Assessing income for Farm Household Allowance (FHA) 002-20102102

The income test for FHA is linked to the allowance income test for payments.

Money received from the forced sale and/or disposal of livestock may be exempt from the income test for FHA customers, see Table 2.

If the customer is reporting employment income, go to Step 7.

To assess:

• business income, go to Step 2
• overall operating loss of the farm enterprise (farm business losses) on or after 14 November 2020, see Table 3
• farm business losses before 14 November 2020, see Table 4
• loans to a trust or company that may not be subject to deeming, go to Step 5

Otherwise, view income assessment details. Ordinary income may include income from the farm business, employment income, income from financial investments, one-off lump sums and non-farm business income.

To view ordinary income for the customer (and their partner), review information on relevant screens. For help in:

• Process Direct, see Coding income and assets for Centrelink payments and services
• Customer First, see Table 4 of Customer First navigation, common screens and functions

From 1 July 2024, unless indicated that the current financial year is different, the actual income from the latest tax return/s will be used for the claim and assessment under the income test.

Customers may provide a reasonable estimate of their business income in the form of a profit and loss statement to have their entitlement to FHA assessed.

The business income estimate only includes income derived from the farm enterprise or directly related farm business. If the customer has an interest in multiple farming businesses, a separate estimate profit and loss is required for each farming business.

Reconciliation of farm business income against the estimate occurred after the end of the financial year for any payments of FHA up to 30 June (or financial year 2019/20). If the customer wants to revise their estimate for the current financial year, see Business income estimates for Farm Household Allowance (FHA).Before 14 November 2020, separate coding applied. The ordinary income was not recorded in the guided procedure where the:

• customer's farm business is run through a trust and company structure, and
• trust/company had a non-farm income source

Processing of business income reconciliation ended on 30 June 2024.

Go to Step 3.

Check if the customer has income from a trust or company structure. If the income is to be coded:

• with the date of effect before 14 November 2020, go to Step 4
• on or after 14 November 2020, but the date of effect is before 14 November 2020, complete both pre and post transitional coding

If coding income on or after 14 November 2020, before coding the income in the FHA trust and company task in Process Direct, if the customer or partner has any non-farm trust and company income coded on REBS, zero off this income from 14 November 2020.

Code all trust and company income in the FHA Trust and Company (FBI) task in Process Direct. In the:

• customer record, select the FHA workflow > Farmer Data Task Selector to open the Farm Business Income (FBI) task
• FHA Trust and Company (FBI) subtask, select Add to insert the trust and company income details:
• Date of event (DOV). For new claims, the start date of FHA payments, but no earlier than 14 November 2020. Select Edit and enter the correct date
• For current customers, the date of change.
  Note: the DOV cannot be earlier than 14 November 2020
• Code the customer's share of total net farm income and total net non-farm income from all trust and company entities
• Save

If the customer is partnered, navigate to the partner's record via the relationship link and update the partner's share of the total net ordinary income and total net ordinary income from all trust and company entities. If the partners share is $0, this must still be entered on the partner's record.

Review the details and finalise the update:

• Select Assess
• In the Update Header Data, key:
• Receipt Date, the date the customer notifies
• Channel, the channel the information was received
• Select Save

Record details on a DOC using the relevant NCL or NNCL Fast Note.

Go to Step 10.

Any non-farm trust/company income must be coded separately on REBS/BUS before coding the business income estimate if the:

• customer operates their farm business in a trust or company structure, and
• trust/company has non-farm income

Note: use the following coding where the FHA customer is single or partnered with another FHA customer. If the FHA customer is partnered with another ISP recipient, seek coding advice from the FHA Level 2 Helpdesk.

On the REBI screen, in the following fields:

• Real Estate/Business Type: NPT or NST depending on trust/company structure
• Description: NPP TAC Income for FHA
• Address: Customer's address

On the BUS screen, in the following fields:

• Event Date: must equal the assessment date as advised by CAO
• Income: Assessable non-farm income as determined by CAO
• % Income (C/P): coded as per the trust/company ownership

Ensure this coding is zeroed from 14 November 2020.

Record the farm business income estimate in the FHA workflow > Farmer Data Task Selector > Farm Business Income as advised by the customer. Go to Step 6.

