutical allowance is not to be included in a person’s maximum basic rate if:

(a) the person is a member of a couple; and

(b) the person’s partner is receiving:

(i) veterans supplement under section 118A of the Veterans’ Entitlements Act; or

(ii) MRCA supplement under section 300 of the Military Rehabilitation and Compensation Act; or

(iii) pharmaceutical supplement under Part 3A of the Australian Participants in British Nuclear Tests and British Commonwealth Occupation Force (Treatment) Act 2006; or

(iv) pharmaceutical supplement under Part 4 of the Treatment Benefits (Special Access) Act 2019; and

No pharmaceutical allowance before advance payment period ends

1068B‑E4 Pharmaceutical allowance is not to be included in a person’s provisional payment rate if:

(a) the person has received an advance pharmaceutical allowance under Part 2.23 of this Act; and

(b) the person’s advance payment period has not ended.

Note: For advance payment period see point 1068B‑E5.

Advance payment period

1068B‑E5(1) A person’s advance payment period starts on the day on which the advance pharmaceutical allowance is paid to the person.

1068B‑E5(2) The period ends after the number of paydays worked out using the following formula have passed:

where:

amount of advance is the amount of the advance paid to the person.

pharmaceutical allowance rate is the fortnightly amount of pharmaceutical allowance which would be included in the person’s maximum payment rate in working out the benefit PP (partnered) instalment for the day on which the advance is paid if parenting payment were payable to the person and pharmaceutical allowance were to be included in the person’s maximum payment rate. (The person’s maximum payment rate is the maximum payment rate at step 4 of whichever of the method statements in points 1068B‑A2 and 1068B‑A3 is applicable to the person.)

Note: The person may have commenced receiving parenting payment after having been a pension recipient and have received an advance while a pension recipient.

No pharmaceutical allowance if annual limit reached

1068B‑E6 Pharmaceutical allowance is not to be included in a person’s provisional payment rate if:

(a) the person has received an advance pharmaceutical allowance during the current calendar year; and

(b) the total amount paid to the person for that year by way of:

(i) pharmaceutical allowance; and

(ii) advance pharmaceutical allowance;

equals the total amount of pharmaceutical allowance that would have been paid to the person during that year if the person had not received any advance pharmaceutical allowance.

Note 1: For the amount paid to a person by way of pharmaceutical allowance see subsections 19A(2) to (7).

Note 2: The annual limit is affected by:

(a) how long during the calendar year the person was on pension or benefit; and

(b) whether the person’s rate of pharmaceutical allowance varies during the calendar year.

Amount of pharmaceutical allowance

1068B‑E8 The amount of pharmaceutical allowance is the amount per fortnight worked out using Table E.

Table E—Pharmaceutical allowance amounts
Column 1 Item	Column 2 Person’s family situation	Column 3 Amount per fortnight
1	Person not covered by item 2, 3, 4 or 5	$2.70
2	Member of illness separated couple	$5.40
3	Member of respite care couple	$5.40
4	Partnered (partner getting service pension)	$2.70
5	Partnered (partner in gaol)	$5.40

Note 1: For illness separated couple, respite care couple and partnered (partner in gaol) see section 4.

Note 2: The amounts in Column 3 are indexed or adjusted annually in line with CPI increases (see sections 1191 to 1194 and 1206A).

Module G—Remote area allowance

Remote area allowance—person physically in remote area

1068B‑G1 An amount by way of remote area allowance is to be added in step 7 of the method statements in points 1068B‑A2 and 1068B‑A3 to a person’s rate of benefit PP (partnered) if:

(b) any of the following subparagraphs applies:

(i) apart from this point, the person’s rate of benefit PP (partnered) would be greater than nil;

(ii) apart from this point, the person’s rate of benefit PP (partnered) would be nil merely because an advance pharmaceutical allowance has been paid to the person under Part 2.23 of this Act;

(iii) apart from this point, the person’s rate of benefit PP (partnered) would be nil merely because an election by the person under subsection 1061VA(1) is in force;

(iv) apart from this point, the person’s rate of benefit PP (partnered) would be nil merely because of both of the matters mentioned in subparagraphs (ii) and (iii); and

(d) the person is physically present in the remote area.

Note 1: For remote area see subsection 14(1).

Note 2: A person may be considered to be physically present in a remote area during temporary absences—see subsection 14(2).

Rate of remote area allowance

1068B‑G2 The rate of remote area allowance payable to a person is worked out using Table G. Work out which family situation in the table applies to the person. The rate of remote area allowance is the corresponding amount in Column 3 plus the additional corresponding amount in Column 4 for each FTB child, and each regular care child, of the person.

Table G—Remote area allowance
Column 1 Item	Column 2 Person’s family situation	Column 3 Basic allowance	Column 4 Additional allowance for each FTB child and regular care child
1	Person not covered by item 2, 3 or 4	$15.60	$7.30
2	Member of illness separated couple	$18.20	$7.30
3	Member of respite care couple	$18.20	$7.30
4	Partnered (partner in gaol)	$18.20	$7.30

Note: For illness separated couple, respite care couple and partnered (partner in gaol) see section 4.

Meaning of remote area allowance

1068B‑G3 In point 1068B‑G2, remote area allowance means:

(a) an amount added to a person’s social security pension or benefit by way of remote area allowance; or

(b) a remote area allowance payable under point SCH6‑G1 of the VEA.

FTB or regular care child must be present in Australia

1068B‑G4 Additional allowance is not payable for an FTB child, or a regular care child, unless the child is physically present in Australia.

Special rule where partner has an FTB or regular care child but is not receiving additional allowance for the child

1068B‑G5 If:

(a) an amount of remote area allowance is to be added to the person’s rate; and

(b) the person’s partner has an FTB child or a regular care child; and

the child is taken, for the purposes of this Module, to be an FTB child, or a regular care child, (as the case requires) of the person.

Special rule dealing with the death of an FTB or regular care child

1068B‑G6 If an FTB child, or a regular care child, of a person dies, this Module has effect, for a period of 14 weeks after the death of the child, as if the child had not died.

Note: This point does not prevent this Module having the effect it would have had if the child would otherwise have ceased to be an FTB child, or a regular care child, during that 14 weeks.

Part 3.7—Rent assistance

Division 1—Operation of this Part

1070 When this Part applies

This Part applies if the rate of a person’s social security payment is to be calculated in accordance with any of the following Rate Calculators:

(a) Pension Rate Calculator A (carer payments and certain age and disability support pensions);

(d) Youth Allowance Rate Calculator;

(da) Austudy Payment Rate Calculator;

(e) Benefit Rate Calculator B (mature age allowance under Part 2.12B, jobseeker payment and partner, sickness and widow allowance);

(f) Pension PP (Single) Rate Calculator or Benefit PP (Partnered) Rate Calculator (parenting payments).

1070A Effect of this Part

If a person to whom this Part applies qualifies for rent assistance in accordance with Division 2, to help cover the cost of rent:

(a) if paragraph (b) does not apply—the amount per fortnight worked out in accordance with Division 3 is added to the person’s maximum basic rate for the social security payment; or

(b) if the rate of the person’s social security payment is to be calculated in accordance with Pension Rate Calculator A or D, or the Pension PP (Single) Rate Calculator—the amount per fortnight worked out in accordance with Division 3 is multiplied by 26 to calculate an amount per year and the amount per year is added to the person’s maximum basic rate for the social security payment.

Division 2—Qualification for rent assistance

1070B Qualification—general rule

A person qualifies for rent assistance if the person satisfies:

(a) the common requirements set out in section 1070C; and

(b) any specific requirement, set out in a later section of this Division, applicable to the person’s social security payment.

1070C Common requirements (about aged care residence, home ownership and rent)

The common requirements are that:

(a) the person is not an aged care resident, and is not taken to be an aged care resident for the purposes of the Rate Calculator concerned; and

(b) the person is not an ineligible homeowner; and

(c) the person pays, or is liable to pay, rent, other than Government rent, in respect of a period in respect of premises in Australia; and

(d) the person’s fortnightly rent is more than the rent threshold amount (see section 1070T).

1070D Specific requirement (carer payments and certain age and disability support pensions)

(1) If the rate of the person’s social security payment is to be calculated in accordance with Pension Rate Calculator A and subsection (2) applies, the specific requirement applicable to the person’s social security payment is that set out in subsection (3).

(2) This subsection applies if:

(a) the following conditions are satisfied:

(i) the person is not a member of a couple, or is a member of an illness separated couple, a respite care couple or a temporarily separated couple;

(ii) the person is entitled to be paid family tax benefit; or

(b) the following conditions are satisfied:

(i) the person is a member of a couple, other than an illness separated couple, a respite care couple or a temporarily separated couple;

(ii) the person, or the person’s partner, is entitled to be paid family tax benefit.

(3) The specific requirement is that:

(a) in a paragraph (2)(a) case, either of the following is satisfied:

(i) the person’s maximum Part A rate of family tax benefit does not include rent assistance;

(ii) the person’s maximum Part A rate of family tax benefit includes rent assistance and clause 38J of Schedule 1 to the Family Assistance Act applies to reduce the person’s Part A rate of family tax benefit; and

(b) in a paragraph (2)(b) case, either of the following is satisfied:

(i) the person’s, or the person’s partner’s, maximum Part A rate of family tax benefit does not include rent assistance;

(ii) the person’s, or the person’s partner’s, maximum Part A rate of family tax benefit includes rent assistance and clause 38J or 38K of Schedule 1 to the Family Assistance Act applies to reduce the person’s, or the person’s partner’s, Part A rate of family tax benefit.

(4) Subsections (1), (2) and (3) do not apply if:

(a) the person’s social security payment is disability support pension; and

(b) the person has not turned 21.

Note: The specific requirement for a person who is receiving disability support pension and has not turned 21 is in section 1070F.

1070E Specific requirement (certain parenting payments)

If:

(a) the rate of the person’s social security payment is to be calculated in accordance with the Pension PP (Single) Rate Calculator; and

(b) the person is entitled to be paid family tax benefit;

the specific requirement applicable to the social security payment is that either of the following is satisfied:

(d) the person’s maximum Part A rate of family tax benefit includes rent assistance and clause 38J of Schedule 1 to the Family Assistance Act applies to reduce the person’s Part A rate of family tax benefit.

1070F Specific requirement (certain disability support pensions)

(1) If:

(a) the person’s social security payment is disability support pension; and

(b) the person has not turned 21; and

(c) the rate of the person’s social security payment is to be calculated in accordance with Pension Rate Calculator A or Pension Rate Calculator D;

the specific requirement applicable to the social security payment is that the person comply with subsection (2) or (3).

Person who has not turned 18

(2) The person complies with this subsection if:

(a) the person has not turned 18; and

(b) one of the following applies:

(i) the person is a member of a couple and, if the person’s partner is living with the person in their home, the person’s partner is not receiving incentive allowance;

(ii) the person is in disability accommodation;

(iii) the person is independent;

(iv) the person is living away from the person’s parental home because of a medical condition of the person; and

(i) the person is not a member of a couple, or is a member of an illness separated couple, a respite care couple or a temporarily separated couple; and

(ii) the person is entitled to be paid family tax benefit;

either of the following is satisfied:

(iii) the person’s maximum Part A rate of family tax benefit does not include rent assistance;

(iv) the person’s maximum Part A rate of family tax benefit includes rent assistance and clause 38J of Schedule 1 to the Family Assistance Act applies to reduce the person’s Part A rate of family tax benefit; and

(d) if:

(i) the person is a member of a couple, other than an illness separated couple, a respite care couple or a temporarily separated couple; and

(ii) the person, or the person’s partner, is entitled to be paid family tax benefit;

either of the following is satisfied:

(iii) the person’s, or the person’s partner’s, maximum Part A rate of family tax benefit does not include rent assistance;

(iv) the person’s, or the person’s partner’s, maximum Part A rate of family tax benefit includes rent assistance but clause 38J or 38K of Schedule 1 to the Family Assistance Act applies to reduce the person’s, or the person’s partner’s, Part A rate of family tax benefit.

Person who has turned 18

(3) The person complies with this subsection if:

(a) the person has turned 18; and

(b) one of the following applies:

(i) the person is a member of a couple and, if the person’s partner is living with the person in their home, the person’s partner is not receiving incentive allowance;

(ii) the person is in disability accommodation;

(iii) the person is living away from the person’s parental home permanently or indefinitely; and

(i) the person is not a member of a couple, or is a member of an illness separated couple, a respite care couple or a temporarily separated couple; and

(ii) the person is entitled to be paid family tax benefit;

either of the following is satisfied:

(iii) the person’s maximum Part A rate of family tax benefit does not include rent assistance;

(d) if:

(i) the person is a member of a couple, other than an illness separated couple, a respite care couple or a temporarily separated couple; and

(ii) the person, or the person’s partner, is entitled to be paid family tax benefit;

either of the following is satisfied:

(iii) the person’s, or the person’s partner’s, maximum Part A rate of family tax benefit does not include rent assistance;

(4) For the purposes of applying the definition of living away from the person’s parental home in subsection (3), a step‑parent or guardian is taken to be a parent.

1070G Specific requirement (youth allowance)

(1) If the rate of the person’s social security payment is to be calculated in accordance with the Youth Allowance Rate Calculator, the specific requirement applicable to the social security payment is that:

(a) the person:

(i) is independent but is not an accommodated independent person; or

(ii) is not independent and is required to live away from home; and

(b) the person does not have a partner with a rent increased pension; and

(i) the person is not a member of a couple, or is a member of an illness separated couple, a respite care couple or a temporarily separated couple; and

(ii) the person is entitled to be paid family tax benefit;

either of the following is satisfied:

(iii) the person’s maximum Part A rate of family tax benefit does not include rent assistance;

(d) if:

(i) the person is a member of a couple, other than an illness separated couple, a respite care couple or a temporarily separated couple; and

(ii) the person, or the person’s partner, is entitled to be paid family tax benefit;

either of the following is satisfied:

(iii) the person’s, or the person’s partner’s, maximum Part A rate of family tax benefit does not include rent assistance;

(2) In this section, accommodated independent person and required to live away from home have the same meanings as in Part 3.5.

1070H Specific requirement (austudy payment, mature age allowance under Part 2.12B, jobseeker payment, partner allowance, sickness allowance or widow allowance)

(1) If the rate of the person’s social security payment is to be calculated in accordance with the Austudy Payment Rate Calculator or Benefit Rate Calculator B, the specific requirement applicable to the social security payment is that set out in subsection (2).

(2) The specific requirement is that:

(a) if the person:

(i) is not a member of a couple; and

(ii) is not living away from the principal home of a parent permanently or indefinitely;

the person has turned 25; and

(b) the person does not have a partner with a rent increased pension; and

(i) the person is not a member of a couple, or is a member of an illness separated couple, a respite care couple or a temporarily separated couple; and

(ii) the person is entitled to be paid family tax benefit;

either of the following is satisfied:

(iii) the person’s maximum Part A rate of family tax benefit does not include rent assistance;

(d) if:

(i) the person is a member of a couple, other than an illness separated couple, a respite care couple or a temporarily separated couple; and

(ii) the person, or the person’s partner, is entitled to be paid family tax benefit;

either of the following is satisfied:

(iii) the person’s, or the person’s partner’s, maximum Part A rate of family tax benefit does not include rent assistance;

(3) For the purposes of subparagraph (2)(a)(ii), a step‑parent or guardian is taken to be a parent.

1070J Specific requirement (certain parenting payments)

If the rate of the person’s social security payment is to be calculated in accordance with the Benefit PP (Partnered) Rate Calculator, the specific requirement applicable to the social security payment is that:

(a) the person’s partner is not receiving a rent increased pension; and

(b) if:

(i) the person is a member of an illness separated couple, a respite care couple or a temporarily separated couple; and

(ii) the person is entitled to be paid family tax benefit;

either of the following is satisfied:

(iii) the person’s maximum Part A rate of family tax benefit does not include rent assistance;

(i) the person is a member of a couple, other than an illness separated couple, a respite care couple or a temporarily separated couple; and

(ii) the person, or the person’s partner, is entitled to be paid family tax benefit;

either of the following is satisfied:

(iii) the person’s, or the person’s partner’s, maximum Part A rate of family tax benefit does not include rent assistance;

Division 3—Rate of rent assistance

1070K Rate depends on social security payment and family situation

A person’s rate of rent assistance depends on the person’s social security payment and the person’s family situation.

1070L Rate for carer payments and certain age and disability support pensions

(1) The person’s rate of rent assistance is worked out under this section if the rate of the person’s social security payment is to be calculated in accordance with Pension Rate Calculator A.

(2) Using the following table, work out which family situation applies to the person and calculate rate A for the person using the formula in column 3. This is the person’s rate of rent assistance per fortnight but only up to the person’s maximum rent assistance rate. If the person is not a single person sharing accommodation, the person’s maximum rent assistance rate is rate B worked out using column 4 of the table. If the person is a single person sharing accommodation, the person’s maximum rent assistance rate is two‑thirds of rate B.

