Assessment of dependent children, additional income free area and child income under social security law 108-01030000

A child aged under 16 years is a dependent child of an adult if:

• the adult has legal responsibility for day-to-day care, welfare and development of the child, either alone or jointly with another person, and the child is in the adult's care, or
• the child is not a dependent child of someone else and is wholly or substantially in the adult's care

If they are not in full-time education, the child's weekly income must not exceed the child income limits - permissible limits. Note: for Carer Allowance (CA), a child care receiver can be a dependent child even if they are not a full-time student and their income exceeds this amount.

A young person 16-21 years (under 22) can be a dependent child of the adult if:

• the young person is wholly or substantially dependent on the customer, and
• they are undertaking full-time education at a school, college or university

The young person cannot be a dependent child if:

• their income exceeds the child income limits - permissible limits in the current financial year, or
• they receive a social security pension/benefit, or
• payment under a Labour Market Program

Note: a young person aged 16-17 years in receipt of a social security pension/benefit may still attract the 'with child' rate of payment for the customer.

If the customer is an Australian resident, the child must also be an Australian resident or be living with the adult for the child to be a dependent child.

If the customer is not an Australian resident, the child must:

• be an Australian resident, or
• have been an Australian resident and now living with the customer outside Australia, or
• have been living with the customer in Australia and is now living with the customer outside Australia

The customer is no longer entitled to benefits and ancillaries when qualification is lost where the customer is no longer considered to be a principal carer of a dependent child under Social Security Law. A customer ceases to be a principal carer if the child:

• has departed Australia permanently or has been overseas temporarily for a period greater than 6 weeks, or
• has returned to Australia after a temporary absence of more than 6 weeks and they have departed again within 6 weeks of their last return, and
• where a customer has ceased to be a principal carer of a child for either of the above reasons, the child may continue to be a dependent child

Under policy, a customer can be considered as:

• caring for a dependent child only, or
• caring for a dependent child and assessed as the principal carer

A principal carer and customers who have a dependent child in their care, will access the 'with child' rate of JobSeeker Payment (JSP) and Youth Allowance (YA).

Principal carers and customers who have a dependent child, may be able to access other additional benefits for their payment, see Benefits under social security law below.

The Social Security Act defines a dependent child for the purpose of qualifying for payment or for a higher rate of payment. Children who meet this definition may also attract an additional income free area for customers depending on the payment the customer is receiving. In some cases, a child who does not meet this definition may attract a higher rate and/or an additional income free area.

In some cases, a customer may benefit from having a dependent child even though the child may not entitle the customer to Family Tax Benefit (FTB). In most cases, a dependent child is also an FTB child. However, there are some differences between an FTB child and a dependent child which are explained in chapter 2.1.1 of the Family Assistance Guide. A Regular Care Child is not an FTB child but may entitle the customer to ancillary benefits and the 'with child' rate of income support.

A separate procedure covers a dependent child for ABSTUDY purposes.

A person who is the principal carer of a child in their care may benefit from the following:

• Parenting Payment (PP) if they have a child under 14 (single) or 6 (partnered)
• Single JobSeeker Payment (JSP), Youth Allowance (YA) (job seeker) and Special Benefit (SpB) may be paid at the 'with child' rate and also have access to a more generous income test
• JSP customers who are single carers are subject to the JSP single principal carer income test. YA customers are subject to the YA income test
• Subject to part-time participation requirements
• Entitled to a Pensioner Concession Card (PCC)
• Qualification for Carer Allowance (CA), if they provide daily care and attention for a child with a disability or severe medical condition at home, and/or Carer Payment (CP), if they are caring for a child with a disability or severe medical condition who has extremely high care needs
• Single principal carers with an exemption from mutual obligation requirements for special family circumstances may have access to a 'higher rate' of JSP, which is more than the 'with child' rate and equivalent to the rate of Parenting Payment Single (PPS)
• Single principal carers on JSP/YA are automatically exempt from their mutual obligation requirements if:
• they are an active foster carer
• they are involved in home schooling or distance education for their child
• they have a large family or caring for a child when the customer is a relative (other than a parent), or
• a Parenting Order made through the Family Court directs it
• For PPS customers, an additional income free area applies based on the number of children in their care. This is regardless of the percentage of care in shared care cases, providing:
• the child continues to meet the definition of a dependent child, and
• the customer still has principal care of at least one child under 14 years to retain qualification for PPS

A person who has a dependent child in their care but are not the principal carer may benefit from the following:

• Health Care Card (HCC) with dependent children listed
• May be paid the 'with child' rate if they are not a principal carer but they have a dependent child in their care, where care of the child is shared, and even in some cases where the dependent child definition is not met but the child is considered a regular care child (with 14% or more care). These customers do not have access to the single principal carer income test. See 'With child' rate of benefit for non-principal carers with shared care
• JSP customers are subject to the usual income test for single allowance customers
• Qualification for Carer Allowance (CA), if they provide daily care and attention for a child with a disability or severe medical condition at home and/or Carer Payment (CP), if they are caring for a child with a disability or severe medical condition who has extremely high care needs
• For PPS customers an additional income free area applies based on the number of children in their care. This is regardless of the percentage of care in shared care cases, providing:
• the child continues to meet the definition of a dependent child, and
• the customer still has principal care of at least one child under 14 years to retain qualification for PPS
• For pension customers who are eligible for payment under the transitional rules for pension customers, an additional income free area applies for children in their care

Generally, a dependent child attracts an additional free area for Parenting Payment Single (PPS) customers and pension customers paid under the transitional rules. However:

• a child who meets the definition of a dependent child does not attract the additional free area if they are a prescribed education scheme student child aged 18 or over for whom CA is not payable to the customer or their partner
• a child who does not otherwise meet the definition of dependent child becomes one solely for the purposes of the additional free area if they are under 18 and receiving YA

Note: prior to September 2021, the pension system applied the additional child income free area for children aged 16 to 18 without the student code being updated on the Child Student/Income Circumstances (CHSI) screen. Some customers may receive a debt if a reassessment occurs for a child where the student code has not been updated and the customer had income above the income free area. If this occurs and the child is a full time student, updating the student code on the CHSI screen will remove the debt.