Assessment of income for Centrelink payments 108-05000000

Examine the nature, source and purpose of the payment to identify if it should be treated as income assessable for income test purposes. Questions to ask include:

• What is the purpose of the payment (is it for services rendered or earned)?
• Is the amount received periodically or is it recurring?
• Is the amount for the customer's own use or benefit?
• Does the amount received relate to a specific time period?
• What is the source of the payment (such as employer, own business or investments)?

Generally, the social security income test uses gross ordinary income. However, income can be assessed in a variety of ways, depending on its source, characteristics and purpose. For example:

• Employment income uses the gross amount of income for assessment
• Business income uses the net amount after allowable deductions
• Investment income uses a deemed amount of income for assessment under the income test and ignores actual income amounts (unless the investment is exempt from deeming)

The Process page has a list of different types of income and how each is treated.

Customers can add and update personal information (including income and assets) online.

The Social Security Act 1991 defines ordinary income as income that is not an exempt lump sum or maintenance income. That is, income from all sources except exempt lump sums or maintenance.

Other ordinary income is ordinary income that is not employment income. It includes:

• profit from self-employment
• superannuation payments to the person
• payment of compensation, or insurance, because the person cannot earn, or get income, from work. For example, because of sickness or injury
• payment to the person by a former employer because of termination of employment
• children born or entering care on or after 1 October 2016, Parental Leave Pay (PPL) and Dad and Partner Pay (DAP) is counted as ordinary income for income support purposes. Note: Dad and Partner Pay ceased being payable for children born on or after 1 July 2023
• a comparable foreign payment
  For more information on other ordinary income, see relevant:
• Operational Blueprints in Contents and Related links below
• Policy and Legislation in References

Note: other ordinary income plus employment income equals ordinary income.

Income affects payments in the following order:

• Basic rate (plus any add-ons, including Youth Disability Supplement, other than those below)
• Pension Supplement basic amount
• Pension Supplement between basic and minimum amounts ('remaining portion')
• Rent Assistance
• Energy Supplement
• Pension Supplement minimum amount
• Pharmaceutical Allowance

Remote Area Allowance (RAA)

RAA is not reduced by income. Regardless of income received in a fortnight, the customer receives the full entitlement of RAA if they:

• are qualified to receive RAA, and
• continue to qualify for basic rate

If the Pension Supplement minimum amount is payable, the full Energy Supplement is automatically payable.

Bank deposits (regular or irregular), may indicate a customer is receiving assessable income. Investigate these deposits to determine the source, nature or purpose of the funds.

A capital gain is generally not treated as income for social security income support purposes. If a capital loss is made it cannot be offset against other income amounts.

However, capital gains may be assessable (and capital losses included as a business deduction) where they form part of the normal income and expenses of a business. Capital gains will also be assessed as income where they are distributed to a non-controller of a private trust or company.

For family assistance, capital gains are included in a family's adjusted taxable income as assessed by the Australian Taxation Office (ATO). Estimates of taxable income should include any expected capital gains.

Some income amounts are excluded from assessment under legislation (for example, emergency relief) or by policy, based on the characteristics of the amount (monies received to cover expenses), while other amounts receive approval for exemption upon application and approval by the delegate under section 8 (11) - Exempt Lump Sums.

When making an unfavourable decision, speak to the customer:

• explain the decision
• give them the chance to provide more information or evidence
• tell them of their review and appeal rights. If needed, record their application for a formal review of the decision

Make 2 genuine attempts to contact the customer before finalising the decision.