Rate of rent assistance
Column 1 Item	Column 2 Person’s family situation	Column 3 Rate A	Column 4 Rate B
1	Not a member of a couple		$93.20
2	Partnered and partner does not have rent increased pension		$88.00
3	Partnered and partner: (a) is receiving a social security pension; and (b) has rent increased pension		Half the rate specified in column 4 of item 2
4	Partnered and partner: (a) is receiving a service pension, income support supplement or a veteran payment; and (b) has rent increased pension; and (c) does not have a dependent child or dependent children		Half the rate specified in column 4 of item 2
5	Partnered and partner: (a) is receiving a service pension, income support supplement or a veteran payment; and (b) has rent increased pension; and (c) has 1 or 2 dependent children		$54.80
6	Partnered and partner: (a) is receiving a service pension, income support supplement or a veteran payment; and (b) has rent increased pension; and (c) has 3 or more dependent children		$62.00
7	Partnered—member of an illness separated couple		$93.20
8	Partnered—member of a respite care couple		$93.20
9	Partnered—member of a temporarily separated couple		$88.00
10	Partnered (partner in gaol)		$93.20

(3) Subsections (1) and (2) do not apply if:

(a) the person’s social security payment is disability support pension; and

(b) the person has not turned 21.

Note: The rate of rent assistance for a person who is receiving disability support pension and has not turned 21 is worked out:

(a) under section 1070N if the person has not turned 18; and

(b) under section 1070P if the person has turned 18.

1070M Rate for certain parenting payments

(1) The person’s rate of rent assistance is worked out under this section if the rate of the person’s social security payment is to be calculated in accordance with the Pension PP (Single) Rate Calculator.

(2) Using the following table, calculate rate A for the person using the formula in column 2. This will be the person’s rate of rent assistance per fortnight but only up to the person’s maximum rent assistance rate. If the person is not a single person sharing accommodation, the person’s maximum rent assistance rate is rate B worked out using column 3 of the table. If the person is a single person sharing accommodation, the person’s maximum rent assistance rate is two‑thirds of rate B.

Rate of rent assistance
1		$93.20

Rate of rent assistance

Column 1

Item

Column 2

Rate A

Column 3

Rate B

$93.20

1070N Rate for disability support pension (person aged under 18)

(1) The person’s rate of rent assistance is worked out under this section if:

(a) the person is receiving disability support pension; and

(b) the person has not turned 18; and

(c) the rate of the person’s pension is to be calculated in accordance with Pension Rate Calculator A or Pension Rate Calculator D.

Rate of rent assistance
Column 1 Item	Column 2 Person’s family situation	Column 3 Rate A	Column 4 Rate B
1	Not a member of a couple and: (a) in disability accommodation; or (b) independent		$93.20
2	Partnered and partner does not have rent increased pension		$88.00
3	Partnered and partner: (a) is receiving a social security pension; and (b) has rent increased pension		Half the rate specified in column 4 of item 2
4	Partnered and partner: (a) is receiving a service pension, income support supplement or a veteran payment; and (b) has rent increased pension; and (c) does not have a dependent child or dependent children		Half the rate specified in column 4 of item 2
5	Partnered and partner: (a) is receiving a service pension, income support supplement or a veteran payment; and (b) has rent increased pension; and (c) has 1 or 2 dependent children		$54.80
6	Partnered and partner: (a) is receiving a service pension, income support supplement or a veteran payment; and (b) has rent increased pension; and (c) has 3 or more dependent children		$62.00
7	Partnered—member of an illness separated couple		$93.20
8	Partnered—member of a respite care couple		$93.20
9	Partnered—member of a temporarily separated couple		$88.00
10	Partnered (partner in gaol)		$93.20

1070P Rate for disability support pension (person aged between 18 and 21)

(1) The person’s rate of rent assistance is worked out under this section if:

(a) the person is receiving disability support pension; and

(b) the person has turned 18 but has not turned 21; and

(c) the rate of the person’s pension is to be calculated in accordance with Pension Rate Calculator A or Pension Rate Calculator D.

Rate of rent assistance
Column 1 Item	Column 2 Person’s family situation	Column 3 Rate A	Column 4 Rate B
1	Not a member of a couple and: (a) in disability accommodation; or (b) living away from the person’s parental home permanently or indefinitely		$93.20
2	Partnered and partner does not have rent increased pension		$88.00
3	Partnered and partner: (a) is receiving a social security pension; and (b) has rent increased pension		Half the rate specified in column 4 of item 2
4	Partnered and partner: (a) is receiving a service pension, income support supplement or a veteran payment; and (b) has rent increased pension; and (c) does not have a dependent child or dependent children		Half the rate specified in column 4 of item 2
5	Partnered and partner: (a) is receiving a service pension, income support supplement or a veteran payment; and (b) has rent increased pension; and (c) has 1 or 2 dependent children		$54.80
6	Partnered and partner: (a) is receiving a service pension, income support supplement or a veteran payment; and (b) has rent increased pension; and (c) has 3 or more dependent children		$62.00
7	Partnered—member of an illness separated couple		$93.20
8	Partnered—member of a respite care couple		$93.20
9	Partnered—member of a temporarily separated couple		$88.00
10	Partnered (partner in gaol)		$93.20

1070Q Rate for youth allowance, austudy payment, mature age allowance under Part 2.12B, jobseeker payment, partner allowance, sickness allowance and widow allowance

(1) The person’s rate of rent assistance is worked out under this section if the rate of the person’s social security payment is to be calculated in accordance with the Youth Allowance Rate Calculator, the Austudy Payment Rate Calculator or Benefit Rate Calculator B.

(2) Using the table below, work out which family situation applies to the person and calculate rate A for the person using the formula in column 3. This is the person’s rate of rent assistance per fortnight but only up to the person’s maximum rent assistance rate. If the person is not a single person sharing accommodation, the person’s maximum rent assistance rate is rate B worked out using column 4 of the table. If the person is a single person sharing accommodation, the person’s maximum rent assistance rate is two‑thirds of rate B.

Rate of rent assistance
Column 1 Item	Column 2 Person’s family situation	Column 3 Rate A	Column 4 Rate B
1	Not a member of a couple		$93.20
2	Partnered—partner does not have rent increased benefit		$88.00
3	Partnered—partner has rent increased benefit		Half the rate specified in column 4 of item 2
4	Partnered—member of an illness separated couple		$93.20
5	Partnered—member of a respite care couple		$93.20
6	Partnered—member of a temporarily separated couple		$88.00
7	Partnered (partner in gaol)		$93.20

1070R Rate for certain parenting payments

(1) The person’s rate of rent assistance is worked out under this section if the rate of the person’s social security payment is to be calculated in accordance with Benefit PP (Partnered) Rate Calculator.

Rate of rent assistance
Column 1 Item	Column 2 Person’s family situation	Column 3 Rate of rent assistance	Column 4 Maximum rate
1	Partnered—partner does not have rent increased benefit		$88.00
2	Partnered—partner has rent increased benefit		Half the rate specified in column 4 of item 1
3	Partnered—member of an illness separated couple		$93.20
4	Partnered—member of a respite care couple		$93.20
5	Partnered—member of a temporarily separated couple		$88.00
6	Partnered (partner in gaol)		$93.20

Division 4—Certain concepts used in this Part

1070S Division has effect for purposes of Part

This Division has effect for the purposes of this Part.

1070T Rent threshold amount

(1) If the rate of a person’s social security payment is to be calculated in accordance with the Pension PP (Single) Rate Calculator, the person’s rent threshold amount is $82.80.

(2) In any other case, a person’s rent threshold amount is worked out in accordance with subsection (3).

(3) First, identify which of sections 1070L, 1070N, 1070P, 1070Q and 1070R applies to work out the rate of rent assistance for the person’s social security payment. Next, identify which family situation in the table in that section applies to the person. The person’s rent threshold amount is the amount in the formula in column 3 of the table, in relation to the family situation, that is deducted from fortnightly rent.

Example: If a person who is not a member of a couple receives an age pension, the person’s rent threshold amount is worked out as follows. First, identify section 1070L as the section applicable to an age pension. Then identify the family situation in item 1 of the table in that section as applicable to the person. Finally, the person’s rent threshold amount is $82.80, being the amount that, in the formula in column 3 of that table, is deducted from the person’s fortnightly rent. Indexation of the $82.80 has been ignored for the purposes of this example.

1070U Fortnightly rent

Fortnightly rent is the fortnightly rent paid or payable by the person whose rate of social security payment is being calculated.

1070V Rent paid by a member of certain couples

Rent paid by a member of a couple where person’s partner is living with the person in their home

(1) If a person is a member of a couple and the person’s partner is living with the person in their home, any rent that the person’s partner pays or is liable to pay in respect of the home is to be treated as paid or payable by the person.

Rent paid by a member of an illness separated, respite care couple or temporarily separated couple

(2) If a person is a member of an illness separated couple, respite care couple or temporarily separated couple, any rent that the person’s partner pays or is liable to pay in respect of the premises or lodgings occupied by the person is to be treated as paid or payable by the person.

1070W Partner with a rent increased pension

A person has a partner with a rent increased pension if:

(a) the partner is living with the person in their home; and

(b) the partner receives a social security pension, a service pension, income support supplement or a veteran payment; and

1070X Partner with a rent increased benefit

Youth Allowance Rate Calculator

(1) If the rate of a person’s social security payment is to be calculated in accordance with the Youth Allowance Rate Calculator, the person’s partner has a rent increased benefit if the partner:

(a) is living with the person in their home; and

(b) either:

(i) is receiving a social security benefit the rate of which is increased to take account of rent; or

(ii) is receiving a designated ABSTUDY payment, or would be receiving such a payment but for the partner’s income.

Note 1: See also subsections 23(4A) and (4AA).

Note 2: For designated ABSTUDY payment, see subsection (5).

Benefit Rate Calculator B

(2) If the rate of a person’s social security payment is to be calculated in accordance with Benefit Rate Calculator B, the person’s partner has a rent increased benefit if the partner:

(a) is living with the person in their home; and

(b) either:

(i) is receiving a social security benefit the rate of which is increased to take account of rent; or

(ii) is receiving a designated ABSTUDY payment, or would be receiving such a payment but for the partner’s income.

Note 1: See also subsections 23(4A) and (4AA).

Note 2: For designated ABSTUDY payment, see subsection (5).

Benefit PP (Partnered) Rate Calculator

(3) If the rate of a person’s social security payment is to be calculated in accordance with the Benefit PP (Partnered) Rate Calculator, the person’s partner has a rent increased benefit if the partner:

(a) is living with the person in their home; and

(b) either:

(i) is receiving a social security benefit the rate of which is increased to take account of rent; or

(ii) is receiving a designated ABSTUDY payment, or would be receiving such a payment but for the partner’s income.

Note 1: See also subsections 23(4A) and (4AA).

Note 2: For designated ABSTUDY payment, see subsection (5).

Austudy Payment Rate Calculator

(4) If the rate of a person’s social security payment is to be calculated in accordance with the Austudy Payment Rate Calculator, the person’s partner has a rent increased benefit if the partner:

(a) is living with the person in their home; and

(b) either:

(i) is receiving a social security benefit the rate of which is increased to take account of rent; or

(ii) is receiving a designated ABSTUDY payment, or would be receiving such a payment but for the partner’s income.

Note 1: See also subsections 23(4A) and (4AA).

Note 2: For designated ABSTUDY payment, see subsection (5).

Designated ABSTUDY payment

(5) For the purposes of this section, a designated ABSTUDY payment is a payment under the scheme known as the ABSTUDY scheme:

(a) the rate of which is increased to take account of rent; and

(b) that includes an amount identified as living allowance.

Part 3.9—Seniors Health Card Income Test Calculator

Note: Section 10A contains many of the definitions that are relevant to the provisions of this Part.

1071 Seniors Health Card Income Test Calculator

The Seniors Health Card Income Test Calculator at the end of this section is to be used in working out whether a person satisfies the seniors health card income test for the purposes of this Act.

Seniors Health Card Income Test Calculator

Satisfying the seniors health card income test

1071‑1 This is how to work out whether a person satisfies the seniors health card income test at a particular time (the test time).

Method statement

Step 1. Work out the amount of the person’s adjusted taxable income for the reference tax year.

Step 1A. If, at the test time, the person, or the person’s partner (if any), has at least one long‑term financial asset (see point 1071‑13), work out the person’s deemed income amount under:

(a) if, at the test time, the person is not a member of a couple—point 1071‑11A; or

(b) if, at the test time, the person is a member of a couple—point 1071‑11B.

Step 1B. Work out the sum of the amounts at step 1 and step 1A (if any).

Step 2. Work out the person’s seniors health card income limit using point 1071‑12.

Step 3. Work out whether the amount at step 1B exceeds the seniors health card income limit.

Step 4. If the amount at step 1B is less than the person’s seniors health card income limit, the person satisfies the seniors health card income test.

Step 5. If the amount at step 1B is equal to or exceeds the person’s seniors health card income limit, the person does not satisfy the seniors health card income test.

Reference tax year

1071‑2(1) In the ordinary case, a person’s reference tax year is:

(a) if the person has received a notice of assessment of his or her taxable income for the tax year immediately preceding the tax year in which the test time occurred—that immediately preceding tax year; or

(b) otherwise—the tax year immediately preceding the tax year applicable under paragraph (a).

(2) However, if the person has informed the Secretary in writing that the person wishes to have his or her entitlement to a seniors health card determined by reference to his or her adjusted taxable income for the tax year in which the test time occurred (the current tax year), the person’s reference tax year is the current tax year.

Adjusted taxable income

1071‑3 For the purposes of this Part, a person’s adjusted taxable income for a particular tax year is the sum of the following amounts (income components):

(a) the person’s taxable income for that year, disregarding the person’s assessable FHSS released amount (within the meaning of the Income Tax Assessment Act 1997) for that year;

(b) the person’s fringe benefits value for that year;

(d) the person’s total net investment loss (within the meaning of the Income Tax Assessment Act 1997) for that year;

(e) the person’s reportable superannuation contributions (within the meaning of the Income Tax Assessment Act 1997) for that year.

Note 1: For taxable income see subsection 23(1) and point 1071‑4.

Note 2: For fringe benefits value see point 1071‑6.

Note 3: For target foreign income see subsection 10A(2) and point 1071‑7.

Taxable income

1071‑4 For the purposes of this Part, a person’s taxable income for a particular tax year is:

(a) the person’s assessed taxable income for that year; or

(b) if the person does not have an assessed taxable income for that year—the person’s accepted estimate of taxable income for that year.

Assessed taxable income

1071‑5 For the purposes of this Part, a person’s assessed taxable income for a particular tax year at a particular time is the most recent of:

(a) if, at that time, the Commissioner of Taxation has made an assessment or an amended assessment of that taxable income—that taxable income according to the assessment or amended assessment; or

(b) if, at that time, a tribunal has amended an assessment or an amended assessment made by the Commissioner—that taxable income according to the amendment made by the tribunal; or

(c) if, at that time, a court has amended an assessment or an amended assessment made by the Commissioner or an amended assessment made by a tribunal—that taxable income according to the amendment made by the court.

Fringe benefits value

1071‑6 For the purposes of this Part, a person’s fringe benefits value for a particular tax year is the person’s accepted estimate of the amount by which the total of the assessable fringe benefits received or to be received by the person in the tax year exceeds $1,000.

Note: For assessable fringe benefit see subsection 10A(2) and Part 3.12A.

Target foreign income

1071‑7 For the purposes of this Part, a person’s target foreign income for a particular tax year is the person’s accepted estimate of the amount of that income for that year.

Total net investment loss

1071‑8 For the purposes of this Part, a person’s total net investment loss for a particular tax year is the person’s accepted estimate of the amount of that loss for that year.

Accepted estimate

1071‑9 For the purposes of this Part, a person’s accepted estimate of an income component for a particular tax year is that income component according to the most recent notice given by the person to the Secretary under point 1071‑10 and accepted by the Secretary for the purposes of this Part.

Notice estimating income component

1071‑10(1) A person may give the Secretary a notice, in a form approved by the Secretary, setting out the person’s estimate of an income component of the person for a tax year.

(2) The notice is to contain, or be accompanied by, such information as is required by the form to be contained in it or to accompany it, as the case may be.

(3) The Secretary is to accept a notice only if the Secretary is satisfied that the estimate is reasonable.

Adjusted taxable income of members of couples

1071‑11 If a person is a member of a couple, add the couple’s adjusted taxable incomes for the reference tax year and divide by 2 to work out the amount of the person’s adjusted taxable income for the reference tax year.

Deemed income amount

1071‑11A This is how to work out the person’s deemed income amount under this point:

Method statement

Step 1. Work out the total value of all of the person’s long‑term financial assets (see point 1071‑13) at the test time.

Step 2. Work out under section 1076 the amount of ordinary income the person would be taken to receive per year on the financial assets:

(a) on the assumption that the only financial assets of the person were the financial assets referred to in step 1; and

(b) on the assumption that the total value of the person’s financial assets were the amount at step 1.

