Assessing and coding parental income for ABSTUDY, Assistance for Isolated Children (AIC) Scheme and Youth Allowance (YA) 108-02010090

The Parental Income Test (PIT) is applied to dependent YA, ABSTUDY and Assistance for Isolated Children (AIC) Scheme customers, unless an exemption applies. Services Australia collects parental income from parent(s)/guardian(s).

In most circumstances, the PIT is assessed using actual parental income figures, however in some situations a reasonable estimate of parental income may be accepted.

A reasonable estimate of parental income can be used to apply the PIT where the:

• parent(s)/guardian(s) do not have taxable income that is assessed by the Australian Taxation Office (ATO)
• actual income for the relevant financial year is not known by the parent(s)/guardian(s)

These situations may occur when:

• parent(s)/guardian(s) has been given an extension by the ATO to lodge their tax return, or
• the parent/guardian has lodged their income tax return and the ATO is yet to finalise the income tax assessment, or
• a current tax year assessment is in place

If the Service Officer is in doubt that the estimate is reasonable, they may ask the parent(s)/guardian(s) to give written verification of the estimate. For example:

• a letter from the accountant/tax agent advising an estimate of parental income, or
• an Income Statement provided by the ATO, or a Payment Summary (Group Certificate) and a Commonwealth statutory declaration

If the parent(s)/guardian(s) give a reasonable estimate, they must provide verification of the actual income as soon as it is available.

Debts may be raised for ABSTUDY and AIC Additional Boarding Allowance (ABA) payments if the actual income figures are higher than the estimates provided and the estimate used to calculate their rate of payment was over the Parental Income Free Area.

AIC Scheme debts are usually the responsibility of the applicant, but in some circumstances, may be the responsibility of a third party. This could be an education provider, parent or guardian. Check to confirm which party directly received the overpayment.

For YA, debts are only raised in certain circumstances. Only Service Officers trained in debt raising should make decisions about whether an overpayment for YA has occurred as a result of the application of PIT is a legally recoverable debt.

For staff trained in raising debts, see Raising Parental Income Test (PIT) debts.