If the customer does not operate their farm business in a trust or company structure or receive trust/company non-farm income, record the Farm business income estimate.

A loan from the beneficiary of a trust to that trust, or from a shareholder of a company to that company, is exempt from deeming rules if all the following applies, the:

• loan was used to purchase farm or farm business assets owned by the trustee of the trust or company
• underlying assets of the entity are illiquid in nature (the liquid assets held by the entity are not sufficient to repay the loan), and
• beneficiary loan value does not exceed the original cost of the asset

Refer these cases to a Complex Assessment Officer (CAO).

Note: if a beneficiary loan has been assessed as a farm asset, not a financial asset, it should not be deemed.

Procedure ends here.

Customers can report via:

• online
• using phone self service
• by calling the Farmer Assistance hotline

Genuine attempts must be made to transition customers to report via self service options before assisted reporting is completed, unless an Exception applies.

Does the customer (or their partner) have income from employment?

• Yes, the customer must report every 2 weeks
• No, the customer must report every 6 weeks. Tell the customer they must notify within 14 days of changes in their circumstances that may affect their FHA payments

As FHA is a stimulus reporting payment, all employment income paid must be reported fortnightly.

• Working Credit provisions do not apply for FHA
• Employment income nil rate provisions apply to FHA as under Social Security Law

For more details, see:

• Assessment of employment income for Centrelink payments, and
• Recording and correcting employment income details

Does the customer have ordinary income?

• Yes, go to Step 8
• No, go to Step 9

This is any amount earned, derived or received that was not produced by an activity of the farm enterprise or related farm business.

Income is assessed the same as Social Security payments, according to the type of income.

Examples include (but are not limited to):

• off-farm employment
• interest payments
• rental income
• business income that is not derived from the activities of the farm business (such as sale of shares or water assets owned by the farm business)
• income from financial investments
• foreign income
• income from trusts and companies
• profit from an unrelated business

Go to Step 9.

Code income details using the relevant tasks, screens and guided procedures. See:

• Coding income and assets for Centrelink payments and services, and
• Business income estimates for Farm Household Allowance (FHA)

If the customer has ordinary income, assess eligibility for a deduction in the assessable ordinary income amount. Record the overall operating loss allowable deduction if applicable.

• On or after November 2020, see Table 3
• Before 14 November 2020, see Table 4

Go to Step 10.

After the relevant updates have been finalised:

• The Social Service Plan (SSP) will finalise as part of the activity:
• If the assessment results in a rate change or a change in entitlement, a new SSP will generate. If the result is no change in rate, the last approved SSP will display. See Rate and payment of Farm Household Allowance (FHA)
• If a rate change is expected but an SSP has not been created, from the SSP screen, select Back to return to the activity, make any updates required. See Change of Circumstance of Farm Household Allowance (FHA)
• Tell the customer of any changes to their FHA entitlement due to the change in income. An automatic letter will be issued to advise of any FHA payment changes
• Record details on a DOC, including all income details and any significant decisions

Customers can advise verbally or via a new claim that they have:

• received income from the forced disposal of livestock, and
• the income was received on or after 1 July 2019, and
• they have or intend to deposit the proceeds into a Farm Management Deposit (FMD)

If the customer:

• meets all the above criteria, go to Step 2
• does not meet the above criteria
• the exemption will not apply
• the income received from forced disposal of livestock must still be recorded, go to Step 2
• is contacting about a previous exemption decision for a forced disposal of livestock, normal review and appeal provisions apply. Procedure ends here

Obtain verbal confirmation from the customer, (verification is not needed) about:

• The date the forced disposal of livestock income was received
• The net amount of the forced disposal of livestock income
• If the customer has deposited or will deposit any of the forced disposal of livestock income into an FMD. If so, ask how much
• Is the forced disposal of livestock expected to alter the customer's current farm business income estimate? If so, obtain a new estimate

Has the customer provided all the required information?

• Yes, for a:
• change of circumstances or a new claim with no trust and company, go to Step 4
• new claim with a trust and company assessment, go to Step 3
• to correct previously coded FDL income, go to Step 5
• No:
• tell the customer to call back with the required information
• record details on a DOC on the customer's record
• procedure ends here

For FHA customers from 1 July 2019. Income from the forced disposal of livestock received by a trust or company operating a farm enterprise, may be exempt from the income test.