Step 3. The result at step 2 is the person’s deemed income amount.

1071‑11B This is how to work out the person’s deemed income amount under this point:

Method statement

Step 1. Work out the total value of all of the person’s long‑term financial assets (see point 1071‑13) at the test time.

Step 2. If, at the test time, the person’s partner has reached the minimum age mentioned in section 301‑10 of the Income Tax Assessment Act 1997, work out the total value of all of the person’s partner’s long‑term financial assets (see point 1071‑13) at the test time.

Step 3. Work out under section 1077 the amount of ordinary income the couple would be taken to receive per year on the financial assets:

(a) on the assumption that section 1077 applied to the person and the person’s partner; and

(b) on the assumption that the only financial assets of the person and the person’s partner were the financial assets referred to in steps 1 and 2; and

(c) on the assumption that the total value of the couple’s financial assets were the sum of the amounts at steps 1 and 2.

Step 4. Divide the amount at step 3 by 2: the result is the person’s deemed income amount.

Seniors health card income limit

1071‑12 A person’s seniors health card income limit is worked out using the Seniors Health Card Income Limit Table. Work out which family situation in the table applies to the person. The person’s seniors health card income limit is the corresponding amount in column 3 plus an additional corresponding amount in column 4 for each dependent child of the person.

Seniors Health Card Income Limit Table
Column 1 Item	Column 2 Person’s family situation	Column 3 Amount per year	Column 4 Additional dependent child Amount per year
1	Not member of couple	$50,000	$639.60
2	Partnered	$40,000	$639.60
3	Member of illness separated couple	$50,000	$639.60
4	Member of respite care couple	$50,000	$639.60
5	Partnered (partner in gaol)	$50,000	$639.60

Note: The amounts in column 3 are to be indexed on 20 September 2014 and each later 20 September in line with CPI increases (see sections 1190 to 1194).

Long‑term financial asset

1071‑13 For the purposes of this Part, a long‑term financial asset is:

(a) a financial investment within the meaning of paragraph (i) of the definition of financial investment in subsection 9(1), where the asset‑tested income stream (long term) arises under a complying superannuation plan (within the meaning of the Income Tax Assessment Act 1997) that is not a constitutionally protected fund (within the meaning of that Act); or

(b) a financial investment within the meaning of paragraph (j) of the definition of financial investment in subsection 9(1).

Note: Schedule 7 to the Social Services and Other Legislation Amendment (2014 Budget Measures No. 6) Act 2014 preserves the rules in this Calculator for a certain kind of long‑term financial asset that was being provided to a person immediately before 1 January 2015 where the person held a seniors health card immediately before that day provided that, since that day, the person has held a seniors health card.

Part 3.9A—Health Care Card Income Test Calculator

1071A Health care card income test

The Health Care Card Income Test Calculator at the end of this section is to be used in working out whether a person satisfies the health care card income test for the purposes of Division 3 of Part 2A.1.

Health Care Card Income Test Calculator

Satisfying the health care card income test: persons claiming a card

1071A‑1 This is how to work out whether a person claiming a health care card satisfies the health care card income test on the day on which the person claims the card, whether or not the person is the holder of a health care card at that time.

Method statement

Step 1. Work out the amount of the person’s ascertained income for the period of 8 weeks ending on the day on which the person lodged the claim.

Step 2. Work out the amount of the person’s allowable income for the period.

Step 3. If the person’s ascertained income for the period is less than the person’s allowable income for the period, the person satisfies the health care card income test.

Step 4. If the person’s ascertained income for the period equals or exceeds the person’s allowable income for the period, the person does not satisfy the health care card income test.

Satisfying the health care card income test: cardholders

1071A‑2 This is how to work out whether a person who holds a health care card satisfies the health care card income test at a particular time where there has been a change in circumstances.

Method statement

Step 1. Work out the amount of the person’s ascertained income for the period of 8 weeks ending on the day on which the change of circumstances occurred.

Step 2. Work out the amount of the person’s allowable income for the period.

Step 3. If the person’s ascertained income for the period is less than 125% of the person’s allowable income for that period, the person satisfies the health care card income test.

Step 4. If the person’s ascertained income for the period is 125% or more of the person’s allowable income for that period, the person does not satisfy the health care card income test.

Working out allowable income

1071A‑2A For the purposes of step 2 of the method statement in point 1071A‑1 or 1071A‑2:

(a) disregard steps 1A, 2 and 3 of the method statement in point 1068‑A1; and

(b) the amount at step 1B of the method statement in point 1068‑A1 is taken to be the amount applicable under item 5 of the table in point 1068‑C3.

Cessation of dependency

1071A‑3 For the purposes of point 1071A‑2, if a person (the first person) ceases to be a dependant of another person who is the holder of a health care card:

(a) the fact that the first person has so ceased is to be disregarded for a period of 4 weeks commencing on the day on which the first person so ceased; and

(b) if, at the end of the period, the first person has not become again a dependant of that other person, the first person is taken to have ceased to be a dependant of the other person at the expiration of that period of 4 weeks.

Definitions

1071A‑4 In this Part:

allowable income, in relation to any period of 8 weeks, means:

(a) in relation to a person who had a dependant or dependants on the last day of the period—the amount worked out by multiplying by 8, or such other number as is prescribed, the aggregate of:

(i) the amount of the weekly rate of income that would, on the last day of the period, be sufficient to prevent both members of a one‑income couple from receiving jobseeker payment; and

(ii) $20, or such other amount as is prescribed; and

(iii) an amount worked out by multiplying $34, or such higher amount as is prescribed, by the number of the dependants of the person on the last day of the period; or

(b) in relation to a person who had no dependants on the last day of the period—the amount worked out by multiplying by 8, or such other number as is prescribed, an amount equal to 60%, or such other percentage as is prescribed, of the aggregate of the amount worked out under subparagraph (a)(i) and the amount referred to in subparagraph (a)(ii) if paragraph (a) had applied to the person.

ascertained income, in relation to a period, means:

(a) in relation to a person who is not a member of a couple—the income of the person in respect of that period; and

(b) in relation to a person who is a member of a couple—the income of the person and his or her partner in respect of that period.

income, in relation to a person, means ordinary income and, to the extent that they are not ordinary income, includes:

(aa) payments of a social security pension or a social security benefit; and

(a) if the person is receiving a social security pension or benefit—the person’s maintenance income (if any) within the meaning of the Family Assistance Act; and

(b) payments of a pension under the Veterans’ Entitlements Act; and

(c) payments of a pension payable by a foreign country, being a pension that, in the opinion of the Secretary, is similar in character to a pension referred to in paragraph (b); and

(ca) payments of income support supplement; and

(cb) a payment under Part VIIAB (DFISA) of the Veterans’ Entitlements Act (including a payment made under regulations made under that Part); and

(d) payments under the scheme known as the New Enterprise Incentive Scheme; and

(e) payments of compensation, including compensation within the meaning of the Military Rehabilitation and Compensation Act; and

(f) instalments of parental leave pay; and

(g) dad and partner pay.

1071A‑5 If a weekly rate of income referred to in subparagraph (a)(i) of the definition of allowable income in point 1071A‑4 or an amount worked out under paragraph (b) of that definition includes an amount of cents, the amount of that weekly rate is, for the purposes of that definition, increased to the nearest whole dollar.

1071A‑6 A couple is a one‑income couple for the purposes of point 1071A‑4 if only one member of the couple is receiving income.

Part 3.10—General provisions relating to the ordinary income test

Division 1—Ordinary income concept

1072 General meaning of ordinary income

A reference in this Act to a person’s ordinary income for a period is a reference to the person’s gross ordinary income from all sources for the period calculated without any reduction, other than a reduction under Division 1A.

Note 1: For ordinary income see subsection 8(1).

Note 2: For other provisions affecting the amount of a person’s ordinary income see section 1073AA (work bonus), sections 1074 and 1075 (business income), Division 1B (income from financial assets (including income streams (short term) and certain income streams (long term)) and Division 1C (income from income streams not covered by Division 1B).

1073 Certain amounts taken to be received over 12 months

(1) Subject to points 1067G‑H5 to 1067G‑H20 (inclusive), 1067L‑D4 to 1067L‑D16 (inclusive), 1068‑G7AA to 1068‑G7AR (inclusive), 1068A‑E2 to 1068A‑E12 (inclusive) and 1068B‑D7 to 1068B‑D18 (inclusive), if a person receives, whether before or after the commencement of this section, an amount that:

(a) is not income within the meaning of Division 1B or 1C of this Part; and

(b) is not:

(i) income in the form of periodic payments; or

(ii) ordinary income from remunerative work undertaken by the person; or

(iii) an exempt lump sum.

the person is, for the purposes of this Act, taken to receive one fifty‑second of that amount as ordinary income of the person during each week in the 12 months commencing on the day on which the person becomes entitled to receive that amount.

(2) Subsection (1) applies to a person who has claimed one of the following:

(a) jobseeker payment;

(b) sickness allowance;

(d) widow allowance;

(e) partner allowance;

(f) mature age allowance under Part 2.12B;

even if the person:

(g) has to serve an ordinary waiting period or a liquid assets test waiting period in respect of the payment or allowance claimed; or

(h) is subject to an income maintenance period in respect of the payment or allowance claimed; or

(i) is subject to a seasonal work preclusion period;

during the period of 12 months referred to in subsection (1).

Division 1AAA—Work bonus

1073AA Work bonus

(1) This section applies to a person if:

(a) the person’s rate of social security pension is calculated in accordance with Pension Rate Calculator A at the end of section 1064; and

(b) the person has reached pension age.

Note: For pension age see subsections 23(5A), (5B), (5C) and (5D).

Work bonus income greater than or equal to income concession amount

(2) If the person’s work bonus income for an instalment period is greater than or equal to the income concession amount for that period, then, for the purposes of Module E of that Rate Calculator, the amount of the person’s work bonus income for that period is reduced by an amount equal to the income concession amount.

Note: For work bonus income, see subsection (4BA).

Example 1: David earns $2,300 of work bonus income in an instalment period of 14 days. David’s rate of social security pension for that period is greater than nil.

David’s work bonus income for that period is reduced by $300, leaving David $2,000 of work bonus income for that period.

Example 2: Amy earns $1,000 of work bonus income in an instalment period of 14 days. Amy’s rate of social security pension for that period is greater than nil.

Amy’s work bonus income for that period is reduced by $300, leaving Amy $700 of work bonus income for that period.

(3) If the person’s unused concession balance (see section 1073AB) is greater than or equal to the amount (the current amount) of the person’s work bonus income that remains after applying subsection (2) of this section in relation to an instalment period:

(a) for the purposes of Module E of that Rate Calculator, the person’s work bonus income for that period is further reduced to nil; and

(b) if the person’s rate of social security pension for that period is greater than nil—the person’s unused concession balance is reduced by an amount equal to the current amount.

Example 1: To continue example 1 in subsection (2), assume David’s unused concession balance is $2,000. The current amount is $2,000.

David’s work bonus income for that period is further reduced to nil.

David’s unused concession balance is now nil.

Example 2: To continue example 2 in subsection (2), assume Amy’s unused concession balance is $1,600. The current amount is $700.

Amy’s work bonus income for that period is further reduced to nil.

Amy’s unused concession balance is now $900.

(4) If the person’s unused concession balance (see section 1073AB) is greater than nil but less than the amount of the person’s work bonus income that remains after applying subsection (2) of this section in relation to an instalment period:

(a) for the purposes of Module E of that Rate Calculator, the person’s work bonus income for that period is further reduced by an amount equal to that unused concession balance; and

(b) if the person’s rate of social security pension for that period is greater than nil—the person’s unused concession balance is reduced to nil.

Example: Bill earns $1,300 of work bonus income in an instalment period of 14 days. Bill’s rate of social security pension for that period is greater than nil.

Under subsection (2), Bill’s work bonus income for that period is reduced by $300, leaving Bill $1,000 of work bonus income for that period.

Assume Bill’s unused concession balance is $800.

Under subsection (4), Bill’s work bonus income for that period is further reduced by $800 leaving Bill $200 of work bonus income for that period.

Bill’s unused concession balance is now nil.

Work bonus income less than income concession amount

(4A) If the person has work bonus income for an instalment period but that income is less than the income concession amount for that period:

(a) for the purposes of Module E of that Rate Calculator, the person’s work bonus income for that period is reduced to nil; and

(b) if the person’s rate of social security pension for that period is greater than nil—the person’s unused concession balance (see section 1073AB) is increased, subject to subsection 1073AB(2), by an amount equal to the difference between that income concession amount and that work bonus income (before it was reduced).

Note: For work bonus income, see subsection (4BA).

Example: Emma earns $100 of work bonus income in an instalment period of 14 days. Emma’s rate of social security pension for that period is greater than nil.

Emma’s work bonus income for that period is reduced to nil.

Emma’s unused concession balance is increased by $200.

No work bonus income

(4B) If:

(a) the person has no work bonus income for an instalment period; and

(b) the person’s rate of social security pension for that period is greater than nil;

the person’s unused concession balance (see section 1073AB) is increased, subject to subsection 1073AB(2), by an amount equal to the income concession amount for that period.

Note: For work bonus income, see subsection (4BA).

Definitions

(4BA) For the purposes of this section, a person’s work bonus income for an instalment period is the sum of the following:

(a) the person’s employment income for that period;

(b) the sum of the person’s gainful work income for each day in that period.

Note: For employment income, see section 8.

(4BB) For the purposes of this section, a person’s gainful work income for a day in an instalment period is the amount worked out using the following formula:

where:

annual amount means the annual amount of ordinary income of the person that is earned, derived or received by the person from gainful work (within the meaning of section 1073AAA) undertaken by the person, being the annual amount as last determined by the Secretary.

(4BC) The amount at paragraph (4BA)(b) is to be rounded to the nearest cent (rounding 0.5 cents downwards).

(4C) The income concession amount is:

(a) for an instalment period of 14 days—$300; and

(b) for an instalment period of less than 14 days—the amount worked out using the following formula:

Interpretation

(5) For the purposes of this section, a person’s employment income for an instalment period includes an amount that is taken to have been earned, derived or received over that period because of subsection 1073A(1).

(5A) If a person has gainful work income for an instalment period, the rate of the person’s gainful work income on a yearly basis for each day in that period may be worked out using the following formula:

Note: This subsection will be relevant to working out the person’s rate of social security pension in accordance with Pension Rate Calculator A at the end of section 1064 or Pension Rate Calculator C at the end of section 1066.

(5B) An amount worked out under subsection (5A) is to be rounded to the nearest cent (rounding 0.5 cents downwards).

(6) If the person is a member of a couple, apply this section in relation to the person, and to the person’s partner, before applying point 1064‑E2.

(7) In working out a person’s employment income for the purposes of this section, disregard subsection 8(1B).

(8) If:

(a) the person is a member of a couple; and

(b) the person’s partner’s work bonus income (within the meaning of section 46AA of the Veterans’ Entitlements Act 1986) is reduced by one or more amounts (each of which is a reduction amount) under section 46AA of that Act;

then, in applying point 1064‑E2, the ordinary income of the person’s partner is to be reduced by an amount equal to the total of the reduction amounts.

1073AAA Meaning of gainful work

General rule

(1) For the purposes of this Division, gainful work is work for financial gain or reward (other than as an employee), where:

(a) the work involves personal exertion on the part of the person concerned; and

(b) the work is carried on within or outside Australia.

Disregard managing or administering family financial investments and real property

(2) Work undertaken by a person is taken not to be gainful work for the purposes of this Division to the extent to which the work consists of the management or administration of any financial investment, or any real property, in which any of the following has a legal or equitable interest:

(a) a member of the person’s family group;

(b) a company that is a family company in relation to the person;

Note: For financial investment, see section 9.

Disregard domestic duties

(3) Work undertaken by a person is taken not to be gainful work for the purposes of this Division if the work consists of carrying out:

(a) domestic tasks; or

(b) household maintenance tasks; or

(d) similar tasks;

in relation to:

(e) the person’s place of residence; or

(f) if the person has 2 or more places of residence—any of those places of residence.

Definitions

(4) For the purposes of this section, a place of residence includes:

(a) if the place is a dwelling‑house—any land or building that is adjacent to the dwelling‑house and that is used primarily for private or domestic purposes in association with that dwelling‑house; or

(b) if the place is a flat or home unit—a garage or storeroom that is used for private or domestic purposes in association with the flat or home unit.

(5) In this section:

family company, in relation to a person, means a company where:

(a) the company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of any or all of the members of the person’s family group; or

(b) any or all of the members of the person’s family group are in a position to cast, or control the casting of, more than 50% of the maximum number of votes that may be cast at a general meeting of the company; or

(i) the company has one or more shareholders; and

(ii) each shareholder is a member of the person’s family group.

family group, in relation to a person, means the group consisting of the person and the family members of the person. If the person has no family members, the person is taken to be a family group in the person’s own right.

Note: For family member, see subsection 23(1).

family trust, in relation to a person, means a trust where a member of the person’s family group benefits, or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust.

