Income Test for single pension customers 108-03010010

This procedure does not contain information for:

• Disability Support Pension (DSP) customers:
• who are under 21 years, with no dependent children and with affecting income at 19 September 2009, or
• who are under 21 years with no dependent children
• Parenting Payment Single (PPS) customers

The income test applies differently for each of the following customers:

• single pensioners
• partnered pensioners
• partnered pensioners where the partner is on an allowance payment
• pensioners separated due to ill health
• pensioners with children - if the pensioner is paid under the transitional rules for pension customers at 20 September 2009 and the customer has children, an extra income amount per child may be deducted before the rate of pension payable is calculated

A separate rate is calculated under both the income test and the assets test. The lowest rate calculated is the rate payable to the customer.

Customers receiving Age Pension (Blind) or DSP (Blind) may be exempt from the means test, but income and assets details are required if the customer wishes to apply for Rent Assistance (RA).

Customers who are granted a pension under an International Agreement and are in receipt of a pension or superannuation payment from that agreement country, may be subject to a direct dollar for dollar rate deduction.

Certain compensation payments or New Zealand Pension payments may also result in a direct deduction.

Additional deductions may apply if the customer is of:

• workforce age, apply the Working Credit rules before applying the Income Test
• Age Pension age and receiving an income support payment other than PPS. Apply the Work Bonus to their eligible income which is:
• employment income, and
• self-employment income the customer has earned through personal exertion

If the customer's income reduces their fortnightly rate to nil and some of that income is employment income, the customer's payment may remain current at nil rate for up to 12 fortnights, known as the employment income nil rate period. Customers also in receipt of Family Tax Benefit (FTB) Part A will be subject to the FTB Part A income test during this period and will be required to provide an income estimate within 21 days of commencing the period or their FTB payment will cancel.

For children born or entrusted to care on or after 1 October 2016, Parental Leave Pay (PPL) is counted as ordinary income for pensions. PPL for children who were born or entrusted to care prior to 1 October 2016 was treated as exempt income.

The online estimator options can be used to estimate the effect of a change in income on a customer's Centrelink payments.

A customer may have their pension rate calculated using the transitional rules. The transitional rules will apply if the customer receives a higher rate of payment under the old Income Test (pre to 20 September 2009) with no Work Bonus applied compared to the Income Test in place from 20 September 2009 which does include the Work Bonus. If the customer's pension is paid under the transitional rules, the Work Bonus is not used to determine their rate entitlement under the pre 20 September 2009 Income Test.

An exempt asset is one that is disregarded under the Assets Test, irrespective of its value. An exempt asset may however have assessable income. For example, the proceeds from the sale of the principal home are an exempt asset but the proceeds when invested are deemed for income.

There are four broad categories of exempt income. Although exempt income is disregarded as income the amount received may be an assessable asset and if the funds are invested, deeming provisions apply.

National Disability Insurance Scheme (NDIS) funds received from the National Disability Insurance Agency (NDIA), whether received periodically or as a lump sum, including interest accrued, which are deposited into an account specifically for the purpose of managing the customer's NDIS plan, are exempt from the Income and Assets Tests and deeming. They are not required to be reported or if reported should not be taken into account in the income and asset assessment.

Note: Parental Leave Pay (PPL) is not treated as exempt income for children born or entrusted to care on or after 1 October 2016. PPL was treated as exempt income for children who were born or entrusted to care prior to 1 October 2016.