Applying the Parental Income Test (PIT) for ABSTUDY and Youth Allowance (YA) 108-02010020

Dependent customers who are subject to the Parental Means Test and the personal income test will have their fortnightly rate of payment determined by the test that results in the greatest reduction of their payment in that fortnight.

Note: some ABSTUDY and YA customers may be exempt from the application of the PIT.

The parent(s)/guardian(s) identified for PIT are:

• The natural, adoptive or relationship parent(s) of the customer if the customer normally lives with them. Note: the birth/natural parent is no longer the parent for ABSTUDY purposes when a student has a parent under traditional Aboriginal or Torres Strait Islander adoption. This means that the birth parent may be the private board provider, and/or the travel supervisor. The birth parent is not considered the parent when assessing eligibility under the Away from Home award for students in traditional Aboriginal or Torres Strait Islander adoption relationships
• The parent and step-parent if the customer normally lives with them. See the References section in this procedure and in Changes which may affect the Parental Income Test (PIT) for more information about step-parents
• If the customer does not normally live with their parent(s) and is wholly or substantially dependent on someone other than a parent, this person may be considered to be the parent for the PIT; for example, the customer's grandparent(s). This cannot be the partner of the customer
• If the customer does not normally live with their parent(s) and their parents are divorced or separated, the PIT is applied to the parent they last lived with. If that parent has a partner who is not the customer’s natural or adoptive parent, the step parent's income is not taken into account if the customer does not normally live with the step-parent. See the Step-parents section below, or
• If none of the above applies, the PIT is applied to the parent they last lived with. For further information see the Step-parents section below
• If the customer has been assessed for the Away from Home rate, the parent being used to assess the away from home rate must be the same parent used for the purposes of the PIT. It is not possible to pay the Away From Home rate based on the natural parents and then use someone else's income for the PIT (for example, a grandparent the customer is living with)

Note: in shared custody situations (including parents separated under the same roof), a dependent ABSTUDY or YA claimant/recipient nominates the parent with primary care responsibility. In 50/50 shared care situations the customer may nominate which parent they want to use for the purposes of the PIT.

Any parental income above the threshold, is divided among the children within the family pool. The share of the parental income for each child will depend on the maximum amount of the payments for which that particular child is eligible. The total amount of payments for all dependent children contribute to the family pool maximum rate.

A sibling is included in the family pool if they are receiving:

• Youth Allowance (YA), or
• ABSTUDY Living Allowance, or
• Assistance for Isolated Children (AIC) Scheme Additional Boarding Allowance (ABA), or
• A sibling who meets the definition of an FTB child or regular care child and aged 0 - 15 or 16-19 and in full-time secondary study

The contribution to the family pool of the FTB and regular care child/ren is the Maximum notional FTB rate (as applied to Youth Payments only).

Both amounts will be included in the family pool calculation if a child receives:

• AIC ABA, or
• ABSTUDY Living Allowance and/or School Fee Allowance Group 2, and
• is approved to live away from home
• attends secondary boarding school, and
• meets the definition of an FTB child or regular care child simultaneously

The contribution to the family pool of the YA child is their Maximum Payment Rate.

The Family Pool (NSFP) screen shows the current and historical maximum payment rate contribution of the customer, and their linked siblings.

If the parental income reduction is less than the Maintenance Income Test Reducible Amount (MRA) and maintenance income is received in respect of the customer, the Maintenance Income Test is calculated. For more information, see Maintenance Income Test (MIT) for ABSTUDY and Youth Allowance (YA).

If the parental income reduction is equal to or more than the Maintenance Income Test Reducible Amount (MRA), the family taper of 20% is then applied to the child's share of the parental income above the threshold. This means that the rate of payment is reduced by 20 cents for each dollar of the child's share of their parents' affecting income.

Current at zero rate

YA customers whose payment is current at zero rate are treated as receiving payment for the family group for a maximum of 6 consecutive fortnights, after which YA will cancel.

ABSTUDY customers whose payment is current at zero rate are treated as receiving payment for the family group. ABSTUDY customers who do not receive Living Allowance will show on the Family Pool Summary (NSFP) screen as 'other'. These siblings will have a zero contribution to the family pool.

Note: YA or ABY customers are not considered to be current at zero rate if they are receiving at least $1 of payment, that is, Rent Assistance or Youth Disability Supplement.

Income assessed under the PIT is combined parental income in the appropriate tax year. This will usually be the income of the base year (the financial year ending on 30 June of the previous year) but can in some cases be the current financial year (the year following the base year).

