Self-employment as an approved activity to satisfy mutual obligation requirements 001-09070050

Item

Scenario

1

Business income and hours meet requirements

Example 1:

Nahid receives Parenting Payment (PP) as a single principal carer, is self-employed and currently works 30 hours a fortnight. Nahid declares net business income of $731.00 per fortnight. This is higher than national minimum wage of $24.10 an hour for 30 hours. Nahid fully satisfies the sufficient work test and mutual obligation requirements.

Example 2:

Dave receives JobSeeker Payment (JSP) as a principal carer, is self-employed and currently works 20 hours a fortnight. Dave also studies part-time for 10 hours a fortnight. Dave declares a net business income of $482.00 per fortnight. This is equivalent to the national minimum wage of $24.10 an hour for 20 hours per fortnight. Dave fully satisfies the remuneration test for the self-employment component, and fully satisfies the mutual obligation requirements through this combination of approved study and self-employment of at least 30 hours per fortnight.

2

Hours of work do not meet requirements

Example 1:

Jeff receives JobSeeker Payment (JSP) and has been assessed as having a partial capacity to work (PCW) between 15-22 hours per week. To fully meet the mutual obligation requirements Jeff needs to work 30 hours per fortnight and the net business income is equal to the national minimum wage for the minimum number of required hours. Jeff works for 20 hours a fortnight in the business and declares net business income of $740.00 a fortnight. This is an hourly rate of $37.00.

Jeff's applicable hourly rate to meet mutual obligation requirements is the minimum wage of $24.10 an hour. Jeff will satisfy the remuneration test if the net business income is at least $723.00 per fortnight, which is 30 hours at $24.10. As Jeff earns more than this, the remuneration test is satisfied.

However, Jeff is working 20 hours a fortnight rather than the minimum 30 hours required, so the sufficient work test is not met. Jeff will need to undertake additional work hours or another approved activity for at least 10 hours per fortnight to fully meet his requirements.

Example 2:

Sara receives Parenting Payment (PP) at the single rate and has compulsory part-time mutual obligation requirements as Sara's youngest dependent child is 7 years old. Sara owns and operates a cleaning business and has advised Services Australia of working 25 hours a fortnight and that the net business income is $750.00 per fortnight, which is $30.00 per hour. Sara will satisfy the remuneration requirement if earning at least $723.00 per fortnight, equal to 30 hours at $24.10 per hour. Sara earns more than this, so the remuneration requirement is satisfied.

However, Sara is not working the minimum number of hours required - 30 hours per fortnight - so the hour requirement for the sufficient work test is not satisfied. Sara will need to undertake an additional 5 hours of work, or another approved activity for at least 5 hours per fortnight to fully meet her requirements.

3

Business income does not satisfy remuneration requirements

Example 1:

Julie has a viable and ongoing home based child-care business that is operating on a full-time basis. However, it is operating at a loss or below the national minimum wage due to significant tax deductions available. In this case, the income is assessed as not meeting the job seeker's mutual obligation requirements (of $723.00 per fortnight based on 30 hour per fortnight at the national minimum wage of $24.10 per hour). Julie will not be considered to have satisfied the mutual obligation requirements. Julie will be required to look for suitable paid work.

Example 2:

Paula receives JobSeeker Payment (JSP) as a principal carer and has compulsory part-time mutual obligation requirements as Paula's youngest dependent child is 12 years old. Paula owns and operates a home-based child care business and has advised Services Australia of working 40 hours a fortnight and the net business income is $600 per fortnight, this equals $15.00 per hour. Paula will satisfy the remuneration requirement if nett earnings are at least $723.00 per fortnight, equal to 30 hours at $24.10 per hour.

Although Paula is satisfying the minimum hour requirements, due to working 40 hours per fortnight, Paula is not currently meeting the remuneration requirement. Paula will need to undertake the additional number of hours required to meet the target remuneration amount of $723.00 per fortnight.

4

Job seeker is overseas for less than 6 weeks during period of assessment

Example 1:

Brian receives Parenting Payment (PP) at the single rate. Brian started a business as a courier and this self-employment has been approved as an activity to meet the mutual obligation requirements. Brian has provided profit and loss statements every 3 months for an assessment of the net business income, until the income tax return is available for an annualised assessment.

Brian is travelling overseas for 5 weeks and contacts Services Australia to advise of these plans and understands the PP will continue during the absence. Brian's business does not generate any income during the 5 weeks overseas.

When Brian returns, the mutual obligation requirements are assessed using a previous profit and loss statement rather than a new profit and loss statement that reflects the decreased business income while Brian was overseas. Brian will need to be working a minimum of 30 hours per fortnight to meet the part-time mutual obligation requirements as a principal carer.

5

Job seeker is overseas for more than 6 weeks during period of assessment

Example 1:

Brian receives Parenting Payment (PP) at the single rate. Brian started a business as a courier and this self-employment has been approved as an activity to meet the mutual obligation requirements. Brian is travelling overseas and the PP is portable for a full 7 weeks. Brian's business does not generate any income during the time overseas.

When Brian returns, the current rate of business income is zero as long as Brian continues to perform no work in the business. Once Brian begins work in the business again, a new annual rate will be calculated using an estimate based on the earnings over a normal year. For example, if Brian has a net estimated business income of $5,000 for 13 weeks, then the annualised net business income is $20,000. Brian will need to be working a minimum of 30 hours per fortnight to meet the mutual obligation requirements as a principal carer.