1073AB Unused concession balance

Initial unused concession balance of nil

(1) A person has an unused concession balance of nil on the first day that is after 30 June 2011 and is a day on which section 1073AA applies to the person.

Maximum unused concession balance

(2) If, apart from this subsection, the person’s unused concession balance would exceed $7,800, that balance is instead taken to be $7,800.

Example: John has an unused concession balance of $7,700. John earns $100 of work bonus income in an instalment period of 14 days.

Instead of John’s unused concession balance increasing to $7,900 under subsection 1073AA(4A), John’s unused concession balance increases to $7,800.

Effect of ceasing to receive social security pension

(3) If the person ceases to receive the social security pension referred to in paragraph 1073AA(1)(a), the person retains the person’s unused concession balance immediately before that cessation.

Note: If section 1073AA applies to the person again, the person’s unused concession balance will be that retained balance.

Division 1AA—Employment income attribution rules

1073A Employment income attribution over a period for social security pensioners

(1) Employment income:

(a) that is a lump sum amount either:

(i) in respect of a period greater than a fortnight; or

(ii) resulting from remunerative work although not in respect of any particular period; and

(b) that is earned, derived or received, or is taken to have been earned, derived or received, by a person:

(i) who is receiving a social security pension; and

(ii) whose rate of payment of that pension is worked out with regard to the income test module of a rate calculator in this Chapter;

is to be taken to have been earned, derived or received over such period, not exceeding 52 weeks, as the Secretary determines.

(2) The person’s employment income for the period determined by the Secretary is to be reduced to a fortnightly rate rounded to the nearest cent (rounding 0.5 cents downwards).

1073B Daily attribution of employment income

(1) If:

(a) a person is receiving a social security pension or a social security benefit; and

(b) the person’s rate of payment of the pension or benefit is worked out with regard to the income test module of a rate calculator in this Chapter; and

(d) the person earns, derives or receives, or is taken, either by virtue of the operation of section 1073A or any other provision of this Act, to earn, derive or receive, employment income during the whole or a part of a particular instalment period of the person;

the person is taken to earn, derive or receive, on each day in that instalment period, an amount of employment income worked out by dividing the total amount of the employment income referred to in paragraph (d) by the number of days in the period.

(2) If a person has reached pension age and is receiving a social security benefit, subsection (1) does not apply to the person, to the extent that it relates to that benefit.

Note 1: Subsection (1) applies to a person who has not reached pension age and is receiving a social security benefit.

Note 2: For pension age see subsections 23(5A), (5B), (5C) and (5D).

1073C Fortnightly or yearly expression of attributed employment income

If, in accordance with the operation of section 1073B, a person is taken to earn, derive or receive a particular amount of employment income on each day in an instalment period:

(a) the rate of the person’s employment income on a fortnightly basis for that day may be worked out by multiplying that amount by 14; and

(b) the rate of the person’s employment income on a yearly basis for that day may be worked out by multiplying that amount by 364.

Division 1AB—Working credit accrual and depletion rules and their consequences

1073D To whom do working credit accrual and depletion rules apply?

The rules in this Division apply to a person (a working credit participant):

(a) who is receiving a social security pension or a social security benefit; and

(b) whose rate of payment of the pension or benefit is worked out with regard to the income test module of a rate calculator in this Chapter; and

(d) to whom the student income bank does not apply.

1073E Opening balance

Basic opening balance rule

(1) Subject to this section, each working credit participant has, on becoming a working credit participant, a working credit opening balance of nil.

Opening balance following cancellation of social security pension or benefit

(2) If:

(a) a person ceases to be a working credit participant or a person to whom the student income bank applies because of a determination to cancel, or an automatic cancellation of, the person’s social security pension or social security benefit; and

(b) the person had a working credit balance or a student income bank balance greater than nil immediately before the date of effect of the determination or cancellation; and

(c) the person makes, or is taken to have made, a new claim for a social security pension or social security benefit; and

(d) the Secretary determines that the new claim is to be granted with effect from a day within 12 months after the date of effect mentioned in paragraph (b); and

(e) the person becomes a working credit participant on a day (the participation day), being either the day with effect from which the new claim is granted or a day following that day;

the working credit balance mentioned in paragraph (b), or the student income bank balance mentioned in that paragraph to the extent that it does not exceed the threshold amount (see subsection (7)), becomes the opening balance of the working credit applicable to the person on the participation day.

Opening balance following suspension of social security pension or benefit

(3) If:

(a) a person ceases to be a working credit participant because of a determination to suspend the person’s social security pension or social security benefit; and

(b) the person had a working credit balance greater than nil immediately before the date of effect of the determination; and

(c) within 12 months after the date of effect of the determination, the payment of the person’s pension or benefit is resumed; and

(d) the person becomes a working credit participant on the day with effect from which the person’s pension or benefit is resumed;

the working credit balance mentioned in paragraph (b) becomes the opening balance of the working credit applicable to the person on the day mentioned in paragraph (d).

Opening balance following suspension and subsequent cancellation of social security pension or benefit

(4) If:

(a) a person ceases to be a working credit participant or a person to whom the student income bank applies because of a determination to suspend the person’s social security pension or social security benefit; and

(b) while the person’s pension or benefit is suspended there is a determination to cancel the person’s pension or benefit; and

(c) the person had a working credit balance or a student income bank balance greater than nil immediately before the date of effect of the suspension determination; and

(d) the person makes, or is taken to have made, a new claim for a social security pension or social security benefit; and

(e) the Secretary determines that the new claim is to be granted with effect from a day within 12 months after the date of effect mentioned in paragraph (c); and

(f) the person becomes a working credit participant on a day (the participation day), being either the day with effect from which the new claim is granted or a day following that day;

the working credit balance mentioned in paragraph (c), or the student income bank balance mentioned in that paragraph to the extent that it does not exceed the threshold amount (see subsection (7)), becomes the opening balance of the working credit applicable to the person on the participation day.

Opening balance following cessation of full‑time study by youth allowance recipient

(5) If:

(a) a person is receiving youth allowance and is undertaking full‑time study; and

(b) the person ceases to undertake full‑time study; and

(c) either because of a determination made as a result of that cessation or, if no determination is necessary, because of the cessation itself, the person, on a day (the participation day):

(i) ceases to be a person to whom the student income bank set out in Module J of the Youth Allowance Rate Calculator applies; and

(ii) becomes a working credit participant; and

(d) the person had a student income bank balance greater than nil immediately before the participation day;

the student income bank balance mentioned in paragraph (d), to the extent that it does not exceed the threshold amount (see subsection (7)), becomes the opening balance of the working credit applicable to the person on the participation day.

Opening balance following cessation as a new apprentice by youth allowance recipient

(5A) If:

(a) a person is receiving youth allowance and is a new apprentice; and

(b) the person ceases to be a new apprentice; and

(c) either because of a determination made as a result of that cessation or, if no determination is necessary, because of the cessation itself, the person, on a day (the participation day):

(i) ceases to be a person to whom the student income bank set out in Module J of the Youth Allowance Rate Calculator applies; and

(ii) becomes a working credit participant; and

(d) the person had a student income bank balance greater than nil immediately before the participation day;

Opening balance following cessation of ABSTUDY payment

(6) If:

(a) a person to whom the income bank under the ABSTUDY scheme applies stops being such a person; and

(b) the person becomes a working credit participant on a day (the participation day) within 12 months after so stopping; and

the credit balance, to the extent that it does not exceed the threshold amount (see subsection (7)), becomes the opening balance of the working credit applicable to the person on the participation day.

Threshold amount

(7) In this section:

threshold amount means:

(a) if, on the participation day, the person is receiving youth allowance, the person is not undertaking full‑time study and the person is not a new apprentice—$3,500; or

(b) in any other case—$1,000.

1073F Working out accruals and depletions of working credit for social security beneficiaries

This section determines, in respect of each working credit participant who is receiving a social security benefit, whether, for each day in an instalment period:

(a) there is an accrual to the participant’s working credit balance; or

(b) the participant’s working credit balance is unaffected; or

and, if there is an accrual to, or a depletion from, the participant’s working credit balance, the amount of that accrual or depletion.

Method statement

Step 1. Work out the amount of the participant’s employment income earned, derived or received on the day. This could be a nil amount or it could be an amount that is taken, under section 1073B, to have been earned, derived or received on the day.

Step 2. Multiply the amount determined under step 1 by 14. This is the participant’s rate of employment income on a fortnightly basis for the day.

Step 3. Add to the participant’s rate of employment income on a fortnightly basis for the day the participant’s rate of any other ordinary income on a fortnightly basis for the day. This is the participant’s rate of total ordinary income on a fortnightly basis for the day.

Step 4. If the participant’s rate of total ordinary income on a fortnightly basis for the day is less than $48, there is an accrual to the participant’s working credit balance for the day of an amount equal to one fourteenth of the amount by which $48 exceeds that rate. The maximum working credit balance is:

(a) if the participant became a working credit participant on a day under subsection 1073E(2), (3), (4), (5), (5A) or (6) and on that day the participant was receiving youth allowance, the participant was not undertaking full‑time study and the participant was not a new apprentice—$3,500; or

(b) in any other case—$1,000.

Step 5. If the participant’s rate of total ordinary income on a fortnightly basis for the day is at least $48 but does not exceed the ordinary income free area applicable to the participant for the day under the income test module of the appropriate rate calculator, the participant’s working credit balance for the day is neither increased nor reduced.

Step 6. If the participant’s rate of total ordinary income on a fortnightly basis for the day is at least $48 and exceeds the participant’s applicable ordinary income free area for the day, the participant’s working credit balance, if it is greater than nil on the day, is depleted on that day by the least of:

(a) the amount of employment income determined under step 1; or

(b) one fourteenth of the amount by which the participant’s rate of total ordinary income on a fortnightly basis exceeds the participant’s applicable ordinary income free area; or

1073G Working out the effect of a working credit depletion on the fortnightly rate of ordinary income for a social security beneficiary

If, under section 1073F, the working credit balance of a working credit participant is depleted on a particular day, the participant’s rate of ordinary income on a fortnightly basis for that day is reduced by the working credit depletion amount applicable to that day, determined under step 6 of the method statement, multiplied by 14.

1073H Working out accruals and depletions of working credit for social security pensioners

This section determines, in respect of each working credit participant who is receiving a social security pension, whether, for each day in an instalment period:

(a) there is an accrual to the participant’s working credit balance; or

(b) the participant’s working credit balance is unaffected; or

and, if there is an accrual to, or a depletion from, the participant’s working credit balance, the amount of that accrual or depletion.

Method statement

Step 2. Multiply the amount determined under step 1 by 364. This is the participant’s rate of employment income on a yearly basis for the day.

Step 3. Add to the participant’s rate of employment income on a yearly basis for the day the participant’s rate of any other ordinary income on a yearly basis for the day. This is the participant’s rate of total ordinary income on a yearly basis for the day.

Step 4. Divide the participant’s rate of total ordinary income on a yearly basis for the day by 26. This is the participant’s rate of total ordinary income, expressed on a fortnightly basis, for the day.

Step 5. Divide the yearly ordinary income free area applicable to the participant for the day under the ordinary income test module of the appropriate rate calculator by 26. This is the participant’s applicable ordinary income free area, expressed on a fortnightly basis, for the day.

Step 6. If the participant’s rate of total ordinary income, expressed on a fortnightly basis, for the day, is less than $48, there is an accrual to the participant’s working credit balance, for the day, of an amount equal to one fourteenth of the amount by which $48 exceeds that rate. The maximum working credit balance is $1,000.

Step 7. If the participant’s rate of total ordinary income, expressed on a fortnightly basis, for the day, is at least $48 but does not exceed the participant’s applicable ordinary income free area, expressed on a fortnightly basis for the day in accordance with step 5, the participant’s working credit balance for the day is neither increased nor reduced.

Step 8. If the participant’s rate of total ordinary income, expressed on a fortnightly basis, for the day, is at least $48 and exceeds the participant’s applicable ordinary income free area, expressed on a fortnightly basis for the day in accordance with step 5, the participant’s working credit balance, if it is greater than nil on the day, is depleted on that day by the least of:

(a) the amount of employment income determined under step 1; or

(b) one fourteenth of the amount by which the participant’s rate of total ordinary income, expressed on a fortnightly basis, exceeds the participant’s applicable ordinary income free area, expressed on that basis; or

1073I Working out the effect of a working credit depletion on the yearly rate of ordinary income for a social security pensioner

If, under section 1073H, the working credit balance of a working credit participant is depleted on a particular day, the participant’s rate of ordinary income on a yearly basis for that day is reduced by the working credit depletion amount applicable to that day, determined under step 8 of the method statement, multiplied by 364.

1073J Working credit balance prevents loss of qualification in certain cases

If:

(a) a person receiving disability support pension, carer payment, youth allowance, jobseeker payment or sickness allowance is a working credit participant; and

(b) either:

(i) the participant commences to earn, derive or receive, or to be taken to earn, derive or receive, employment income; or

(ii) there is an increase in the employment income that is earned, derived or received, or taken to be earned, derived or received, by the participant; and

(c) the participant has a working credit balance greater than nil at the start of the instalment period of the participant in which the commencement or increase occurs; and

(d) but for the commencement or increase, the participant would have continued to be qualified for the payment mentioned in paragraph (a) until the earlier of:

(i) a day determined under Division 8 or 9 of Part 3 of the Administration Act; or

(ii) the day on which the participant’s working credit balance is reduced to nil;

the participant is to be treated as if he or she had continued to be so qualified until the earlier of the days determined as referred to in subparagraphs (d)(i) and (ii).

Division 1A—Business income

1074 Ordinary income from a business—treatment of trading stock

(1) If:

(a) a person carries on a business; and

(b) the value of all the trading stock on hand at the end of a tax year is greater than the value of all the trading stock on hand at the beginning of that tax year;

the person’s ordinary income for that tax year in the form of profits from the business is to include the amount of the difference in values.

(2) If:

(a) a person carries on a business; and

(b) the value of all the trading stock on hand at the end of a tax year is less than the value of all the trading stock on hand at the beginning of that tax year;

the person’s ordinary income for that tax year in the form of profits from the business is to be reduced by the amount of the difference in values.

1075 Permissible reductions of business income

(1) Subject to subsection (2), if a person carries on a business, the person’s ordinary income from the business is to be reduced by:

(a) losses and outgoings that relate to the business and are allowable deductions for the purposes of section 8‑1 of the Income Tax Assessment Act 1997; and

(b) amounts that relate to the business and can be deducted in respect of plant (within the meaning of the Income Tax Assessment Act 1997) under Division 40 of that Act; and

(c) amounts that relate to the business and are allowable deductions under section 290‑60 of the Income Tax Assessment Act 1997.

(2) If, under Division 1B, a person is taken to receive ordinary income on a financial investment, that ordinary income is not to be reduced by the amount of any expenses incurred by the person because of that investment.

Note: For financial investment see subsection 9(1).

(3) If a person’s ordinary income for a period includes rental income from a property that is not business income, the person’s ordinary income from that property is to be reduced by losses and outgoings that relate to the property and are allowable deductions for the purposes of section 8‑1 of the Income Tax Assessment Act 1997 for that period.

(4) If the amount of the allowable deductions relating to a property for a period under section 8‑1 of the Income Tax Assessment Act 1997 exceeds the amount of the rental income from the property for that period, the amount of the ordinary income from the property for that period is taken to be nil.

Division 1B—Income from financial assets (including income streams (short term) and certain income streams (long term))

1076 Deemed income from financial assets—persons other than members of couples

(1) This section applies to a person who is not a member of a couple.

(2) A person who has financial assets is taken, for the purposes of this Act, to receive ordinary income on those assets in accordance with this section.

(3) If the total value of the person’s financial assets is equal to or less than the person’s deeming threshold, the ordinary income the person is taken to receive per year on the financial assets is the amount worked out by multiplying the value of those assets by the below threshold rate.

(3A) If the total value of the person’s financial assets exceeds the person’s deeming threshold, the ordinary income that the person is taken to receive is worked out as follows:

Method statement

Step 1. Multiply the person’s deeming threshold by the below threshold rate.

Note 1: For deeming threshold see subsection 1081(1).

Note 2: For below threshold rate see subsection 1082(1).

Step 2. Subtract the deeming threshold from the total value of the person’s financial assets.

Note: For deeming threshold see subsection 1081(1).

Step 3. Multiply the remainder worked out at Step 2 by the above threshold rate.

Note: For above threshold rate see subsection 1082(2).

Step 4. The total of the amounts worked out at Steps 1 and 3 represents the ordinary income the person is taken to receive per year on the financial assets.

(4) The person is taken, for the purposes of this Act, to receive one fifty‑second of the amount calculated under subsection (3) or (3A) as ordinary income of the person during each week.

1077 Deemed income from financial assets—members of pensioner couples

(1) This section applies to the members of a pensioner couple.