The PIT includes the following income:

• Taxable income
• Adjusted employer provided reportable fringe benefits including salary sacrifice. The reportable fringe benefit amount as recorded on a customer's group certificate should be advised and recorded:
• exempt reportable fringe benefits is automatically converted to the lower adjusted amount using the fringe benefits tax rate
• other reportable fringe benefits will not be converted. 100% will be included in parental income
• Target foreign income (except if received as a gift from an immediate family member) - also known as overseas income
• Total net investment losses
• Reportable superannuation contributions
• Tax free pensions and benefits. Note: where the parent/s have received income from overseas, the foreign income must be converted to Australian Dollars (AUD)

If a parent has paid maintenance (including Child Support) for the support of other children, this amount is deducted from the total parental income amount.

Note: maintenance income received on behalf of the customer may need to be recorded separately to be applied in the Maintenance Income Test.

For YA and ABSTUDY purposes, a step-parent is the married or de facto partner of the parent who has primary care and responsibility of the dependent customer.

The income of the step-parent is included in the Parental Income Test (PIT) for the purposes of determining the rate of YA or ABSTUDY Living Allowance for a customer where:

• the step-parent lives with the parent, and
• the customer normally lives with the parent and step parent

The earliest the income of the step-parent may be applied to the PIT is from the date the parent and step-parent are considered to be normally living together. This may include while the customer is absent from the primary home but normally lives with the parent.

The customer is considered to be normally living with the parent and step-parent where the customer's primary home address is the same as the parent and step-parent. This includes customers who live away from home:

• for study
• to undertake their Australian Apprenticeship
• to search for work
• to undertake other activities, and
• who have not established their own permanent and separate home away from their parent and step-parent. That is, they intend to return to the parental home

Customers living arrangements may be deemed temporary, for example, if they:

• live in campus accommodation
• must pack up their belongings and return home during semester break, and
• will not have a lease during the semester break

For the purposes of the PIT, the step-parent's income should not be included when the customer:

• has established a separate home, and
• has no intention of returning, other than for a visit

If a customer has established a permanent home and they return to the parental home to live, they must notify Services Australia as per their payment notification requirements.

For YA customers see Change of circumstances for Youth Allowance (YA) students and Australian Apprentices.

For ABSTUDY customers, see Change of circumstances for ABSTUDY customers.

The PIT will not apply to a dependent YA or ABSTUDY customer during the period where at least one of their parent(s)/guardian(s):

• receives a certain social security benefit or pension or a payment paid by the Department of Veterans' Affairs (DVA), listed in Module L of Section 1067G of the Social Security Act 1991 (for example, Service Pension, Income Support Supplement (ISS), overseas income Payment)
• receives ABSTUDY Living Allowance
• receives Farm Household Allowance (FHA)

The parent(s)/guardians(s) are not taken to be receiving an income support payment, and an exemption from the PIT will not apply if they:

• are serving an Income Maintenance Period that reduces their rate to zero
• are in an employment income nil rate period, or
• have an AGE/CZR PLS status (indicating receipt of Home Equity Access Scheme (HEAS) payments only)

Note: an additional exemption only applies to dependent ABSTUDY customers or claimants if a parent holds a current Health Care Card or has a Health Care Card because they receive the maximum rate of Family Tax Benefit Part A.

Parent(s)/guardian(s) who reside outside of Australia are still required to supply combined parental income. If evidence of foreign income is provided, and does not align with an Australian Tax Year (1 July to 30 June) Parent(s)/guardian(s) must supply additional evidence, such as:

• Letter from their employer
• Payslips
• a Commonwealth of Australia Statutory Declaration

Note: if the parent/s have received income from overseas, the income should be declared in the foreign currency. Services Australia will convert the figures to Australian Dollars (AUD).

Letters from employers or payslips can be accepted in a language other than English and can be referred by Service Officers for translation. See Translation of documents.

For YA, an exemption from the PIT does not apply for any period where the customer's parent is:

• receiving an income support payment and:
• is in an employment income nil rate period, or
• receives their entire payment as a Home Equity Access Scheme loan

For ABSTUDY, an exemption does not apply:

• for a period after the expiry date on the Health Care Card (HCC)
• if a parent holds a HCC because they receive a social security Mobility Allowance (MOB) or Carer Allowance (CA) (in respect of a disabled child)
• if the applicant or the applicant's partner is not receiving an income support payment and holds only a Pensioner Concession Card (PCC) or a Commonwealth Seniors Health Card (CSHC)
• if a parent only holds a Low Income Heath Card (only for ABSTUDY Living Allowance customers), or
• for any period where the customer's parent is:
• receiving an income support payment, and
• is in an employment income nil rate period, or
  receives their entire payment as a Home Equity Access Scheme (HEAS) loan