Allowance income and assets tests 108-01020000

Under the personal Income Test for JobSeeker Payment (JSP) and Youth Allowance (YA) job seekers, all income earned in each fortnightly period must be declared to Services Australia. Income below $150 is in the income free area. Income above that threshold reduces a customer's allowance entitlements at tapered rates.

The Income Test has different applications for some job seekers, dependent on their marital status and whether their partner receives a pension. Students or Australian Apprentices on ABSTUDY or YA also receive different treatment as they have a higher income free area and may have an Income Bank.

For children born or entering care on or after 1 October 2016, Parental Leave Pay (PPL) is counted as ordinary income for calculating the rate of payment for income support payments.

Customers of workforce age (not including students, Australian Apprentices or those receiving Special Benefit) are entitled to Working Credits, which may enable the customer to keep some of their income support payment while they are working. 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 and will enter an employment income nil rate period, and
• the customer may retain certain benefits

Working Credits accrue up to a maximum of 1000 credits for allowance customers. The exception is YA job seekers who can accrue up to a maximum of 3500 credits.

The other test used to determine payments for customers is the Assets Test. Customers must declare all assets owned, although some may be treated as exempt assets. If the value of the customer's assets exceeds the Assets Test limit, they do not qualify for payment. There is a distinct cut off point dependent upon marital status and whether or not they are homeowners. Hardship provisions may apply if a customer is in severe financial hardship, but limits are not increased for dependent children.

The Assets Test presumes that people with substantial assets which produce little, or no income should rearrange their financial affairs before seeking financial support from the community. The intention of any such rearrangement should be to increase their income if possible.

An exempt asset, irrespective of its value, is one that is disregarded under the Assets Test but may 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 (interest earned).

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 from the National Disability Insurance Agency (NDIA) are received periodically or as a lump sum, including interest accrued. They are:

• deposited into an account specifically for the purpose of managing the customer's NDIS
• exempt from the Income and Assets Tests and deeming
• not required to be reported or, if reported, should not be taken into account in the income and asset assessment

Customers who are granted a payment under an International Agreement may be subject to a direct deduction Income Test if they are receiving income from that agreement country.