(2) If one or both of the members of a couple have financial assets, the members of the couple are taken, for the purposes of this Act, to receive together ordinary income on those assets in accordance with this section.

(3) If the total value of the couple’s financial assets is equal to or less than the couple’s deeming threshold, the ordinary income the couple is taken to receive per year on the financial assets is the amount worked out by multiplying the value of those assets by the below threshold rate.

(3A) If the total value of the couple’s financial assets exceeds the couple’s deeming threshold, the ordinary income that the couple is taken to receive is worked out as follows:

Method statement

Step 1. Multiply the couple’s deeming threshold by the below threshold rate.

Note 1: For deeming threshold see subsection 1081(2).

Note 2: For below threshold rate see subsection 1082(1).

Step 2. Subtract the deeming threshold from the total value of the couple’s financial assets.

Note: For deeming threshold see subsection 1081(2).

Step 3. Multiply the remainder worked out at Step 2 by the above threshold rate.

Note: For above threshold rate see subsection 1082(2).

Step 4. The total of the amounts worked out at Steps 1 and 3 represents the ordinary income the couple is taken to receive per year on the financial assets.

(4) Each member of the couple is taken, for the purposes of this Act, to receive, as ordinary income during each week, an amount worked out under the following formula:

1078 Deemed income from financial assets—members of non‑pensioner couples

(1) This section applies to a person who is a member of a couple, other than a pensioner couple.

(2) A person who has financial assets is taken, for the purposes of this Act, to receive ordinary income on those assets in accordance with this section.

(3A) If the total value of the person’s financial assets exceeds the person’s deeming threshold, the ordinary income that the person is taken to receive is worked out as follows:

Method statement

Step 1. Multiply the person’s deeming threshold by the below threshold rate.

Note 1: For deeming threshold see subsection 1081(3).

Note 2: For below threshold rate see subsection 1082(1).

Step 2. Subtract the deeming threshold from the total value of the person’s financial assets.

Note: For deeming threshold see subsection 1081(3).

Step 3. Multiply the remainder worked out at Step 2 by the above threshold rate.

Note: For above threshold rate see subsection 1082(2).

Step 4. The total of the amounts worked out at Steps 1 and 3 represents the ordinary income the person is taken to receive per year on the financial assets.

(4) The person is taken, for the purposes of this Act, to receive one fifty‑second of the amount calculated under subsection (3) or (3A) as ordinary income of the person during each week.

1081 Deeming threshold

(1) The deeming threshold for a person who is not a member of a couple is $30,000.

(2) The deeming threshold for a pensioner couple is $50,000.

(3) The deeming threshold for a member of a couple, other than a pensioner couple, is an amount equal to one‑half of the amount fixed by subsection (2).

Note: The amounts fixed by subsections (1) and (2) are indexed every 1 July. See sections 1190–1192.

1082 Below threshold rate, above threshold rate

(1) For the purposes of this Division, the below threshold rate is the rate determined, by legislative instrument, by the Minister to be the below threshold rate for the purposes of this Division.

(2) For the purposes of this Division, the above threshold rate is the rate determined, by legislative instrument, by the Minister to be the above threshold rate for the purposes of this Division.

(3) A rate determined under this section must be in the form of a specified percentage.

1083 Actual return on financial assets not treated as ordinary income

(1) Subject to subsection (2), any return on a financial asset that a person actually earns, derives or receives is taken, for the purposes of this Act, not to be ordinary income of the person.

(2) If, because of:

(a) a determination under subsection 1084(1); or

(b) the operation of subsection 1084(2);

a financial investment is not to be regarded as a financial asset for the purposes of section 1076, 1077 or 1078, subsection (1) does not apply to any return on the investment that the person actually earns, derives or receives.

1084 Certain money and financial investments not taken into account

(1) The Minister may determine that:

(a) specified financial investments; or

(b) a specified class of financial investments;

are not to be regarded as financial assets for the purposes of section 1076, 1077 or 1078.

(2) If a financial investment is an unrealisable asset for the purposes of section 1129, 1130B or 1131, the financial asset is not to be regarded as a financial asset for the purposes of section 1076, 1077 or 1078.

(3) A determination under subsection (1):

(a) must be in writing; and

(b) takes effect on the day on which it is made or on such other day (whether earlier or later) as is specified in the determination.

1084A Valuation and revaluation of certain financial investments

The total value of a person’s listed securities and managed investments (being listed securities and managed investments that fluctuate depending on the market) (the relevant investments) is determined in accordance with the following:

(a) an initial total valuation is to be given to the relevant investments on 1 July 1996, or when a new claim is determined, by the method set out in departmental guidelines;

(b) that total valuation continues in effect until the relevant investments are revalued by the method set out in departmental guidelines, and that revaluation must occur:

(i) on 20 March in each calendar year after 1996; and

(ii) on 20 September in each calendar year after 1996; and

(iii) when the person requests a revaluation of one or more of the person’s listed securities and managed investments; and

(iv) following an event that affects the relevant investments and is the subject of a notice given under section 68 of the Administration Act.

Division 1C—Income from income streams not covered by Division 1B

Subdivision B—Income streams that are not family law affected income streams

1097A Scope of Subdivision

(1) This Subdivision applies to income streams that are not family law affected income streams.

(2) However, this Subdivision does not apply to:

(a) an asset‑tested income stream (long term) that is an account‑based pension within the meaning of the Superannuation Industry (Supervision) Regulations 1994; or

(b) an asset‑tested income stream (long term) that is an annuity (within the meaning of the Superannuation Industry (Supervision) Act 1993) provided under a contract that meets the requirements determined in an instrument under subsection 9(1EA) of this Act.

Note 1: For treatment of an income stream mentioned in subsection (2), see Division 1B.

Note 2: Part 2 of Schedule 11 to the Social Services and Other Legislation Amendment Act 2014 preserves the rules in this Subdivision for a certain kind of income stream that was being provided to a person immediately before 1 January 2015 where the person was receiving an income support payment immediately before that day provided that, since that day, that income stream has been provided to the person and the person has been continuously receiving an income support payment.

1098 Income from asset‑test exempt income stream

(1) For the purpose of working out the annual rate of ordinary income of a person from an asset‑test exempt income stream to which this Subdivision applies, the person is taken to receive from that income stream each year the amount worked out under section 1099 or 1099A.

Note: For asset‑test exempt income stream see sections 9A, 9B and 9BA.

(2) Sections 1099 and 1099A do not apply if:

(a) the income stream is covered by subsection 9BA(1); or

(b) on the income stream’s commencement day, there was a reasonable likelihood that the income stream would have been covered by subsection 9BA(1), but the income stream is no longer covered by that subsection.

Note: See section 1099AA.

1099 Income—income stream not a defined benefit income stream

If the asset‑test exempt income stream to which this Subdivision applies is not a defined benefit income stream, the amount that the person is taken to receive from the income stream each year is worked out as follows:

where:

annual payment means the amount payable to the person for the year under the income stream.

purchase price has the meaning given by subsection 9(1).

relevant number has the meaning given by subsection 9(1).

Example: Mark is 65 years old and single. He purchases an annuity for $100,000 with a term based on life expectancy (i.e. 15.41 years, which he chooses to round up to 16 years). The annuity has all the revised characteristics listed in the legislation. His annual payment from the annuity totals $9,895. Mark’s assessable income from this income stream is:

1099A Income—income stream is a defined benefit income stream

(1) Subject to subsection (2), if the asset‑test exempt income stream to which this Subdivision applies is a defined benefit income stream, the amount that the person is taken to receive from the income stream each year is worked out as follows:

where:

annual payment means the amount payable to the person for the year under the income stream.

deductible amount has the meaning given by subsection 9(1).

Cap on deductible amount

(2) If:

(a) the defined benefit income stream is not a military defined benefit income stream; and

(b) apart from this subsection, the deductible amount under subsection (1) in relation to the income stream for the year would exceed 10% of the amount payable to the person for the year under the income stream;

then that deductible amount is taken to be an amount equal to 10% of the amount payable to the person for the year under the income stream.

1099AA Income from market‑linked asset‑test exempt income stream

(1) If either of the following conditions is satisfied in relation to the asset‑test exempt income stream to which this Subdivision applies:

(a) the income stream is covered by subsection 9BA(1);

the annual rate of ordinary income of a person from the income stream is worked out under whichever of subsections (2) and (3) is applicable.

Recipient makes election

(2) If:

(a) the person has elected that a particular amount is to be the payment, or the total of the payments, to be made under the income stream in respect of a period (the payment period) that:

(i) consists of the whole or a part of a particular financial year; and

(ii) begins on or after the income stream’s commencement day; and

(b) the election is in force on a particular day in the payment period;

the annual rate of ordinary income of the person from the income stream on that day is worked out using the following formula:

where:

purchase price has the meaning given by subsection 9(1).

relevant number has the meaning given by subsection 9(1).

total payments means the payment, or the total of the payments, to be made under the income stream in respect of the payment period.

Recipient does not make election

(3) If the person has not elected that a particular amount is to be the payment, or the total of the payments, to be made under the income stream in respect of a period (the payment period) that:

(a) consists of the whole or a part of a particular financial year; and

(b) begins on or after the income stream’s commencement day;

the annual rate of ordinary income of the person from the income stream on each day during the payment period is worked out using the following formula:

where:

default amount means 100% of the amount worked out for the financial year using the formula in subsection 9BA(5) (for pro‑rating, see subsection (4)).

purchase price has the meaning given by subsection 9(1).

relevant number has the meaning given by subsection 9(1).

(4) If the income stream’s commencement day is not a 1 July, the default amount (within the meaning of subsection (3)) for the financial year starting on the preceding 1 July must be reduced on a pro‑rata basis by reference to the number of days in the financial year that are on and after the commencement day.

Exception—income stream’s commencement day happens in June

(5) If:

(a) the income stream’s commencement day happens in June; and

(b) no payment is made under the income stream for the financial year in which the commencement day happens;

subsections (2), (3) and (4) do not apply in working out the annual rate of ordinary income of the person from the income stream on a day in that financial year.

1099B Income from asset‑tested income stream (long term)

(1) For the purpose of working out the annual rate of ordinary income of a person from an asset‑tested income stream (long term) to which this Subdivision applies, the person is taken to receive from that income stream each year the amount worked out under section 1099C or 1099D.

(2) Sections 1099C and 1099D do not apply to an income stream if section 1099DAA applies to the income stream.

1099C Income—asset‑tested income stream (long term) that is not a defined benefit income stream

If the asset‑tested income stream (long term) to which this Subdivision applies is not a defined benefit income stream, the amount that the person is taken to receive from the income stream each year is worked out as follows:

where:

annual payment means the amount payable to the person for the year under the income stream.

purchase price has the meaning given by subsection 9(1).

relevant number has the meaning given by subsection 9(1).

residual capital value has the meaning given by subsection 9(1).

Note: For treatment of asset‑tested income streams (short term) see Division 1B of Part 3.10.

Example: Sally is 65 years old and single. She purchases a 10 year annuity for $150,000, with a residual capital value of $20,000. Her total annual annuity payment is $18,337. Sally’s assessable income from her 10 year annuity is:

1099D Income—asset‑tested income stream (long term) that is a defined benefit income stream

(1) Subject to subsection (2), if the asset‑tested income stream (long term) to which this Subdivision applies is a defined benefit income stream, the amount that the person is taken to receive from the income stream each year is worked out as follows:

where:

annual payment means the amount payable to the person for the year under the income stream.

deductible amount has the meaning given by subsection 9(1).

Cap on deductible amount

(2) If:

(a) the defined benefit income stream is not a military defined benefit income stream; and

then that deductible amount is taken to be an amount equal to 10% of the amount payable to the person for the year under the income stream.

1099DAA Income from certain low‑payment asset‑tested income streams

(1) If:

(a) an income stream is an asset‑tested income stream (long term) to which this Subdivision applies; and

(b) the income stream is an allocated pension within the meaning of the Superannuation Industry (Supervision) Regulations 1994; and

(c) one or more payments have been, or are to be, made under the income stream in respect of a period (the payment period) that:

(i) consists of the whole or a part of a financial year; and

(ii) begins on or after the income stream’s commencement day; and

(d) on a day in the payment period, the amount worked out using the formula in subsection (2) is less than the amount worked out using the formula in subsection (3);

the annual rate of ordinary income of a person from the income stream on that day is worked out under subsection (3).

Annual rate based on total payments

(2) For the purposes of paragraph (1)(d), the formula in this subsection is:

where:

purchase price has the meaning given by subsection 9(1).

relevant number has the meaning given by subsection 9(1).

total payments means the payment, or the total of the payments, made, or to be made, under the income stream in respect of the payment period.

Annual rate based on minimum amount

(3) For the purposes of paragraph (1)(d), the formula in this subsection is:

where:

minimum amount means the minimum amount calculated in accordance with the method determined, by legislative instrument, by the Minister for the purposes of this definition.

purchase price has the meaning given by subsection 9(1).

relevant number has the meaning given by subsection 9(1).

Exception—income stream’s commencement day happens in June

(4) If:

(a) the income stream’s commencement day happens in June; and

(b) no payment is made under the income stream for the financial year in which the commencement day happens;

subsections (2) and (3) do not apply in working out the annual rate of ordinary income of the person from the income stream on a day in that financial year.

1099DAB Income—asset‑tested income stream (lifetime)

If the income stream is an asset‑tested income stream (lifetime), the amount that the person is taken to receive from the income stream each year is worked out as follows:

where:

annual payment means the amount payable to the person for the year under the income stream.

Subdivision C—Family law affected income streams

1099DA Scope of Subdivision

(1) This Subdivision applies to family law affected income streams.

(2) However, this Subdivision does not apply to:

(a) an asset‑tested income stream (long term) that is an account‑based pension within the meaning of the Superannuation Industry (Supervision) Regulations 1994; or

Note 1: For treatment of an income stream mentioned in subsection (2), see Division 1B.

1099DB Income from asset‑test exempt income streams

(a) if the income stream is not a defined benefit income stream—the amount determined by the Secretary under this paragraph; or

(b) if the income stream is a defined benefit income stream—the amount determined by the Secretary under this paragraph.

(2) In making a determination under paragraph (1)(a) or (b), the Secretary must comply with any relevant decision‑making principles in force under section 1099DD.

1099DC Income from asset‑tested income stream (long term)

(a) if the income stream is not a defined benefit income stream—the amount determined by the Secretary under this paragraph; or

(b) if the income stream is a defined benefit income stream—the amount determined by the Secretary under this paragraph.

(2) In making a determination under paragraph (1)(a) or (b), the Secretary must comply with any relevant decision‑making principles in force under section 1099DD.

1099DCA Income from asset‑tested income stream (lifetime)

(1) For the purpose of working out the annual rate of ordinary income of a person from an asset‑tested income stream (lifetime) to which this Subdivision applies, the person is taken to receive from that income stream each year the amount determined by the Secretary under this subsection.

(2) In making a determination under subsection (1), the Secretary must comply with any relevant decision‑making principles in force under section 1099DD.

1099DD Decision‑making principles

The Secretary may, by legislative instrument, formulate principles (decision‑making principles) to be complied with by him or her in making decisions under:

(a) paragraph 1099DB(1)(a); or

(b) paragraph 1099DB(1)(b); or

(d) paragraph 1099DC(1)(b); or

(e) subsection 1099DCA(1).

Division 1D—Aged care accommodation bonds: certain transactions before 6 November 1997

1099E Scope of Division

(1) This Division applies to a person if:

(a) at any time from the beginning of 1 October 1997 until the end of 5 November 1997, the person became liable to pay an accommodation bond for entry to a residential care service; and

(b) either an accommodation charge would have been payable for the entry, or the person would have been a charge exempt resident, had section 44‑8B and Division 57A of the Aged Care (Transitional Provisions) Act 1997 been in force at the time of the entry; and

(c) the person later made an agreement (a refund agreement) with the provider of the service that the person’s liability to pay an accommodation bond for the entry was to be replaced with a liability to pay an accommodation charge for the entry, and that any payment of any of the bond was to be refunded to the person.

Note: For accommodation bond, accommodation charge and charge exempt resident, see subsection 11(1).

(2) This Division also applies to a person if the Secretary is satisfied that:

(a) on or before 5 November 1997, the person sold his or her principal home for the sole or principal purpose of raising money to pay an accommodation bond for entry to a residential care service; and

Note: For accommodation bond, accommodation charge and charge exempt resident, see subsection 11(1).

(3) This Division also applies to the partner of a person covered by subsection (1) or (2) (even if the person so covered is now deceased).

(4) For the purposes of subsection (2), the time at which a person sells his or her home is the time when he or she comes under a legal obligation to transfer the home to the buyer.

1099F Exempt bond amount does not count as income

The person’s exempt bond amount (see section 1099H) does not count as income of the person for the purposes of this Act.

Note: Income is otherwise defined in section 8.

1099G Person’s ordinary income reduced using financial asset rules

(1) For the purposes of this section, assume that the person’s exempt bond amount (see section 1099H) were a financial asset of the person.

