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Determining the appropriate tax year for the Parental Income Test (PIT) for Youth Allowance (YA), ABSTUDY and Assistance for Isolated Children (AIC) Scheme 108-02010050

This document outlines the factors in determining the appropriate tax year to use for PIT for dependent YA, ABSTUDY and AIC Scheme Additional Boarding Allowance.

Determine appropriate tax year for the PIT for YA, ABSTUDY and AIC

Step	Action
1	Income details for parent/guardian + Read more ... Customer has details of parent's/guardian's income for the Parental Income Test (PIT). Determine the base tax year. See the Resources page for a base tax year chart. Has the customer indicated the combined parental income has increased or decreased in the year following the base tax year (that is, the current tax year)? Yes, go to Step 2 No, the appropriate tax year is the base tax year. Apply the PIT assessment: for Youth Allowance (YA)/ABSTUDY, see Applying the Parental Income Test (PIT) for ABSTUDY and Youth Allowance (YA) for AIC, see Applying the Parental Income Test (PIT) for Assistance for Isolated Children (AIC) Scheme and record details on a DOC Procedure ends here.
2	Combined parental income + Read more ... Has the combined parental income increased or decreased in the current tax year? Increased, go to Step 3 Decreased, or is expected to do so, go to Step 6
3	Increase in income + Read more ... Ask the customer/parents to supply an estimate (or actual figures, if known) of the combined parental income for the current tax year and request YA/ABSTUDY customers to fully complete the Module JY - Parent(s)/Guardian(s) details - for the Base Tax Year and Current Tax Year for Dependent Youth Allowance or ABSTUDY Customers (Mod JY) or the AIC customer to complete the Assistance for Isolated Children Current Tax Year Assessment (SY042), for this purpose. Calculate the combined parental income for the current tax year. Calculate the combined parental income for the base tax year (To locate these details, check the parents/guardian’s details on the claim form, the Module JY for YA/ABY and SY042 for AIC, or the Household Income and Assets (NHI) screen, if already input on the screen). Calculate the percentage increase in income for the current tax year over that of the base tax year. Is the combined parental income for the current tax year more than 25% greater than that of the base tax year? Yes, go to Step 4 No, go to Step 8
4	Review combined parental income + Read more ... Compare the combined parental income for the current tax year and the customer's or AIC student's Parental Income Free Area (PIFA). Calculate the percentage increase over the PIFA. Is the combined parental income for the current tax year more than 25% greater than the customer's PIFA? Yes, go to Step 5 No, go to Step 8
5	Appropriate tax year + Read more ... For the period ending 30 September, the appropriate tax year is the base tax year. From 1 October, the appropriate tax year is the current tax year. This assessment of current tax year income is termed a 'Current Income assessment'. record details of the percentage calculations on a DOC and that a Current Income assessment will apply from 1 October apply the PIT assessment: for YA/ABSTUDY, see Applying the Parental Income Test (PIT) for ABSTUDY and Youth Allowance (YA) for AIC, see Applying the Parental Income Test (PIT) for Assistance for Isolated Children (AIC) Scheme Procedure ends here.
6	Decrease in income + Read more ... A Current Income assessment applies if there is a substantial decrease in parental income and the drop is expected to last at least 2 years from the later of 1 January or the date of the drop. If there is: a substantial decrease in income, the appropriate tax year is the current tax year not a substantial decrease in income, the appropriate tax year is the base tax year If the customer advises their parental income was impacted by coronavirus (COVID-19) during the 2019/20, 2020/21 or 2021/22 financial years: accept that the decrease will last for 2 years or more no evidence is required where the decrease was due to COVID-19 Note: 'substantially less income' is defined as any decrease that would provide a beneficial outcome to the dependent YA, ABSTUDY or AIC rate of payment, that is, where the rate of payment would be increased by at least $1. If the parental income has, or will, decrease enough for the student to get YA, ABSTUDY or AIC Additional Boarding Allowance, the decrease may be accepted as substantial. A customer can advise up to 13 weeks in advance of the date of the event. For example, they may advise