If the Complex Assessment Officer (CAO) identifies forced disposal of livestock. The CAO must review the claim to determine if any of this amount was or is intended to be deposited into an FMD. Follow up may be required to determine whose name the FMD is held in.

The CAO assessment DOC must contain the:

• net amount of income received from the forced disposal of livestock
• amount deposited or intended to be deposited into an FMD
• name of the person who holds or will hold the FMD
• adjusted income estimate for the trust and company with the exemption applied

To implement the CAO decision, go to Step 4.

Code in Process Direct where the customer has or intends to deposit forced disposal of livestock income into an FMD.

Only the amount the customer has deposited or intends to deposit in an FMD will be exempted income.

In the customer record, select the FHA workflow > Farmer Data Task Selector > Farm Business Income:

• in the Forced Disposal of Livestock subtask, select Add
• Net Profit Amount, key the total net profit of the forced disposal of livestock income
• Date, key the income from forced disposal of livestock was received
• Date of Notification
• Confirmed FMD Amt - key the amount actually deposited into an FMD
• Intended FMD Amt - key the amount the customer intends to deposit into an FMD
• Financial year (auto populated)

To finalise the update:

• select Assess
• in the Update Header Data, key:
• Receipt Date, the date the customer notifies
• Channel, the channel the information was received
• select Save

Go to Step 6.

To correct previously advised forced disposal of livestock income:

• select Edit next to the line that requires correction
• update the relevant data
• select Save

To finalise the update:

• select Assess
• in the Update Header Data, key:
• Receipt Date, the date the customer notifies
• Channel, the channel the information was received
• select Save

Go to Step 6.

Where the Forced Disposal of Livestock subtask has been coded, and the FHA Business Financials (FBF) screen shows the customer is being paid on an estimate, the farm business income estimate must include a corresponding update. This must be updated even if the customer advises the estimate amount will not change.

When determining the new estimate, tell the customer to consider:

• including the net income received from the forced disposal of livestock, and
• excluding the amount of the exemption applied to the amount intended or deposited into an FMD

To update the farm business income estimate, see Business income estimates for Farm Household Allowance (FHA).

Use the FHA workflow to record the amount received from the forced disposal of livestock.

It may be necessary to make several entries on this screen, depending on how the customer has distributed the money. The customer may hold some of the sale money as cash, in a personal or business bank account as well as the FMD.

See Coding income and assets for Centrelink payments and services.

Complete all coding for the:

• forced disposal of livestock income
• farm business income estimate
• FMD

Check for any outstanding (CoC) activities that can be completed. This ensures all the updates are applied to the customer and their partner's record.

To search for and action an outstanding CoC activity, see Change of circumstance for Farm Household Allowance (FHA).

Ensure all coding has been completed:

• If the assessment results in a rate change or change in entitlement, a new SSP generates
• This will finalise as part of the activity
• If the result is no change in rate, the last SSP displays.
  See Table 2 of Change of circumstance for Farm Household Allowance (FHA)

Record details on a DOC. Use Fast Note - select Auto text, use Rural > Update > Forced Disposal of Livestock.

If the income from the forced disposal of livestock and FMD results in the cancellation of the customer's FHA, record significant decision details on a DOC.

Overall Operating losses reduce the assessable amount of ordinary income. Ordinary income can include (but not limited to):

• off farm employment
• rental income
• un-related business income
• deeming
• foreign income
• income from trusts and companies

Note: compensation payments cannot be reduced by overall operating losses.

To check the current overall operating loss details, view on:

• REBS/BUS, and/or
• the Farm Business income (FBI) trust and company task in Process Direct

Go to Step 2.

The income or loss from the farm business and any related business are offset against each other to determine the net income.

Is the assessable farm business income less than zero?

• Yes, go to Step 3
• No, go to Step 7

The maximum allowable reduction is the lowest of the:

• reduction threshold of $100,000, or
• overall operating loss for the financial year, or
• ordinary income amount earned for the financial year

Partnered customers:

If both members of the couple meet the eligibility criteria, the offset can be applied to:

• each person, or
• one person's income

If the allowable reduction is applied to each member of the couple, the combined amount for both partners cannot exceed the maximum allowable reduction.

