Applying the Parental Income Test (PIT) for Assistance for Isolated Children (AIC) Scheme 108-02010030

If an AIC form is received, forward to AIC Smart Centre. Look up local Processing Service details for: Assistance for Isolated Children (AIC).

Is the applicant eligible for Boarding Allowance for the student?

• Yes, go to Step 2
• No, ABA is not payable. Check eligibility for:
• other AIC Scheme allowances or
• other payments for students if general AIC eligibility criteria are not met
• Procedure ends here

Is the approved AIC applicant an institution/organisation?

• Yes, the Parental Income Test (PIT) is waived. On the AIC Claim Details (EICD) screen, code 'ORG' in the Relationship to Student: field. The actual annual rate of ABA plus BA payable cannot exceed the annual boarding costs for the student. The maximum rate of ABA is payable if the annual boarding costs for the student (boarding charges plus $250) are at the least the applicable maximum rates of BA plus ABA. For AIC rate information, see the AIC category in Rates and Thresholds
  Procedure ends here
• No, go to Step 3

Determine who the student's parents or guardians are for the purposes of applying the PIT.

• Generally, the PIT applies to the income of the approved applicant and their partner if they have a partner
• If the parents are separated or divorced, determine who the approved applicant is and apply the PIT to that parent (and their partner, if applicable)

See Determining who can be the applicant for the Assistance for Isolated Children (AIC) Scheme for further information.

• Update PIT Parent Selection (NPPS) screen. Ensure parent/guardian Customer Reference Numbers and Tax File Numbers are recorded
• Go to PIT Sibling Selection (NPSS) screen. All siblings who have at least one parent in common and are linked to that parent will be displayed here
• Check the details of the siblings to see if the children are contributing to the family pool on the following screens:
• Family Pool Summary (NSFP) and
• Dependent Youth Rate Summary (!DYRSUMM)
• If a child aged 16-19 years should be in the family pool, but it is not displaying, update study details using the Child Education Details workflow. For more details, see Determining a dependent child for inclusion in the family pool for the Parental Income Test (PIT)
• If there has been a change in parent/guardian circumstances, see Step 1 in Table 3

A PIT exemption applies if:

• the applicant or their partner:
• receives a qualifying payment (except during an employment income nil rate period or if they receive the income support payment entirely as a Home Equity Access Scheme loan)
• holds a Health Care Card (HCC) issued to families in receipt of the maximum rate Family Tax Benefit Part A
• is in long term receipt of JobSeeker Payment (JSP), or
• the student is in a State authorised foster care arrangement and their carer does not receive a foster care allowance

Does a PIT exemption apply?

• Yes, go to Step 6
• No, see Step 1 in the Coding parental income table

Are acceptable supporting documents required?

Verify details on the applicant/partner record if they receive a qualifying payment from Services Australia or hold a valid HCC. Request verification of Department of Veterans' Affairs (DVA) pensions.

• Yes, request the documentation by generating and sending a Request for information - incomplete claim (Q760). Basic Boarding Allowance may be paid pending receipt of the documents. When documents are supplied, go to Step 7
• No, go to Step 7

If the exemption applies to a foster parent and the foster parent is not receiving Foster Care Allowance, on the AIC Claim Details (EICD) screen code 'FSP' in the Relationship to Student: field.

In all other cases, check that the Household Income (NHI) screen displays the appropriate exemption reason in the PIT Exempt Rsn: field. If the details do not match, the parent's record may need updating. Some PIT exemption reasons will need manual coding. See Circumstances when the Parental Income Test (PIT) does not apply.

Maximum ABA rate can be paid subject to annual boarding charges. For AIC rate information, see Rates and Thresholds.

Procedure ends here.

Collect information on the parent's income for the base tax year from either a new claim (SY040) or from the FAO Income for Previous Year (FIPY) screen of the applicant's record.

Note: if the parent has any of the following income estimates recorded on their family assistance record, then the actual income information for these income components must be obtained from the parent as actuals are not obtained for Family Tax Benefit/Child Care Benefit/Child Care Subsidy reconciliation purposes

• Tax Exempt Foreign income (FEF screen)
• Foreign Income (FFI screen)
• Tax Free Pension/Benefit (FTF screen)
• Deductible Child Maintenance Expenditure (FDM screen)

If:

• base tax year income details are supplied and the applicant is PIT exempt, then it may be coded
• base tax year income is recorded and there is a change in the PIT exempt status, the system will adjust the rate accordingly
• there is no record of base tax year income details a request for information will be issued

Have parents completed:

• all boxes in the parental income question of the SY040 for the financial year ending in the year before study, and
• provided details of any other dependent children in the family for whom various means tested payments is being, or will be claimed, and has suitable proof of income been provided?
• Yes, go to Step 2
• No, Basic Boarding Allowance may be paid pending receipt of the requested information. Issue request for information for the base tax year using Q760 - request for information, incomplete claim

Record income details for the parent(s) for the base tax year on the Household Income and Assets (NHI) screen in Customer First

Record the Date of Effect: field as 1 January and the Financial Year Ending: field as the base tax year. Complete the following fields as appropriate:

• taxable income
  Where the parents actual income is $nil, code $0 and the system will automatically populate $1 of taxable income to allow calculation of ABA entitlement. Where auto population of $1 is inappropriate, leave this field blank and the system will automatically populate $0 and not calculate ABA entitlement
• overseas income
  Convert the overseas income figure to Australian dollars by dividing the figure by the applicable conversion rate
• maintenance paid
• passive business/investment losses: (for example, negative gearing)
• reportable superannuation contributions
• tax free pensions and benefits (applies from 1 July 2017 onward)
• exempt reportable fringe benefits
• other reportable fringe benefits

If other reportable fringe benefits have been received, enter the amount shown on the payment summary. The system will calculate the adjusted fringe benefits figure.

