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

Dependent child under 16

Note: for family assistance payments, Family Tax Benefit (FTB) child and Regular Care Child definitions apply.

A young person who has not turned 16 years of age is a dependent child of another person (adult) if Australian residence requirements are met, and one of the following is satisfied:

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

A young person who has not turned 16 years of age is not a dependent child if any of the following apply:

• they are not a full-time student (except children under school age) and their weekly income from any source other than maintenance exceeds the dependency limit
• the young person receives payment under a Labour Market Program
• the young person receives a social security pension or social security benefit

'With child' rate: for some benefits, a young person may attract this rate for the customer, if the dependent child definition is met except for the percentage of care.

Note: for family assistance payments, Family Tax Benefit (FTB) child and Regular Care Child definitions apply.

A young person aged 16-21 (under 22) is a dependent child of another person (adult) if they satisfy all of the following:

• Australian residence requirements are met
• the young person is wholly or substantially dependent on the adult
• they are undertaking full-time education at a school, college or university

A young person aged 16 or over is not a dependent child if any of the following apply:

• the young person is the adult's partner
• the young person receives payment under a Labour Market Program
• the young person receives a social security pension or social security benefit
• the young person's income exceeds the personal income limit

'With child' rate: in certain cases, a young person may attract this rate for the customer, even though the dependent child definition is not met.

Additional income free area: in some cases, a young person is included, even though the dependent child definition is not met, and in some cases, not included when the definition is met.

For family assistance payments, FTB child and Regular Care Child definitions apply. See Family Tax Benefit (FTB) child of a person.

There will be cases where a child is considered a dependent of a person for FTB but not for their Social Security payment (for example, Parenting Payment (PP)) and vice versa.

The References page contains a link for details of these differences that relate to:

• child age and study requirements
• child income limit
• receipt of Prescribed Education Scheme (PES) payments
• shared care

A dependent child for CA child purposes, is a young person who satisfies the definition of dependent child per the Social Security Act 1991, disregarding subsection 5(3).

A person may qualify for CA for a child even if the child is not in full-time education and their income exceeds the child income limits - permissible limits.

A young person is a dependent child for YA, if the child:

• has not reached maximum YA age
• is not independent, and
• is not receiving Carer Payment (CP), JobSeeker Payment (JSP), Austudy, Special Benefit (SpB) or Disability Support Pension (DSP)

In some cases, the 'with child' rate may be payable to a YA job seeker caring for a child aged under 16 years, even though the dependent child definition is not met. See 'With child' rate of benefit for non-principal carers with shared care.

For information about the independence criteria for YA, see Assessing independence when a customer has, or has had, a dependent child.

If the adult is an Australian resident, the young person must be:

• an Australian resident, or
• living with the adult

If the adult is not an Australian resident, the young person must:

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

A 'with child' rate is payable to single customers receiving the following payments, if they have a dependent child in their care (a partnered 'with child' rate also applies to Austudy and Youth Allowance (YA)):

• Austudy
• JobSeeker Payment (JSP)
• Special Benefit (SpB)
• YA

Dependent child definition not met

In the following two circumstances, the 'with child' rate may be payable even though the dependent child definition is not met:

• single customers on Austudy or JSP, caring for a young person aged 16-17 who receives a social security benefit (for example, YA)
• single customers receiving JSP or YA (job seeker), who have at least 14% care of a child aged under 16 years

See 'With child' rate of benefit for non-principal carers with shared care.

Parenting Payment Single (PPS) customers and single principal carers on JSP or YA with a dependent child

Single principal carers on JSP or YA (job seeker) are automatically exempt from their mutual obligation requirements if they are:

• a registered and active foster carer
• providing home schooling for their child/ren
• facilitating distance education for their child/ren
• caring for a large family (4 or more children aged 6 - 19), or
• caring for a child where the customer is a relative (other than a parent), as directed by a Parenting Order made through the Family Court

These customers may receive the 'higher rate' of payment equivalent to the PPS rate of payment.

PPS customers and pension customers paid under the transitional rules for pension customers

The ordinary income free area under the transitional rate or PPS pension income test, includes an additional free area for each of a customer's dependent children. The child does not need to be in the customer's principal care to be a dependent child for income test purposes.

Generally, a child who meets the definition of a dependent child attracts an additional free area. However, this is not always the case:

• 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 Carer Allowance (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 Youth Allowance (YA)

The additional income free area is $24.60 per fortnight for each dependent child = $624 per year.

Payments received by a customer for or in respect of a dependent child (for example, Foster care allowance, superannuation or compensation for a child), can reduce the $24.60 additional free area for that child. The additional free area is not reduced by exempt child income.

Where a transitional rule pension or PPS customer receives income for a child, it is to be coded on the Pensions Additional Assessment (PAA) screen, unless it is exempt child income.

Note: a child income limit also applies.

Child education and income information is to be coded on the Child Student/Income Circumstances (CHSI) screen for children aged 16 and over.

For more information see:

• Parenting Payment Single (PPS) income and asset tests
• Transitional rules for pension customers who were on payment at 19 September 2009

These child limits are for payments paid under social security law. They do not apply to Family Tax Benefit (FTB) child income.

Under 16 - dependency limit

Income is assessed weekly and must not exceed the under 16 dependent child income limit. See Child earning limits - permissible limits in Rates and Thresholds.

16 or over - full time study

A young person aged 16 years or over must be undertaking full-time education at a school, college or university. The Student Code field must be coded on the CHSI screen for the system to assess a child 16 or over as a dependent.

16 or over - personal income test

Income is assessed over a financial year and must not exceed the 16 or over dependent child income limit. See Child earning limits - permissible limits in Rates and Thresholds.

Note: some income received by or on behalf of a dependent child is exempt child income.

Payments received by a customer for or in respect of a dependent child (for example, Foster care allowance, superannuation or compensation for a child), can reduce the $24.60 additional free area for that child.

Where a transitional rule pensioner or Parenting Payment Single (PPS) customer receives income for a child, it is to be coded on the Pensions Additional Assessment (PAA) screen, unless it is exempt child income. Note: child superannuation is coded on the Superannuation/Annuities Details Variable (SUPV) screen.

For more information about the additional free area and dependents, see:

• Parenting Payment Single (PPS) income and asset tests
• Transitional rules for pension customers who were on payment at 19 September 2009
• Child Student/Income Circumstances (CHSI) screen

The additional income free area for children only applies to PPS customers or pensioners paid under the transitional rules for pension customers.

For information on the additional free income area for a customer with dependent children and receiving pension payment under the transitional rules, see:

• Additional income free area, and
• Social security child income limits and assessment

For more information on transitional rules, see Transitional rules for pension customers who were on payment at 19 September 2009.