To determine the allowance reduction, consider the total value of the overall operating loss, including related farm income.

See Resources for examples.

Go to Step 4.

If the customer is:

• Single, no further action needed. The overall operating loss is automatically applied to their rate of FHA
• Partnered, the customer and partner will need to elect how the overall operating loss is to be apportioned, the total cannot exceed 100%. Go to Step 5

The customer and their partner can decide how much of the allowable reduction each person claims.

For example, the customer may have been claiming 100% of the allowable reduction to reduce their assessable ordinary income and their partner has not claimed any. As their partner has started part-time work off the farm, they may now wish to claim a portion of the allowable reduction each.

Code Farm Business Loss Apportionment (FBI) to record the requested percentage on each person's record:

• Select the FHA workflow > Farmer Data Task Selector > Farm Business Income (FBI) task. Select Add
• record the requested percentages

Review the details and finalise the update:

• Select Assess
• Update Header Data:
• Receipt Date, the date the customer notifies
• Channel, the channel the information was received
• Select Save

The combined percentage must not exceed 100%.

The allowable reduction is apportioned throughout the financial year so that a regular amount of income will be offset each day.

This applies only where corrections need to be made on FDI to previous coding

To apportion the income reduction in Process Direct:

• Open the record of the person who had the reduction applied
• Select the FHA workflow

End date any previous apportionment coding:

• Select Edit
• End date the previous income reduction line. This is the day before the new assessment applies

Finalise the update

• Select Assess
• Update Header Data:
• Receipt Date, the date the customer notifies
• Channel, the channel the information was received
• Select Save

Coding FBI will automatically reassess the latest Social Service Plan (SSP). Complete a Manual reassessment on both records.

Tell the customer:

• the effect of the apportionment being updated affects their ordinary income. The allowable reduction is apportioned throughout the financial year at a daily rate
• of any change to the amount that can be used to reduce their or their partner's ordinary income. Include if they are no longer eligible for an allowable reduction

Records details on a DOC using the relevant Fast Note.

Procedure ends here.

The customer is not eligible for the overall operating loss allowable reduction as their combined farm business net income is positive.

If the customer's circumstances change and the combined farm business net is at a loss, tell the customer why they are not eligible for the allowable reduction. Customers will need to update their income estimate, and the overall operating losses will be reassessed.

Record details on a DOC.

Check the FHA Disregarded Income Summary screen in Process Direct for:

• DOCs
• allowance reduction, and
• amount of allowable reduction applied so far in the financial year

Open the record of the person who earns the ordinary income (even if they have not claimed FHA):

• If both members of a couple are claiming a portion of the allowable reduction, run the task on both customer records
• Select the FHA BIR workflow to open the Disregarded Income (FDI) task

Go to Step 2.

If the customer:

• advises the farm income for the current financial year has changed (business income estimate reviewed), go to Step 9
• and their partner each receive FHA, and want to change how their maximum allowable reduction is split for the financial year, go to Step 10

Otherwise, go to Step 3.

Ordinary income can include (but is not limited to):

• off-farm employment
• rental income
• un-related business income
• deeming
• foreign income
• income from trusts and companies

Exception: compensation payments cannot be reduced by farm business losses

Go to Step 4.

Does the customer have a related farm business?

• Yes:
• the income or loss from the farm business and any related businesses need to be offset against each other to determine the net income.
  See Resources for calculation examples
• go to Step 5
• No, go to Step 5

Check the customer's record to determine the amount of the net farm income from the farm business and related farm business.

To view the customer's current business income estimate in Customer First select:

• CRN/BP link in Customer Header
• Circumstances Data tab on the Customer Summary screen
• FHA Specific Overview twisty
• Business income

Is the ordinary income of the farm business for the current financial year less than zero?

• Yes, go to Step 6
• No, go to Step 7

The maximum allowable reduction is the lowest of the:

• reduction threshold of $100,000, or
• Farm Business Loss for the financial year, or
• ordinary income amount earned for the financial year

Partnered customers:

If both members of the couple meet the eligibility criteria, the offset can be applied to:

• each person, or
• one person's income

If the allowable reduction is applied to each member of the couple, the combined amount for both partners cannot exceed the maximum allowable reduction.

To determine the allowable reduction, consider the total value of the farm business loss, including related farm income.

