Youth Allowance (YA) and ABSTUDY Parental Income Test (PIT) reviews 110-07060060

The PIT assesses the combined income of the parent(s)/guardian(s) in the base tax year. As the base tax year changes each calendar year, parental income must be updated annually. This information is collected in the annual PIT review.

Annual Parental Income Test (PIT) reviews are conducted from September each calendar year to determine dependent Youth Allowance (YA) and ABSTUDY customers’ continuing entitlement to payment.

Annual PIT review letters are issued to dependent YA and ABSTUDY customers except when they:

• are exempt from the PIT
• have had taxable income details copied from the parent(s)/guardian(s) Centrelink file via the PIT Copy process
• will turn 22 years of age before the Entitlement Period Start Date (EPSD) of the entitlement period that covers 1 January, or
• submitted PIT information for a new claim on/after 1 September using the Advise Parental Income (API) online service. In this circumstance, parental income for both relevant financial years is collected during the claim process

The system automatically issues an annual PIT review letter on the customer's next Entitlement Period End Date (EPED), where the customer:

• has their payment cancelled before the annual PIT review letters being issued, and later restored after that date
• claims YA/ABSTUDY after the annual PIT review letters have been issued, and have not provided their parental income details for the current financial year, or
• was previously exempt from the PIT and their exemption end after the annual PIT review letters have been issued

The annual PIT review letter includes a One Time Access Code (OTAC) that parent(s)/guardian(s) can use to respond using the API online service. See Completing Parent(s)/Guardian(s) details for the Base Tax Year and Current Tax Year (MOD JY) for more details.

As the OTAC is linked to the review activity, the parent(s)/guardian(s) can use the OTAC multiple times, until the review has been completed.

When the parent(s)/guardian(s) provides the PIT information to Services Australia for the annual PIT review, the:

• information is assessed, and
• the customer's record is updated

Information returned via the API online service will usually be automatically applied to the customer's record.

If the parental income information is not supplied for an annual PIT review:

• YA customers are:
• issued a reminder notice, 28 days after the issue date of the initial review letter
• suspended YAR (Failed to return PIT review form) if the information is not supplied within 21 days after the reminder notice is issued, unless the parent(s)/guardians(s) request an extension to lodge the review details
• cancelled PIA (Parental income and assets not provided) if the information is not supplied and recorded by 31 December
• ABSTUDY customers:
• are not issued a reminder notice
• will stop receiving any means tested ABSTUDY payments from 1 January, if the information is not supplied and recorded by 31 December

A change in circumstance PIT review is conducted when there is a change in circumstances for a parent/ guardian of a dependent YA or ABSTUDY customer. See Changes which may affect the Parental Income Test (PIT) for reasons a change of circumstance PIT review may be issued. The system automatically issues a change of circumstance review letter following certain updates to the parent(s)/guardian(s) record.

The PIT review letter:

• is issued via the customer's preferred contact channel, and
• includes a One Time Access Code (OTAC). This allows the parent(s)/guardian(s) to access the Advise Parental Income (API) online service

In limited circumstances, customers may also receive a YA/ABSTUDY Current Family Circumstances (SY012E) or Parent(s)/Guardian(s) details (Mod JY) form for completion.

Some PIT reviews will be allocated for manual processing and have no information pre-populated on the Household Income and Assets (NHI) screen.

This can occur when:

• there is a mismatch in the parental information, for example, a change to the parent(s)/guardian(s) relationship status, or
• taxable income has not been collected through the Advise Parental Income (API) online service

The PIT does not apply if PIT linked parent(s)/guardian(s) receive certain social security benefits, pensions, or Department of Veterans' Affairs payments.

If the parent(s)/guardian(s) payment is suspended or cancelled, the PIT exemption no longer applies and the system automatically issues a PIR review.