Complete other fields as appropriate.

The applicant should have provided details of any other dependent children in the family (siblings of the student) for whom one of the following means tested payments is being, or will be, claimed:

• AIC Additional Boarding Allowance (ABA)
• Youth Allowance
• ABSTUDY Living Allowance and/or means tested component of School Fees Allowance
• Sibling(s) who meet the definition of an FTB child aged 0-15 or 16-19 years and in full-time secondary study
• Sibling(s) who are regular care children and whose parent(s) have verified rent recorded

To check that the sibling information (if relevant) is already recorded or needs updating, see Assessing the new claim for Assistance for Isolated Children (AIC) (SY040).

Are parents applying for a Current Income assessment or is a Reverse Current Income assessment required?

For help, see Determining the appropriate tax year for the Parental Income Test (PIT) for Youth Allowance (YA), ABSTUDY and Assistance for Isolated Children (AIC) Scheme.

• Yes, an AIC Current Tax Year Assessment (SY042) is required. If this has not been completed, ask the parents to complete an SY042 or issue request for information (Q760). When received, assess SY042. Basic Boarding Allowance can be paid pending this assessment
• No, go to Step 5

Finalise activity on the Assessment Results (AR) screen and record details on a DOC.

The system automatically calculates ABA entitlement based on details that have been recorded.

The amount of ABA subject to the PIT is determined by the amount of annual boarding charges. These must exceed the maximum rate of Basic Boarding Allowance less $250 for incidentals for any ABA to be paid, subject to the PIT.

See Eligibility for AIC Scheme Boarding Allowance to manually calculate this amount.

If a PIT exemption does not apply, the ABA entitlement is affected by the amount of combined parental income over the Parental Income Free Area (PIFA). For the Parental income free area, see Assistance for Isolated Children (AIC) - Parental Income Test (PIT).

The amount of combined parental income affecting the student will be reduced if there are siblings in receipt of a PIT tested payment or a sibling who is a FTB child or Regular Care Child. The family taper of 20% is applied to the student’s share of the parental income above the threshold, i.e. the rate of payment is reduced by 20 cents for each dollar of the student’s share of their parents’ affecting income.

For current AIC rate information, see AIC category in Rates and Thresholds.

From 1 January 2017 to 31 December 2018, a Maintenance Income Test may have applied. The Parental Income Test Reduction Amount (PITRA) and the Maintenance Income Test Notional Reduction (MITNR) are automatically calculated and compared to determine the ABA entitlement. For historical information, see:

• Application of the MIT table in Maintenance Income Test (MIT) for ABSTUDY and Youth Allowance (YA)

If the parent(s)/guardian(s) have:

• become widowed, go to Step 2
• separated or divorced, go to Step 3
• become partnered, go to Step 4

If the customer changes which parent/guardian they live with, see Determining who can be the applicant for the Assistance for Isolated Children (AIC) Scheme. Procedure ends here.

If a customer has become widowed, refer them where appropriate to:

• a Services Australia social worker
• any other agencies

For more information, see Social work services.

If the applicant loses a partner by death:

• eligibility is reassessed from the date of the change in circumstance
• the income test only assesses the applicant’s income

A death must be confirmed when a person contacts to advise the death of an applicant.

Note: Service Officers must check the record of the applicant to ensure the death action has been completed.

Go to Step 5.

If the applicant loses a partner because of separation:

• eligibility is reassessed from the date of the change in circumstance
• the income test only assesses the applicant’s income

Note: a Mod S is not required if the customer's parent(s)/guardian(s) are partnered and not receiving an income support payment.

Go to Step 5.

If the applicant gains a partner (for example, remarrying or beginning a de facto relationship):

• eligibility is reassessed from the date of change of circumstance
• the income test uses the combined income of the applicant and the new partner

Go to Step 6.

Update the PIT Parent Selection (NPPS) screen where appropriate, ensuring relevant siblings are linked on the PIT Sibling Selection (NPSS) screen. See Creating, updating and ending Parental Income Test (PIT) links with dependent student, Australian Apprentice and job seeker recipients or claimants

For parents that have separated or become widowed:

• Unlink the parent using the NPPS screen
• Navigate to the Assets (NHI) screen within the same activity
• Check if there are any previous estimates for the unlinked parent
• If any estimates remain, update to actual
• Record details in a DOC.

Procedure ends here.

If the customer is able to provide sufficient information at the time of contact:

• Update PIT Parent Selection (NPPS) screen
• Ensure parent/guardian Customer Reference Numbers (CRN) and Tax File Numbers (TFN) are recorded
• Record details in a DOC

If updates are required prior to the limiting date:

• reject the payment to this date and
• note any Over Payments (OVP)

Repeat this step if required until the correct date is reached

Go to Step 2.

Make the necessary updates to reassess entitlement, then:

• re-index and grant the AIC payment if required
• zero off any arrears already paid

Note: Claims can be indexed with a Date of receipt (DOR) of up to 3 years, anything older will require a MySupport request.

Go to Step 3.

After restoration any overpayments (OVP's) must be Finalised No Debt (FND) - Payment Restored (PRS), see Finalised 'no debt' (FND) or 'zeroing' debts that are not legally recoverable.

Staff not trained in actioning AIC debts must send a FastNote to the AIC Smart Centre from the student record:

• Select: Auto Text > Debts > Debt Action Referral > AIC Debt Action
• Include all relevant details

Procedure ends here