See Resources page for examples.

To record the allowable reduction amount, go to Step 8.

The customer is not eligible for the farm business loss allowable reduction as their combined farm business net income is positive.

Tell the customer why they are not eligible for the allowable reduction. If the customer's circumstances change and the combined farm business net is at a loss, they can ask for a reassessment under the farm business losses rules at any time.

Record details on a DOC.

Does the customer have a related farm business?

• Yes:
• The income or loss from the farm business and any related businesses need to be offset against each other to determine the net income. See Resources for calculation examples
• Enter the net value of Farm Business Income or Losses under the appropriate FPT/FST business on the REBS screen with the start date
• Zero the existing farm related income coded as non-farming income.
  For example, NST, NPT the same date as the Farm Business Income/Losses
• Record the net assessable income figure in Process Direct, see Business income estimates for Farm Household Allowance (FHA)
• Complete all updates, go to Step 9
• No, go to Step 9

Check if the farm business income estimate needs updating after the farm business loss assessment.

To update the customer's farm business income estimate for the financial year, use the

FHA workflow > Farmer Data Task Selector > Farm Business Income task. The new farm business income estimate must be recorded on REBS from the date of notification.

Record the customer's reasonable business income estimate.

Is the ordinary income of the farm business still less than zero?

• Yes, go to Step 10
• No, the customer is no longer eligible for the offset. Go to Step 11

To apply the allowable reduction in Process Direct:

• Open the record of the customer who earns the off-farm income (even if they have not claimed FHA). If both members of a couple are claiming a portion of the allowable reduction, the task needs to be run on both customer records
• Select the FHA BIR workflow to open the Disregarded Income (FDI) task

To update the offset details:

• Select Add
• Record the start date, for a new claim use the start date of payment
• If the allowable reduction is assessed after the claim is granted, this is considered a notification of a change of circumstances and coded from the date of notification. The date of effect is based on whether the determination is favourable or unfavourable
• Favourable determinations - from the date of decision backdate the later of 13 weeks or 16 December 2019. Note: if the customer has given a new farm business estimate, the estimate is not backdated 13 weeks. See Resources for an example
• Unfavourable determination - the date of the decision is the date of effect.
  For the new financial year review, this is 1 July of the relevant financial year
• Record end date as 30 June of the relevant financial year. Customers must notify of changes in circumstances which may affect their rate of payment
• If the customer is no longer eligible for the allowable reduction during the financial year, the end date is updated to reflect the actual period of eligibility for the allowable reduction
• When the customer provides their business income estimate for a new financial year, eligibility for the allowable reduction is reassessed and, if applicable, the end date recorded to reflect the new financial year
• Record annual allowable reduction amount. For partnered customers this is their selected portion of the total allowable reduction
• Select reason code Other
• Review the estimate details and finalise the update
• Select Assess
• Updated Header Data:
• Receipt date, key the date the customer notifies
• Channel, key the channel the information was received
• Select Save

The system will automatically apply the allowable reduction to ordinary income, up to their maximum allowable reduction for the financial year.

Go to Step 12.

Update the income offset in Process Direct:

• Open the record of the person who had the offset applied
• Select the FHA BIR workflow to launch the Disregarded Income (FDI) task

To end date offset details,

• select Edit
• record the new end date. This is the date of the decision that the customer is no longer eligible for the offset

Review the details and finalise the update:

• select Assess
• in the Update Header Data, key:
• Receipt Date, the date the customer notifies
• Channel, the channel the information was received
• select Save

Go to Step 12.

Coding FDI will not automatically reassess the latest Social Service Plan (SSP). Complete a Manual reassessment. If partnered, complete a manual reassessment on both records. To assess Social Service Plans, see Change of circumstance for Farm Household Allowance (FHA).

Tell the customer:

• the effect of the allowable reduction being applied to their ordinary income. Include the allowable reduction is apportioned throughout the financial year at a daily rate
• of any change to the amount that can be used to reduce their or their partner's ordinary income, including if they are no longer eligible for an allowable reduction

Record details on a DOC using the relevant Fast Note:

• FBL Income Reduction Assessed if the customer is still eligible for an allowable reduction, or
• FBL Income Reduction Ceased if the allowable reduction has ceased