in late October that a decrease in income will occur from 1 January. Where this is the case, it should be considered whether at that time there is sufficient evidence that the decrease will last more than 2 years. If not, a manual follow-up is required closer to the date of event, to ensure that the estimate is still accurate. Ask the parents/guardians of YA/ABSTUDY customer to complete a Mod JY or AIC customer receiving Additional Boarding Allowance to complete the SY042 with their income details for the current tax year. Also ask currently whether the decrease is to last at least 2 years from the later of 1 January in the year of claim or the date of the drop in income. By getting these details up front, general advice can be given about which year's income (base tax year or current tax year) can be used to apply the PIT. However, for a decision to be reviewable, the parent(s) will need to complete and lodge the Module JY/SY042. Note: advise the parents/guardians to provide evidence of the current tax year figures. This may be in the form of copies of Payment Summaries, their Tax Return, or a Notice of Assessment (NOA). If the parent(s)/guardian(s) is (are) using income estimates for their current tax year figures, a statement from their employer or accountant is required to support their claim of a decrease in income. Notice of Assessment (NOA) consideration: A superannuation withdrawal under the First Home Super Saver (FHSS) Scheme is not included as assessable income for calculating the Parental Income Test. The treatment of these withdrawals is different between Services Australia and the Australian Taxation Office (ATO). While the ATO will ensure incomes received by Services Australia in the data exchange will automatically have amounts released under the FHSS excluded, this will not be the case for an individual NOA. For ATO purposes part of the amount released is considered taxable income and will be reflected on an individual’s NOA as taxable income. A customer supplying an NOA who has had a superannuation withdrawal under the FHSS will need to advise the amount considered taxable so this can be manually excluded for Services Australia's purposes. Calculate the combined parental income for the current tax year. Calculate the combined parental income for the base tax year (To locate these details, check the parent(s)/guardian(s) details on the claim form, the Mod JY/SY042 details, or the NHI screen (if already input on the screen). For current tax year assessments, details of reportable superannuation contributions need to be obtained. This includes: discretionary employer superannuation contributions voluntary salary sacrificed amounts, and tax deductible superannuation contributions for the self-employed Is there a substantial decrease in income for the current tax year over that of the base tax year? See Increase or decrease in parental income for Youth Allowance (YA), ABSTUDY and Assistance for Isolated Children (AIC) Scheme Yes, go to Step 7 No, go to Step 9
7	Current tax year + Read more ... The appropriate tax year is the current tax year. This assessment of current tax year income is termed a 'Current Income assessment'. Record advice given and any action taken on a DOC. Record details of the percentage drop on a DOC, reason the parental income has dropped and the date from which the current will take effect. Apply the PIT assessment: for YA/ABSTUDY, see Applying the Parental Income Test (PIT) for ABSTUDY and Youth Allowance (YA) for AIC, see Applying the Parental Income Test (PIT) for Assistance for Isolated Children (AIC) Scheme Procedure ends here.
8	Base tax year + Read more ... The appropriate tax year is the base tax year. Record advice given and any action taken on a DOC. Record details of the calculations of the percentage increase in income. Apply the PIT assessment: for YA/ABSTUDY, see Applying the Parental Income Test (PIT) for ABSTUDY and Youth Allowance (YA) for AIC, see Applying the Parental Income Test (PIT) for Assistance for Isolated Children (AIC) Scheme Procedure ends here.
9	Customer advice and record outcome + Read more ... The appropriate tax year is the base tax year. advise the customer of the review and appeal process record advice given and any action taken on a DOC record details of the calculations of the percentage decrease in income and reasons for non-approval of the Current Income assessment on a DOC apply the PIT assessment: for YA/ABSTUDY, see Applying the Parental Income Test (PIT) for ABSTUDY and Youth Allowance (YA) for AIC, see Applying the Parental Income Test (PIT) for Assistance for Isolated Children (AIC) Scheme