Income Test for illness separated or partner in prison customers 108-03010060

Customers who are unable to live together due to ill health may be entitled to payment of their pension at the single rate while they are living separately. However, the combined income test (and if eligible the transitional rules income test) and assets test is still applied to both members of the couple in determining the rate payable.

If the partner is in prison, the customer maybe entitled to payment at a higher rate until the partner's release. However, the combined income test and assets test is still applied to both members of a couple in determining the rate payable. Note: the Guide to Social Security Law clarifies that a person detained in an Immigration Detention Centre is not the same as a person in prison. See Prison admission process and claims during incarceration for more information.

The income test has different applications for the following pension 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 assets test with the one resulting in the lowest rate of pension being applicable to that person.

Customers receiving Age Pension (Blind) or Disability Support Pension (Blind) may be exempt from the means test, but income and assets details are required to determine the partner's entitlement to payments or if the customer is claiming rent assistance.

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.

If the customer or their partner has employment income, additional deductions may apply:

• For customers of work force age, apply the Working Credit rules before applying the income test
• For pensioners of Age Pension age, if eligible, apply the Work Bonus before applying the income test. The Work Bonus is required to be applied prior to any Working Credit calculations

If the customer's, or partner's, income reduces their fortnightly rate to nil and some of that income is employment income, the person'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.

The procedure, Exempt income, provides information about assessing income that is exempt from the income test.

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 is treated as exempt income.

A customer may have their pension rate calculated using the transitional rules. The transitional rules will continue to apply for as long as the customer receives a higher rate of payment under the old Income Test (pre 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. It is possible for their partner's income support payment rate to be calculated under a different income test, that is, the customer could receive a higher rate under the old income test and their partner may have been granted after 20 September 2009 and therefore only eligible to be paid under the new income test.