The PIR review letter:

• is issued via the customer's preferred contact channel, and
• includes a One Time Access Code (OTAC). This allows the parent(s)/guardian(s) access to the Advise Parental Income (API) online service

Note: do not cancel PIR reviews where the parent(s)/guardian(s) payment has been restored or re-granted, and there is a gap in their entitlement. For example, where a parent's payment is SUS/CAN from 1 September and the payment is either restored, or another payment is granted, from 15 September.

As there is a gap in the PIT exemption between 1 September and 15 September, the dependent YA or ABSTUDY rate of payment must be assessed based on the combined parental income for this period.

The PIT does not apply if PIT linked parent(s)/guardian(s) receive certain social security benefits, pensions, or Department of Veterans' Affairs payments.

If the parent(s)/guardian(s) is receiving their income support payment entirely as a Home Equity Access Scheme (HEAS) loan or during an employment income nil rate period, the PIT exemption no longer applies for that period, and the system automatically issues an EIR review.

The EIR review:

• is issued via the customer’s preferred contact channel, and
• includes a One Time Access Code (OTAC). This allows the parent(s)/guardian(s) to access the Advise Parental Income (API) online service

Note: do not cancel EIR reviews.

Verification of parental income is needed:

• in new claims
• when a PIT estimate review date is reached
• if a PIT estimate is unreasonable or doubt exists to the validity of the information given

For PIT reviews, parental taxable income is accepted as actual income where the parent(s)/guardian(s) advise they have received their Notice of Assessment (NOA) issued by the Australian Taxation Office (ATO), and provide the Date of Issue of the NOA via:

• Advise Parental Income (API) service
• MOD JY or SY012, or
• verbally

Parental income details can be verified from the parent(s)/guardian(s) record if actual taxable income is available on the FAO Income for Previous Year (FIPY) screen.

Note: Do not use estimated income recorded on a parent(s)/guardian(s) FIPY screen.

For the PIT, if the parental income is below the tax-free threshold, or they do not need to lodge a tax return, an estimate is recorded as the actual income on the Household Income and Assets (NHI) screen. The parent(s)/guardian(s) must advise of any taxable or other income details for the relevant financial year.

Note: record details where the parent(s)/guardian(s) is providing verified income. Do not record estimated income where a PIT exemption is recorded.

The parent(s)/guardian(s) will be asked to advise of:

• an estimate if unable to provide the actual taxable income
• the date that evidence of income can be provided

See Assessing and coding parental income for ABSTUDY, Assistance for Isolated Children (AIC) and Youth Allowance (YA).

PIT review letters are issued at different times based on the customer's circumstances. For:

• YA customers, annual PIT review letters are issued over a 10 day period based on the customer's Entitlement Period End Date (EPED). Generally, these letters are issued from the first Monday after the September ICT Major Release
• ABSTUDY customers, annual PIT review letters are issued on a single day after the September ICT Major Release
• YA and ABSTUDY customers, change of circumstance, PIR and EIR PIT review letters are issued after the change in circumstance occurs on the parent(s)/guardian(s) record, and ripples to the customer's record

The rate of payment for a dependent YA or ABSTUDY customer is based on their parent(s)/guardian(s) income.

Depending on the parent(s)/guardian(s) income, the assessment may take effect from the following dates:

• For YA:
• the payment period that includes 1 January of the next calendar year
• the first payment period ending after 30 September (the entire period of the first pay period ending after 30 September is affected), if parental income has increased to more than 25% of the base tax year income and more than 25% of the parental income free area, or
• date of notification (if there has been a decrease in parental income that will last for a minimum of 2 years)

Note: while the new assessment may take effect from one of the above dates, any increases to the Parental Income Free Area (PIFA) and Youth Allowance rate will take effect from 1 January each year

• For ABSTUDY:
• 1 January of the next calendar year
• 1 October of the current calendar year, (if parental income has increased to more than 25% of the base tax year income and more than 25% of the parental income free area), or
• date the decrease occurred, (if there has been a decrease in parental income that will last for a minimum of 2 years)

For more information, see Increase or decrease in parental income for Youth Allowance (YA), ABSTUDY and Assistance for Isolated Children (AIC).