(2) The person’s ordinary income for a year is reduced by the amount of ordinary income taken to be received on the asset for the year, as worked out under Division 1B (income from financial assets (including income streams (short term) and certain income streams (long term)).

(3) In working out that reduction, assume that the total value of the person’s financial assets exceeded the person’s deeming threshold (deeming threshold is a term used in Division 1B).

1099H Meaning of exempt bond amount

(1) The following is how to work out a person’s exempt bond amount.

(2) If the person is covered by subsection 1099E(1) (but not subsection 1099E(2)), the person’s exempt bond amount is any amount of accommodation bond payment refunded to the person under the refund agreement mentioned in that subsection.

(3) If the person is covered by subsection 1099E(2) (but not subsection 1099E(1)), the person’s exempt bond amount is the gross proceeds of the sale mentioned in that subsection, less:

(a) any costs incurred in the course of the sale; and

(b) the amount of any debt the person or the person’s partner owed immediately before the sale, so far as the debt was secured by the home at that time.

(4) If the person is covered by both subsections 1099E(1) and (2), the person’s exempt bond amount is the greater of the 2 amounts worked out under subsections (2) and (3) of this section.

(5) If the person is covered by subsection 1099E(3), the person’s exempt bond amount is equal to the exempt bond amount of the person’s partner, as worked out under subsection (2), (3) or (4) of this section.

(6) But in all of the above cases, if the person currently has a partner (who is not deceased), the person’s exempt bond amount is half of what it would otherwise be.

Division 1E—Refunds to charge exempt residents

1099J Scope of Division

(1) This Division applies to an amount (the refunded amount) that is refunded as mentioned in paragraph 56‑1(kc) or 56‑3(ic) of the Aged Care Act 1997 (as in force before 1 July 2014) to a person because the person is or was a charge exempt resident.

Note: For charge exempt resident, see subsection 11(1).

(2) This Division also applies to an amount (also called the refunded amount) that is paid to a person under paragraph 44‑8A(6)(b) of the Aged Care (Transitional Provisions) Act 1997 because the person is or was a charge exempt resident.

Note: For charge exempt resident, see subsection 11(1).

(3) To avoid doubt, this Division does not apply if the amount is paid to the person’s estate or to any other person.

1099K Refunded amount does not count as income

The refunded amount does not count as income of the person for the purposes of this Act.

Note: Income is otherwise defined in section 8.

1099L Person’s ordinary income reduced using financial asset rules

(1) For the purposes of this section, assume that the refunded amount were a financial asset of the person.

(3) In working out that reduction, assume that the total value of the person’s financial assets exceeded the person’s deeming threshold (deeming threshold is a term used in Division 1B).

1099M Application of Division

This Division applies in relation to a person who is a charge exempt resident at any time, whether before or after the commencement of the Division.

Division 2—Conversion of foreign currency amounts

1100 How value of a payment received in a foreign currency is to be determined

(1) If:

(a) the rate of a payment to be made to a person under this Act is being worked out for a calculation day; and

(b) an amount received by the person in a foreign currency needs to be taken into account in working out the rate;

the value in Australian currency of the amount received is to be determined in accordance with this section.

(2) Except in the case of:

(a) amounts received in a foreign currency in respect of which the Secretary determines that it is not appropriate for this subsection to apply; or

(b) a payment, or class or kind of payments, received in a foreign currency, being a payment or a class or kind of payments in respect of which the Secretary determines that it is not appropriate for this subsection to apply;

the value in Australian currency of the amount received is to be calculated using the appropriate market exchange rate for the foreign currency on the fifth business day before the calculation day.

(3) For the purposes of subsection (2), the appropriate market exchange rate on a particular day for a foreign currency to which subsection (2) applies is:

(a) if there is an on‑demand airmail buying rate for the currency available at the Commonwealth Bank of Australia at the start of business in Sydney on that day and the Secretary determines it is appropriate to use that rate—that rate; or

(b) in any other case:

(i) if there is another rate of exchange for the currency, or there are other rates of exchange for the currency, available at the Commonwealth Bank of Australia at the start of business in Sydney on that day and the Secretary determines it is appropriate to use the other rate or one of the other rates—the rate so determined; or

(ii) otherwise—a rate of exchange for the currency available from another source at the start of business in Sydney on that day that the Secretary determines it is appropriate to use.

(4) In the case of a foreign currency or a payment in a foreign currency in respect of which the Secretary has determined that it is not appropriate for subsection (2) to apply, the value in Australian currency of the amount received is to be calculated using a rate of exchange that the Secretary determines to be appropriate.

(5) The Secretary may make written determinations for the purposes of this section.

(6) In this section:

business day means a day other than:

(a) a Saturday; or

(b) a Sunday; or

calculation day means the first business day for each month.

month means one of the 12 months of the calendar year.

1100A Determining value of a payment originally denominated in a foreign currency but made in Australian currency

(1) This section applies if, for the purposes of working out for a calculation day the rate of a payment to be made to a person under this Act, it is necessary to take account of a payment (the foreign payment):

(a) that the person received from a source overseas; and

(b) that was originally denominated in a foreign currency but was received by the person in Australian currency.

(2) For those purposes, the value in Australian currency of the foreign payment is taken to be the value that would have been determined under section 1100 had the person received the foreign payment in the foreign currency.

(3) Subsection (2) has effect regardless of the amount of the foreign payment actually received by the person in Australian currency.

(4) In this section:

calculation day has the same meaning as in section 1100.

Division 3—Disposal of ordinary income

1106 Disposal of ordinary income

(1) For the purposes of this Act, a person disposes of ordinary income of the person if:

(a) the person engages in a course of conduct that directly or indirectly:

(i) destroys the source of the income; or

(ii) disposes of the income or the source of the income; or

(iii) diminishes the income; and

(b) one of the following subparagraphs is satisfied:

(i) the person receives no consideration in money or money’s worth for the destruction, disposal or diminution;

(ii) the person receives inadequate consideration in money or money’s worth for the destruction, disposal or diminution;

(iii) the Secretary is satisfied that the person’s purpose, or the person’s dominant purpose, in engaging in that course of conduct was to obtain a social security advantage.

(2) For the purposes of subsection (1), a person has a purpose of obtaining a social security advantage if the person has a purpose of:

(a) obtaining, or enabling the person’s partner to obtain, a social security pension, a social security benefit, a youth training allowance, a service pension, income support supplement or a veteran payment; or

(b) obtaining, or enabling the person’s partner to obtain, a social security pension, a social security benefit, a youth training allowance, a service pension, income support supplement or a veteran payment at a higher rate than that which would otherwise have been payable; or

(c) ensuring that the person or the person’s partner would be qualified for fringe benefits for the purposes of this Act or the Veterans’ Entitlements Act.

(3) Paragraph (1)(a) does not apply if:

(a) the source of the income is a deprived asset, or

(b) the income is earned, derived or received from a transaction involving a deprived asset.

Note: For amount of disposition see section 1107.

1107 Amount of disposition

If a person disposes of ordinary income, the amount of the disposition is the amount that, in the Secretary’s opinion, is:

(a) if the person receives no consideration for the destruction, disposal or diminution—the annual rate of the diminution of the income because of the destruction, disposal or diminution; or

(b) if the person receives consideration for the destruction, disposal or diminution—the annual rate of the diminution of the income because of the destruction, disposal or diminution less the part (if any) of the consideration that the Secretary considers to be fair and reasonable in all the circumstances of the case.

1108 Disposal of ordinary income—individuals

If a person who is not a member of a couple has disposed of ordinary income of the person, the amount of that disposition is to be included in the person’s ordinary income for the purposes of this Act.

Note 1: For disposes of ordinary income see section 1106.

Note 2: For amount of disposition see section 1107.

Note 3: For ordinary income see subsection 8(1): ordinary income includes investment income but does not include maintenance income.

1109 Disposal of ordinary income—members of couples

(1) Subject to subsections (1A), (1B), (2), (3) and (4), if a person who is a member of a couple has disposed of ordinary income of the person:

(a) 50% of the amount of the disposition is to be included in the person’s ordinary income; and

(b) 50% of the amount of the disposition is to be included in the person’s partner’s ordinary income.

Note 1: For disposes of ordinary income see section 1106.

Note 2: For amount of disposition see section 1107.

(1A) Subject to subsection (3), for the purposes of the application of this Act in relation to a person’s rate of social security benefit, if:

(a) a person who is a member of a couple has disposed of ordinary income of the person; and

(b) the amount of the disposition is not greater than the least amount that, if added to the person’s ordinary income (disregarding this section), would cause the person’s rate of benefit to be reduced to nil;

the amount of the disposition is to be included in the person’s ordinary income.

(1B) Subject to subsection (3), for the purposes of the application of this Act in relation to a person’s rate of social security benefit, if:

(a) a person who is a member of a couple has disposed of ordinary income of the person; and

(b) the amount of the disposition is greater than the least amount that, if added to the person’s ordinary income (disregarding this section), would cause the person’s rate of benefit to be reduced to nil;

then:

(d) the difference between the 2 amounts referred to in paragraph (b) is to be included in the person’s partner’s ordinary income.

(2) If:

(a) amounts are included under subsection (1) in the ordinary income of a person who is a member of a couple and in the person’s partner’s ordinary income because the person has disposed of ordinary income; and

(b) the person and the person’s partner cease to be members of the same couple;

any amount that was included in the ordinary income of the person’s former partner because of the disposition is to be included in the person’s ordinary income.

(3) If:

(b) the person dies;

no amount is to be included in the ordinary income of the person’s partner because of the disposition.

(4) If:

(a) an amount is included under subsection (1) in the ordinary income of a person who is a member of a couple and in the person’s partner’s ordinary income because the person has disposed of ordinary income; and

(b) the person’s partner dies;

any amount that would, if the person’s partner had not died, be included in the ordinary income of the person’s partner because of the disposition is to be included in the person’s ordinary income.

Note: For ordinary income see subsection 8(1): ordinary income includes investment income but does not include maintenance income.

1111 Dispositions more than 5 years old to be disregarded

This Division does not apply to a disposition of ordinary income that took place:

(a) more than 5 years before the time when:

(i) the person who disposed of the ordinary income; or

(ii) if the person who disposed of the ordinary income was, at the time of disposition, a member of a couple—the person’s partner;

became qualified for a social security pension; or

(b) less than 5 years before the time referred to in paragraph (a) and before the time when the Secretary is satisfied that the person who disposed of the ordinary income could reasonably have expected that the person or the person’s partner would become qualified for such a pension.

Part 3.12—General provisions relating to the assets test

Division 1—Value of person’s assets

1118 Certain assets to be disregarded in calculating the value of a person’s assets

(1) In calculating the value of a person’s assets for the purposes of this Act (other than sections 198F to 198MA (inclusive), Division 1B of Part 3.10, Division 2 and sections 1133 and 1135A), disregard the following:

(a) if the person is not a member of a couple—the value of any right or interest of the person in the person’s principal home that is a right or interest that gives the person reasonable security of tenure in the home;

(b) if the person is a member of a couple—the value of any right or interest of the person in one residence that is the principal home of the person, of the person’s partner or of both of them that is a right or interest that gives the person or the person’s partner reasonable security of tenure in the home;

(i) a life interest in the principal home of the person, of the person’s partner or of both of them; or

(ii) a life interest created by the person, by the person’s partner or by both of them; or

(iii) a life interest created on the death of the person’s partner;

(d) the value of any asset‑test exempt income stream of the person, other than a partially asset‑test exempt income stream;

(da) half of the value of any partially asset‑test exempt income stream of the person;

(e) any amount that is:

(i) received by the person within the immediately preceding period of 90 days; and

(ii) is excluded from the definition of income in subsection 8(1) by subsection 8(4) or (5);

(f) the value of the person’s investment in:

(i) a superannuation fund; or

(ii) an approved deposit fund; or

(iv) an ATO small superannuation account;

until the person:

(v) reaches pension age; or

(vi) starts to receive a pension or annuity out of the fund;

(g) if:

(i) the person has a granny flat interest in the person’s principal home; and

(ii) the granny flat interest gives the person reasonable security of tenure in the home; and

(iii) the person acquired or retained the granny flat interest before 22 August 1990;

the value of the granny flat interest;

(ga) if:

(i) the person has a granny flat interest in the person’s principal home; and

(ii) the person is a person to whom subsection 1150(2), 1151(2), 1152(2), 1152(5), 1153(2), 1154(2), 1155(2), 1156(2) or 1157(2) applies;

the value of the granny flat interest;

Note: A person described in subparagraph (ii) will have acquired or retained the granny flat interest on or after 22 August 1990 (see section 1145A).

(gb) if:

(i) the person is a sale leaseback resident; and

(ii) the person is a person to whom subsection 1150(2), 1151(2), 1152(2), 1152(5), 1153(2), 1154(2), 1155(2), 1156(2) or 1157(2) applies;

the value of any right or interest of the person in the sale leaseback home;

(h) the value of any contingent, remainder or reversionary interest of the person (other than an interest created by the person, by the person’s partner or by both of them);

(j) the value of any assets (other than a contingent, remainder or reversionary interest) to which the person is entitled from the estate of a deceased person but which has not been, and is not able to be, received;

(k) the value of any medal or other decoration awarded (whether to the person or another person) for valour that is owned by the person otherwise than for the purposes of investment or a hobby;

(m) the value of:

(i) any cemetery plot acquired by the person for the burial of the person or the person’s partner; and

(ii) any funeral expenses paid in advance by the person in respect of the funeral of the person or the person’s partner;

(ma) an amount invested in an exempt funeral investment and any return on the investment;

(n) if:

(i) personal property of the person is designed for use by a disabled person; and

(ii) the person, the person’s partner, a dependent child of the person or a dependent child of the person’s partner is disabled;

the value of the property;

(p) if:

(i) personal property of the person is modified so that it can be used by a disabled person; and

(ii) the person, the person’s partner, a dependent child of the person or a dependent child of the person’s partner is disabled;

the part of the value of the property that is attributable to the modifications;

(q) if the person is provided with a motor vehicle under the scheme administered by the Commonwealth known as the gift car scheme—the value of that motor vehicle;

(r) if the person has sold a residence that was the principal home of the person on terms and has purchased, also on terms, another residence that is the principal home of the person—so much of the balance due to the person in respect of the sale as will be applied by the person in respect of the purchase of the other residence;

(s) the amount of any insurance or compensation payments received by the person because of the loss of or damage to buildings, plant or personal effects within the immediately preceding 12 months or such longer period as the Secretary determines for any special reason for a particular payment;

(sa) if subsection (1AB) applies (application of insurance etc. payments to rebuilding etc.)—the amount worked out under that subsection, during the period mentioned in subsection (1AC);

(sb) if a person has received an NDIS amount—the amount worked out under subsection (1AD);

(t) the value of any native title rights and interests of the person, or of a community or group of which the person is a member;

(u) the amount of any accommodation bond balance in respect of an accommodation bond paid by the person;

(v) the amount of any refundable deposit balance in respect of a refundable deposit paid by the person.

Note 1: For granny flat interest see subsection 12A(2).

Note 2: For principal home see section 11A.

Note 3: For reasonable security of tenure see subsection 11A(10).

Note 4: For exempt funeral investment see section 19E.

Application of insurance etc. payments to rebuilding etc.

(1AA) Subsection (1AB) applies if:

(a) a person receives any insurance or compensation payments because of loss of or damage to a building (including the person’s principal home) or plant; and

(b) either:

(i) if the building or plant was lost—the person applies the whole or a part of those payments to build another building or plant to replace the building or plant that was lost; or

(ii) if the building or plant was damaged—the person applies the whole or a part of those payments to rebuild, repair or renovate the building or plant.

(1AB) For the purposes of paragraph (1)(sa), the amount that may be disregarded is:

(a) the value of the building or plant that is being built, rebuilt, repaired or renovated, to the extent that those payments are so applied; and

(b) if a building whose value is being disregarded under paragraph (a) of this subsection is to be the person’s principal home:

(i) the value of the land on which the building is being built, rebuilt, repaired or renovated to the extent that, once the building becomes the person’s principal home, the land will, under section 11A, be included in a reference to the principal home; and

(ii) the value of any other structure, on that land, that is to be the person’s principal home to the extent that the structure was built before the person began applying the payments.

(1AC) For the purposes of paragraph (1)(sa), the amount worked out under subsection (1AB) may be disregarded during the period:

(a) beginning when the payments are received; and

(b) ending at the earlier of the following times:

(i) 12 months, or such longer period as the Secretary determines for any special reason, after that time;

(ii) when the building, rebuilding, repair or renovation of the building or plant is complete.

NDIS amounts

(1AD) For the purposes of paragraph (1)(sb), the amount that may be disregarded is the value of the sum of:

(a) the NDIS amounts received by the person; and

(b) any return on those amounts that the person earns, derives or receives;

less the sum of the amounts spent by the person in accordance with an NDIS plan (whether in the person’s capacity as an NDIS participant or as a person managing the funding under an NDIS plan for an NDIS participant).

Definitions

(1A) In this section:

native title rights and interests means:

(a) native title rights and interests within the meaning of section 223 of the Native Title Act 1993;

(b) any rights and interests of a similar nature under any law of a State, a Territory or a foreign country (whether or not the rights and interests relate to land or waters outside Australia);

but, to avoid any doubt, does not include any right or interest in a lease or licence, or in a freehold estate.

partially asset‑test exempt income stream means:

(a) an asset‑test exempt income stream that:

(i) is an income stream (other than a defined benefit income stream) covered by subsection 9A(1) or (1A), 9B(1) or 9BA(1); and

(ii) has a commencement day during the period from 20 September 2004 to 19 September 2007 (both dates inclusive); and

(iii) is not covered by principles (if any) determined for the purposes of this subparagraph, by legislative instrument, by the Secretary; or

(b) an income stream that:

(i) has a commencement day happening on or after 20 September 2007; and

(ii) is covered by principles determined for the purposes of this subparagraph, by legislative instrument, by the Secretary.

Application of proceeds of sale of principal home

(1B) Subsection (2) applies if:

(a) a person sells the person’s principal home; and

(b) either:

(i) the person does not have a right or interest in a principal home; or

(ii) the person has a right or interest in a principal home that the Secretary is satisfied does not give the person reasonable security of tenure in the home; and

(c) before the end of 12 months, or any longer period determined under subsection (2B), after the sale, one or more of the following applies:

(i) the person intends to apply the whole or a part of the proceeds of the sale to build, rebuild, repair or renovate another residence that is to be the person’s principal home;

(ii) the person applies the whole or a part of the proceeds of the sale to build, rebuild, repair or renovate another residence that is to be the person’s principal home;

(iii) the person intends to apply the whole or a part of the proceeds of the sale to purchase another residence that is to be the person’s principal home.

(2) For the purposes of this Act (other than Division 1B of Part 3.10):

(a) if subparagraph (1B)(c)(i) applies—disregard the proceeds, to the extent that the person intends to apply those proceeds to build, rebuild, repair or renovate the other residence, until the earlier of the following times:

(i) the period mentioned in paragraph (1B)(c) ends;

(ii) the Secretary becomes satisfied that the person has ceased to have that intention; or

(b) if subparagraph (1B)(c)(ii) applies—disregard the value of the following, until the end of the period mentioned in paragraph (1B)(c), to the extent that the person applies those proceeds to build, rebuild, repair or renovate that other residence:

(i) the value of the other residence;

(ii) the value of the land on which the other residence is being built, rebuilt, repaired or renovated to the extent that, once the building becomes the person’s principal home, the land will, under section 11A, be included in a reference to the principal home;

(iii) the value of any other structure, on that land, that is to be the person’s principal home to the extent that the structure was built before the person began applying those proceeds; or

(c) if subparagraph (1B)(c)(iii) applies—disregard the proceeds, to the extent that the person intends to apply those proceeds to purchase the other residence, until the earlier of the following times:

(i) the period mentioned in paragraph (1B)(c) ends;

(ii) the Secretary becomes satisfied that the person has ceased to have that intention.

(2A) Subsection (2) does not apply to the calculation of the value of a person’s assets for the purposes of sections 198F to 198MA or 1123 to 1128 (disposal of assets).

(2B) For the purposes of subsection (1B), the Secretary may determine, in writing, a period of up to 24 months if:

(a) a person who has sold his or her principal home is making reasonable attempts to purchase, build, repair or renovate another residence; and

(b) the person has been making those attempts within a reasonable period after selling the principal home; and

(c) the person has experienced delays beyond his or her control in purchasing, building, repairing or renovating the other residence.

Value of certain personal effects of less than $10,000

(3) For the purposes of this section, if:

(a) the value of any assets of a person or, if the person is a member of a couple, of the person and the person’s partner, that consists of the contents of a principal home and of other personal effects that are used primarily within the principal home does not exceed $10,000; and

(b) the assets are used primarily for private or domestic purposes;

the value of the assets is to be taken to be $10,000 unless the person satisfies the Secretary that the value of the assets is less than $10,000.

This section subject to sections 1145A to 1157

(4) This section has effect subject to sections 1145A to 1157 (special residences).

1118A Value of superannuation investments determined by Minister to be disregarded

(1) The value of a person’s investment in a superannuation fund, an approved deposit fund or an ATO small superannuation account is to be disregarded in calculating the value of the person’s assets for the purposes of this Act (other than section 198H, 198HA, 198HB, 198J, 198JA, 198JB, 198K or 198L, subparagraph 263(1)(d)(iv), Division 1B of Part 3.10, or section 1124A, 1125, 1125A, 1126, 1133 or 1135A) if the investment is specified in a determination made under subsection (2).

(2) The Minister may specify:

(a) a specified investment in a superannuation fund, an approved deposit fund or an ATO small superannuation account; or

(b) a specified class of investments in a superannuation fund, an approved deposit fund or an ATO small superannuation account;

in a determination for the purpose of subsection (1).

(3) A determination under subsection (2) must be in writing.

(4) A determination under subsection (2) takes effect on the day on which it is made or on such other day (whether earlier or later) as is specified in the determination.

1118AA Value of assets reduced by amounts received from Mark Fitzpatrick Trust

(1) In this section:

application day, in relation to a person who was a recipient of a social security payment immediately before 28 September 1995, means the day, on or after that date, on which the person applied or applies for review of the rate of that social security payment because of the expected enactment, or the operation, of this section.

(2) Subject to subsection (3), the value of a person’s assets for the purposes of this Act (other than subparagraph 501E(1)(d)(iv) and sections 1124A, 1125, 1125A and 1126) is reduced by the sum of any amounts received by the person from the Mark Fitzpatrick Trust.

(3) Subsection (2) has effect, or is taken to have had effect, as the case may be:

(a) for a person who was a recipient of a social security pension immediately before 28 September 1995—on the first pension payday after the application day; or

(b) for a person who was a recipient of a social security payment other than a social security pension immediately before 28 September 1995—on the next day, after the application day, on which the person received or receives an instalment of the payment; or

(c) for a person who became or becomes a recipient of a social security payment on or after 28 September 1995—on the day on which the person received or receives the first instalment of the payment.

1118AB Value of person’s assets reduced: certain transactions to do with aged care accommodation bonds

(1) This section applies to a person if Division 1D of Part 3.10 applies to the person.

(2) For the purposes of this Act (other than subparagraph 501E(1)(d)(iv) and sections 1124A, 1125, 1125A and 1126), the total value of the person’s assets is reduced by the person’s exempt bond amount (as defined by section 1099H).

1118AC Value of person’s assets reduced: refunds to charge exempt residents

(1) This section applies to a person if Division 1E of Part 3.10 applies to the person.

(2) For the purposes of this Act (other than subparagraph 501E(1)(d)(iv) and sections 1124A, 1125, 1125A and 1126), the total value of the person’s assets is reduced by the refunded amount (as defined by section 1099J).

1119 Value of asset‑tested income streams that are not defined benefit income streams, asset‑tested income streams (lifetime) or family law affected income streams

(1) This section applies to a person’s asset‑tested income stream if it is not a defined benefit income stream, it is not an asset‑tested income stream (lifetime) and it is not a family law affected income stream.

Note: For defined benefit income streams, see section 1120. For asset‑tested income streams (lifetime), see sections 1120AA and 1120AB. For family law affected income streams, see section 1120A.

(2) The value of the income stream is, for the purposes of the assets test, worked out:

(a) if the person receives payments from the income stream 2 or more times a year—in relation to each 6 month period of the income stream’s term; and

(b) if the person receives a payment from the income stream only once a year—in relation to each 12 month period of the income stream’s term.

(3) If the income stream has an account balance, the value of the income stream, for the purposes of the assets test, is the value of the account balance at the beginning of the 6 month or 12 month period (as the case requires) referred to in subsection (2).

(4) If the income stream does not have an account balance, the value of the income stream is, for the purposes of the assets test, worked out as follows:

where:

purchase price has the meaning given by subsection 9(1).

relevant number has the meaning given by subsection 9(1).

residual capital value has the meaning given by subsection 9(1).

term elapsed is the number of years of the term that have elapsed since the commencement day of the income stream, rounded down:

(a) in the case of an income stream referred to in paragraph (2)(a)—to the nearest half‑year; and

(b) in the case of an income stream referred to in paragraph (2)(b)—to the nearest whole year.

Example: Sally is 65 years old and single. She purchases a 10 year annuity for $150,000 with a residual capital value of $20,000. Her total annual annuity payment is $18,337. Monthly payments commence on 1 January. Her assessable asset for the first six months will be:

Her assessable asset after 30 June in that year will be:

1120 Value of asset‑tested income streams that are defined benefit income streams

(1) This section applies to a person’s asset‑tested income stream if it is a defined benefit income stream and it is not a family law affected income stream.

Note: For family law affected income streams, see section 1120A.

(2) The value of the income stream is, for the purposes of the assets test, worked out in relation to each 12 month period of the income stream’s term.

(3) The value of the income stream is, for the purposes of the assets test, worked out as follows:

where:

annual payment means the amount payable to the person for the relevant 12 month period under the income stream.

pension valuation factor means the pension valuation factor that applies to the person in accordance with the determination made, by legislative instrument, by the Minister for the purposes of this section.

1120AA Value of asset‑tested income streams (lifetime) that are managed investments

(1) This section applies to a person’s asset‑tested income stream (lifetime), that does not arise under arrangements that are regulated by the Superannuation Industry (Supervision) Act 1993, in relation to a day that is before the person’s assessment day (within the meaning of section 1120AB) for the income stream.

Note: For asset‑tested income stream (lifetime), see subsection 9(1).

(2) However, this section does not apply to a family law affected income stream.

Note: For family law affected income streams, see section 1120A.

Value of income stream

(3) Subject to this section, the value of the person’s income stream is, for the purposes of the assets test, the purchase amount for the income stream.

Purchase amount

(4) For the purposes of this section, the purchase amount for the income stream is:

(a) subject to paragraph (b)—if one or more amounts have been paid for the income stream, the sum of each compounded amount in relation to an amount paid for the income stream, as worked out under subsection (5), less any commuted amounts; or

(b) if the circumstances determined in an instrument under subsection (7) apply in relation to the income stream—the amount worked out in accordance with that instrument.

(5) A compounded amount in relation to an amount paid for the income stream is worked out by applying the following formula for each relevant adjustment day (from the earliest to the latest):

where:

compounded amount for the relevant adjustment day means:

(a) for the earliest relevant adjustment day—the amount that was paid for the income stream; or

(b) for each later relevant adjustment day—the result of applying the formula for the most recent earlier relevant adjustment day.

relevant above threshold rate for the relevant adjustment day means the following:

(a) if the relevant adjustment day is the relevant payment day—zero;

(b) if the relevant adjustment day is a 12‑month anniversary of the relevant payment day—the rate applicable under subsection 1082(2) for that relevant adjustment day, expressed as a decimal fraction.

relevant adjustment day means each of the following:

(a) the relevant payment day;

(b) each 12‑month anniversary of the relevant payment day.

relevant payment day means the day that the amount was paid for the income stream.

(6) If the income stream is a joint income stream, then, for the purposes of applying subsections (4) and (5) to the person and to a day covered by subsection (1), an amount paid for the income stream is taken to be that amount multiplied by the proportion of the income stream attributable to the person on that day.

(7) The Secretary may make a legislative instrument for the purposes of paragraph (4)(b).

1120AB Value of asset‑tested income streams (lifetime) that are not managed investments

(1) This section applies to a person’s asset‑tested income stream (lifetime) in relation to a day that is on or after the person’s assessment day for the income stream.

Note 1: For asset‑tested income stream (lifetime), see subsection 9(1). For assessment day, see subsections (6) and (7) of this section.

Note 2: This section applies separately in relation to each asset‑tested income stream (lifetime) of a person.

(2) However, this section does not apply to a family law affected income stream.

Note: For family law affected income streams, see section 1120A.

Value of income stream

(3) Subject to this section, the value of the person’s income stream is, for the purposes of the assets test, worked out as follows:

(a) for a day in the period beginning on the person’s assessment day for the income stream and ending at the end of the person’s threshold day for the income stream:

(b) for a day after the person’s threshold day for the income stream:

Note: For threshold day, see subsections (9) and (10). For purchase amount, see subsection (12).

(4) The Secretary may, by legislative instrument, determine one or more methods for working out the value of an asset‑tested income stream (lifetime) for persons to whom this section applies.

(5) If one or more amounts worked out in accordance with the instrument are higher than the amount under subsection (3), then the value of the person’s income stream is, for the purposes of the assets test, the highest of those amounts.

Assessment day

(6) Subject to subsection (7), for the purposes of this section, a person’s assessment day for an asset‑tested income stream (lifetime) is:

(a) if the income stream arises under arrangements that are regulated by the Superannuation Industry (Supervision) Act 1993—the latest of the following:

(i) the day the person first satisfies a condition of release that is mentioned in regulations under the Superannuation Industry (Supervision) Act 1993 and is of a kind determined in an instrument under subsection (8);

(ii) the day the first amount was paid for the income stream;

(iii) the day the person acquired the income stream (if no amount is identifiable as having been paid for the income stream); or

(b) otherwise:

(i) if the commencement day in relation to the income stream is before the day the person reaches pension age—the commencement day in relation to the income stream; or

(ii) in any other case—the latest of the day the first amount was paid for the income stream, the day the person reaches pension age and the day the person acquired the income stream (if no amount is identifiable as having been paid for the income stream).

Note: For commencement day, see subsection 9(1).

(7) For the purposes of this section, a person’s assessment day for an asset‑tested income stream (lifetime) that reverted to the person as a reversionary beneficiary is:

(a) if the income stream reverted to the person on or after the commencement day in relation to the income stream—the day of the reversion; or

(b) if the income stream reverted to the person before the commencement day in relation to the income stream and the income stream arises under arrangements that are regulated by the Superannuation Industry (Supervision) Act 1993:

(i) if the commencement day in relation to the income stream is before the day the person first satisfies a condition of release that is mentioned in regulations under the Superannuation Industry (Supervision) Act 1993 and is of a kind determined in an instrument under subsection (8)—the commencement day in relation to the income stream; or

(ii) in any other case—the later of the day of the reversion and the day the person first satisfies a condition of release that is mentioned in regulations under the Superannuation Industry (Supervision) Act 1993 and is of a kind determined in an instrument under subsection (8); or

(c) if the income stream reverted to the person before the commencement day in relation to the income stream and the income stream does not arise under arrangements that are regulated by the Superannuation Industry (Supervision) Act 1993:

(i) if the commencement day in relation to the income stream is before the day the person reaches pension age—the commencement day in relation to the income stream; or

(ii) in any other case—the later of the day of the reversion and the day the person reaches pension age.

Note: For commencement day, see subsection 9(1).

(8) The Secretary may, by notifiable instrument, determine a kind of condition of release for the purposes of subparagraphs (6)(a)(i) and (7)(b)(i) and (ii).

Threshold day

(9) Subject to subsection (10), for the purposes of this section, a person’s threshold day for an asset‑tested income stream (lifetime) is worked out using the following method statement:

Method statement

Step 1. Work out, in relation to a man aged 65 on the person’s assessment day for the income stream, the number of expected years remaining in the man’s life, by reference to the instrument in force under subsection (11) on that assessment day, rounded down to the nearest whole number of years.

Note: The number of expected years remaining in a 65‑year old man’s life is used no matter how old the person is and whether the person is a man or a woman.

Step 2. Increase the number of years at step 1 by 65.

Step 3. Subject to step 4, the person’s threshold day for the income stream is the later of the following days:

(a) the day before the person reaches the age in years worked out at step 2;

(b) the last day of the 5‑year period beginning on the person’s assessment day for the income stream.

Step 4. If the income stream is a joint income stream, the person’s threshold day for the income stream is the later of the following days:

(a) the day before the oldest of the persons, to whom a proportion of the income stream is attributable on the person’s assessment day for the income stream, reaches the age in years worked out at step 2;

(b) the last day of the 5‑year period beginning on the person’s assessment day for the income stream.

(10) If:

(a) an asset‑tested income stream (lifetime) reverts to a person as a reversionary beneficiary on the death of another person; and

(b) before the death of the other person, the other person’s assessment day for the income stream had occurred;

then:

(c) if, before the death of the other person, the other person’s threshold day for the income stream had not occurred—the reversionary beneficiary’s threshold day for the income stream is taken to be the day that would have been the other person’s threshold day if the other person had not died; and

(d) if, before the death of the other person, the other person’s threshold day for the income stream had occurred—the reversionary beneficiary’s threshold day for the income stream is taken to be the other person’s threshold day; and

(e) if the reversionary beneficiary’s assessment day for the income stream worked out under subsection (7) is on or after the reversionary beneficiary’s threshold day for the income stream worked out under paragraph (c) or (d) of this subsection:

(i) paragraph (3)(a) is taken not to apply to the reversionary beneficiary and the income stream; and

(ii) paragraph (3)(b) is taken to apply to the reversionary beneficiary and the income stream for a day that is on or after the reversionary beneficiary’s assessment day for the income stream.

(11) The Secretary may make a notifiable instrument for the purposes of step 1 of the method statement in subsection (9). If there are Life Tables published by the Australian Government Actuary, the Secretary must be satisfied that the instrument is consistent with the latest of those Life Tables.

Purchase amount

(12) For the purposes of this section, the purchase amount for the income stream is:

(a) subject to paragraph (b)—if one or more amounts have been paid for the income stream—the sum of:

(i) each compounded amount in relation to an amount paid for the income stream before the person’s assessment day for the income stream, as worked out under subsection (13); and

(ii) each amount paid for the income stream on or after that assessment day;

less any commuted amounts; or

(b) if the circumstances determined in an instrument under subsection (15) apply in relation to the income stream—the amount worked out in accordance with that instrument.

(13) A compounded amount in relation to an amount paid for the income stream before the person’s assessment day for the income stream is worked out by applying the following formula for each relevant adjustment day (from the earliest to the latest):

where:

compounded amount for the relevant adjustment day means:

(a) for the earliest relevant adjustment day—the amount that was paid for the income stream; or

(b) for each later relevant adjustment day—the result of applying the formula for the most recent earlier relevant adjustment day.

relevant above threshold rate for the relevant adjustment day means:

(a) if the relevant adjustment day is a 12‑month anniversary of the relevant payment day—the rate applicable under subsection 1082(2) for that relevant adjustment day, expressed as a decimal fraction; or

(b) if the relevant adjustment day is the assessment day—the amount worked out in accordance with the following formula:

relevant adjustment day means each of the following:

(a) each 12‑month anniversary of the relevant payment day that happens before the person’s assessment day;

(b) the person’s assessment day.

Note: For assessment day, see subsections (6) and (7).

relevant number of days means the number of days in the period:

(a) beginning on the day after:

(i) if the assessment day is at least 12 months after the relevant payment day—the most recent 12‑month anniversary of the relevant payment day; or

(ii) otherwise—the relevant payment day; and

(b) ending at the end of the assessment day.

relevant payment day means the day that the amount was paid for the income stream.

(14) If the income stream is a joint income stream, then, for the purposes of applying subsections (12) and (13) to the person and to a day covered by subsection (1), an amount paid for the income stream is taken to be that amount multiplied by the proportion of the income stream attributable to the person on that day.

(15) The Secretary may make a legislative instrument for the purposes of paragraph (12)(b).

1120A Value of asset‑tested FLA income streams

(1) This section applies to family law affected income streams.

(2) The value of an income stream that is not a defined benefit income stream is, for the purposes of the assets test, determined by the Secretary.

(3) The value of an income stream that is a defined benefit income stream is, for the purposes of the assets test, determined by the Secretary.

(4) In making a determination under subsection (2) or (3), the Secretary must comply with any relevant decision‑making principles in force under subsection (5).

(5) The Secretary may, by legislative instrument, formulate principles (decision‑making principles) to be complied with by him or her in making decisions under:

(a) subsection (2); or

(b) subsection (3).

1120B Value of partially asset‑test exempt income streams

(1) This section applies to income streams covered by paragraph 1118(1)(da).

(2) The value of such an income stream is, for the purposes of paragraph 1118(1)(da), worked out as follows:

(a) if the income stream is a family law affected income stream—under section 1120A;

(b) otherwise—under section 1119;

as if the income stream were an asset‑tested income stream to which that section applied.

1120C Value of superannuation reserves for superannuation funds of 4 members or less

(1) This section applies in calculating the value of a person’s investment in a superannuation fund if:

(a) the fund has 4 or fewer members; and

(b) the fund has reserves (within the meaning of section 115 of the Superannuation Industry (Supervision) Act 1993).

Note: The value of a person’s investment in a superannuation fund is only included in the value of the person’s assets after the person reaches pension age or starts to receive a pension or annuity out of the fund (see paragraph 1118(1)(f)).

(2) Despite paragraph 1118(1)(h), the value of the person’s investment in the superannuation fund includes the following amount:

(3) However, if it is not possible to work out the person’s interest in the superannuation fund, the value of the person’s investment in the fund includes the following amount:

1121 Effect of charge or encumbrance on value of assets

(1) If there is a charge or encumbrance over a particular asset of the person, the value of the asset, for the purposes of calculating the value of the person’s assets for the purposes of this Act (other than Division 1B of Part 3.10), is to be reduced by the value of that charge or encumbrance.

Note: This section does not apply to an asset to which section 1121A (primary production assets) applies.

(1A) Subsection (1) does not apply to a charge that arises under section 1138.

Note: See subsection (5) for a charge that arises under section 1138.

(2) Subsection (1) does not apply to a charge or encumbrance over an asset of a person to the extent that:

(a) the charge or encumbrance is a collateral security; or

(b) the charge or encumbrance was given for the benefit of a person other than the person or the person’s partner.

(3) Subsection (1) does not apply to a charge or encumbrance over assets that are to be disregarded under section 1118.

(3A) Subsection (1) does not apply to an asset that is an asset‑tested income stream (long‑term).

(3B) Subsection (1) does not apply to an asset that is a partially asset‑test exempt income stream (within the meaning of section 1118).

(3C) Subsection (1) does not apply to an asset that is an asset‑tested income stream (lifetime).

(4) If:

(a) there is a charge or encumbrance over assets; and

(b) the charge does not arise under section 1138; and

the amount to be deducted under subsection (1) is:

(5) If:

(a) a person is or was participating in the pension loans scheme; and

(b) either:

(i) the person’s real assets are subject to a charge under section 1138; or

(ii) if the person is a member of a couple—the couple’s real assets are subject to a charge under section 1138;

then the value of those real assets, for the purposes of calculating the value of the person’s assets for the purposes of this Act (other than Division 1B of Part 3.10), is to be reduced by the amount of the debt owed by the person under section 1135 because of that participation.

Note: If there are other charges or encumbrances over any of those real assets, there may be a further reduction under subsection (1) in the value of those assets.

(6) This section has effect subject to sections 1145A to 1157 (special residences).

1121A Effect of certain liabilities on value of assets used in primary production

(1) For the purposes of working out the value of a person’s assets under this Act, if:

(a) the person is:

(i) a primary producer; or

(ii) a family member of a primary producer; and

(b) the person has assets (including real property) that are, in the Secretary’s opinion, used for the purposes of carrying on that primary production; and

(c) the person also has liabilities that are, in the Secretary’s opinion, related to the carrying on of the primary production;

then:

(d) section 1121 does not apply in relation to the assets referred to in paragraph (b); and

(e) those assets are taken to be a single asset (in this section called the primary production asset); and

(f) the value of that single asset is worked out under subsection (2).

Note: For family member see subsection 23(1).

(2) The value of a person’s primary production asset is worked out in the following way:

Method statement

Step 1. Add together the value of the assets referred to in paragraph (1)(b): the result is called the unencumbered value.

Step 2. Add together the value of the liabilities referred to in paragraph (1)(c): the result is called the total liability.

Step 3. Take the total liability away from the unencumbered value: the result is the value of the person’s primary production asset.

(3) If the result under Step 3 of the Method statement is less than nil, the value of the primary production asset is taken to be nil.

1121B Value of life policy

(1) This section applies in relation to a person and a day (the assessment day) if:

(a) the person has reached pension age; and

(b) the person is the owner (within the meaning of subsection 10(2) of the Life Insurance Act 1995) of a life policy covered by paragraph 9(1)(a) or (b) of that Act; and

(d) the sum of each amount paid for the policy (regardless of who paid the amount) in any period of 12 months exceeds 15% of the maximum death benefit that would be payable in the event of the death of the person whose life is insured on the assessment day.

(2) The value of the life policy on the assessment day is, for the purposes of the assets test, the higher of the following:

(a) the amount that would be payable to the person covered by paragraph (1)(b) if the policy were surrendered on that day;

(b) the sum of each amount paid for the policy by the person covered by paragraph (1)(b), less any commuted amounts.

1122 Loans

If a person lends an amount after 27 October 1986, the value of the assets of the person for the purposes of this Act includes so much of that amount as remains unpaid but does not include any amount payable by way of interest under the loan.

Division 2—Disposal of assets

1123 Disposal of assets

(1) For the purposes of this Act, a person disposes of assets of the person if:

(a) the person engages in a course of conduct that directly or indirectly:

(i) destroys all or some of the person’s assets; or

(ii) disposes of all or some of the person’s assets; or

(iii) diminishes the value of all or some of the person’s assets; and

(b) one of the following subparagraphs is satisfied:

(i) the person receives no consideration in money or money’s worth for the destruction, disposal or diminution;

(ii) the person receives inadequate consideration in money or money’s worth for the destruction, disposal or diminution;

(iii) the Secretary is satisfied that the person’s purpose, or the dominant purpose, in engaging in that course of conduct was to obtain a social security advantage.

Note: Under Division 4 of Part 3.18A, certain transfers of assets to special disability trusts can be taken not to be disposals of the assets (but this can be subject to a limit on the aggregate value of the transfers).

(2) For the purposes of subsection (1), a person has a purpose of obtaining a social security advantage if the person has a purpose of:

(a) obtaining a social security pension, a social security benefit, a parenting allowance, a service pension, income support supplement or a veteran payment or enabling the person’s partner or someone else of whom the person is a family member to obtain such a pension, benefit, allowance, supplement or payment, or a youth training allowance; or

(b) obtaining a social security pension, a social security benefit, a parenting allowance, a service pension, income support supplement or a veteran payment, or enabling the person’s partner to obtain such a pension, benefit, allowance, supplement or payment, or a youth training allowance, at a higher rate than would have otherwise been payable; or

(c) ensuring that the person or the person’s partner would be qualified for fringe benefits for the purposes of this Act or the Veterans’ Entitlements Act.

(3) For the purposes of subsection (1), the value of a person’s granny flat interest is to be taken not to be consideration received by the person if the interest was acquired or retained before 22 August 1990.

Note: For granny flat interest see subsection 11(9).

(4) If, under subsection 1147(1A), the value of a granny flat interest is less than the amount paid, or agreed to be paid, for the interest, then, for the purposes of this section, so much of the amount paid, or agreed to be paid, as exceeds the value of the interest is not consideration for the interest.

Note: For granny flat interest see subsection 11(9).

1124 Amount of disposal or disposition

If a person disposes of assets, the amount of the disposal or disposition is:

(a) if the person receives no consideration for the destruction, disposal or diminution—an amount equal to:

(i) the value of the assets that are destroyed; or

(ii) the value of the assets that are disposed of; or

(iii) the amount of the diminution in the value of the assets whose value is diminished; or

(b) if the person receives consideration for the destruction, disposal or diminution—an amount equal to:

(i) the value of the assets that are destroyed; or

(ii) the value of the assets that are disposed of; or

(iii) the amount of the diminution in the value of the assets whose value is diminished;

less the amount of the consideration received by the person in respect of the destruction, disposal or diminution.

Note: If subsection 1209ZA(2) applies in relation to the transfer of an asset to a special disability trust, that subsection has the effect of reducing the amount of the disposal or disposition.

1124A Disposal of assets in pre‑pension years—individuals

(1A) This section applies only to disposals of assets that took place before 1 July 2002.

(1) If:

(a) a person is not a member of a couple when the person claims a pension, benefit or payment of a kind referred to in subsection 11(10A); and

(b) the person has, during a pre‑pension year of the person, disposed of an asset of the person; and

(c) the amount of that disposition, or the sum of that amount and of the amounts (if any) of other dispositions of assets previously made by the person during that pre‑pension year, exceeds the disposal limit;

then, for the purposes of determining whether a pension, benefit or payment is payable to the person, there is to be included in the value of the person’s assets for the period of 5 years that starts on the day on which the disposition took place:

(d) the amount by which the sum of the amount of the first‑mentioned disposition of assets and of the amounts (if any) of other dispositions of assets previously made by the person during that pre‑pension year exceeds the disposal limit; or

(e) the amount of the first‑mentioned disposition;

whichever is the lesser amount.

Note 1: For disposes of assets see section 1123.

Note 2: For amount of disposition see section 1124.

Note 4: If a pension or benefit is payable to the person, section 1125 operates to determine the rate of payment and section 1124A ceases to apply to the person.

(3) In this section:

disposal limit means:

(a) in relation to assets disposed of on or after 1 March 1986 and before 1 March 1991—$2,000; and

(b) in relation to assets disposed of on or after 1 March 1991—$10,000.

1125 Disposal of assets in pension years—individuals

(1) If, on or after 1 March 1986 and before 1 July 2002:

(a) a person who is not a member of a couple has, during a pension year of the person, disposed of an asset of the person; and

(b) the amount of that disposition, or the sum of that amount and of the amounts (if any) of other dispositions of assets previously made by the person during that pension year, exceeds the disposal limit;

then, for the purposes of this Act, there is to be included in the value of the person’s assets for the period of 5 years that starts on the day on which the disposition takes place:

(c) the amount by which the sum of the amount of the first‑mentioned disposition of assets, and of the amounts (if any) of other dispositions of assets previously made by the person during that pension year, exceeds the disposal limit; or

(d) the amount of the first‑mentioned disposition;

whichever is the lesser amount.

Note 1: For disposes of assets see section 1123.

Note 2: For amount of disposition see section 1124.

(3) In this section:

disposal limit means:

(a) in relation to assets disposed of on or after 1 March 1986 and before 1 March 1991—$2,000; and

(b) in relation to assets disposed of on or after 1 March 1991—$10,000.

1125A Disposal of assets in pre‑pension years—members of couples

(1A) This section applies only to disposals of assets that took place before 1 July 2002.

(1) Subject to subsections (3), (4) and (5), if:

(a) a person has disposed of an asset; and

(b) the person is a member of a couple when the person or the person’s partner claims a pension, benefit or payment of a kind referred to in subsection 11(10A) or when the person’s partner claims a youth training allowance; and

(i) during a pre‑pension year of the person; or

(ii) if the person has not claimed a pension, benefit or payment of a kind referred to in subsection 11(10A) but the person’s partner has claimed such a pension, benefit or payment or has claimed a youth training allowance—during a pre‑pension year of the person’s partner; and

(d) the amount of that disposition, or the sum of that amount and the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during that pre‑pension year, exceeds the disposal limit;

then, for the purposes of determining whether a pension, benefit, payment or allowance is payable to the person:

(e) there is to be included in the value of the person’s assets for the period of 5 years that starts on the day on which the disposition took place:

(i) 50% of the amount by which the sum of the amount of the first‑mentioned disposition and of the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during that pre‑pension year exceeds the disposal limit; or

(ii) 50% of the amount of the first‑mentioned disposition;

whichever is the lesser amount; and

(f) there is to be included in the value of the assets of the person’s partner for the period of 5 years that starts on the day on which the disposition took place:

(ii) 50% of the amount of the first‑mentioned disposition;

whichever is the lesser amount.

Note 1: For disposes of assets see section 1123.

Note 2: For amount of disposition see section 1124.

Note 4: If a pension or benefit is payable to the person, section 1126 operates to determine the rate of payment and section 1125A ceases to apply to the person.

(3) If:

(a) amounts are included under subsection (1) in the value of a person’s assets who is a member of a couple and in the assets of the person’s partner because of a disposition of an asset by the person; and

(b) the person and the person’s partner cease to be members of the same couple;

any amount that was included in the value of the person’s former partner’s assets because of that disposition is to be included in the value of the person’s assets.

(4) If:

(a) an amount is included under subsection (1) in the value of the assets of a person who is a member of a couple and the value of the assets of the person’s partner because of a disposition of an asset by the person; and

(b) the person dies;

an amount is not to be included in the value of the assets of the person’s partner because of that disposition.

(5) If:

(b) the partner dies;

any amount that would, if the partner had not died, be included in the value of the partner’s assets because of the disposition is to be included in the value of the person’s assets.

(6) In this section:

disposal limit means:

(a) in relation to assets disposed of on or after 1 March 1986 and before 1 March 1991—$4,000; and

(b) in relation to assets disposed of on or after 1 March 1991—$10,000.

1126 Disposal of assets in pension years—members of couples

(1) Subject to subsections (3) and (4), if, on or after 1 March 1986 and before 1 July 2002:

(a) a person who is a member of a couple has disposed of an asset of the person:

(i) during a pension year of the person; or

(ii) if the person is not receiving a pension, benefit or payment of a kind referred to in subsection 11(10) but the person’s partner is receiving such a pension, benefit or payment or is receiving a youth training allowance—during a pension year of the person’s partner; and

(b) the amount of that disposition, or the sum of that amount and the amounts (if any) of other dispositions of assets previously made by the person or the person’s partner during that pension year, exceeds disposal limit;

then, for the purposes of this Act:

(c) there is to be included in the value of the person’s assets for the period of 5 years that starts on the day on which the disposition takes effect:

(ii) 50% of the amount of the first‑mentioned disposition;

whichever is the lesser amount; and