Increase or decrease in parental income for Youth Allowance (YA), ABSTUDY and Assistance for Isolated Children (AIC) 108-02020020

The appropriate tax year for applying the Parental Income Test (PIT) is usually the base tax year. The tax year immediately following the base tax year (the current tax year) is the appropriate tax year where parental income in the current tax year exceeds both:

• 125% of the base tax year income, and
• 125% of the parental income free area (PIFA). For the PIFA, see the Parental Income Test (PIT) - Youth Allowance (YA) link on the Rates and thresholds page

If parental income that has increased by this amount is recorded, the system will reassess the rate of payment on current year income for:

• YA, from the first payment period ending after 30 September (the entire period of the first pay period ending after 30 September is affected)
• ABSTUDY and AIC, from 1 October

For AIC ABA, this process is known as Reverse Current Income. Note: legislation or policy do not use this phrase relating to YA or ABSTUDY.

An increase in parental income may result in a customer:

• losing a PIT exemption
• losing entitlement to a Centrelink allowance or benefit, or
• receiving a lower rate of payment

Other parental income (including net investment/business losses, reportable fringe benefits and superannuation contributions) are included in the combined parental income for the all tax years.

The tax year immediately following the base tax year (the current tax year), where:

• combined parental income decreases substantially in the current tax year, and
• the decrease is likely to last for at least 2 years (from the later of 1 January of the current tax year, or the date of the decrease)

For ABSTUDY and AIC

• If the decrease occurs before 1 January in the year for which assistance is being claimed, a current tax year income assessment will apply from 1 January
• A current tax year assessment will apply from the date the decrease occurred If the change occurs:
• on or after 1 January, and
• before 1 July in the year for which assistance is being claimed

For YA, ABSTUDY and AIC ABA

Current year assessment cannot be applied until the entitlement period that includes January 1, for decreases in parental income occurring after 1 July. This is because the decrease occurred in the financial year after the current tax year. There is no provision in legislation or policy to use parental income from any tax year other than the base tax year or the current tax year.

Where parental income decreased after the current tax year and the customer applies for a current year assessment:

• before 31 December, and they are claiming/receiving:
• YA, the current year assessment applies from the start of the YA entitlement period that includes 1 January (the base and current tax year change on this date). The event date is recorded as 1 January, and the system applies the assessment from Entitlement Period Start Day (EPSD)
• ABSTUDY, the current year assessment applies from 1 January
• after 1 January, the date of event is:
• the date of the request for YA, the system applies the assessment from the entitlement period start day (EPSD) immediately before the date of event
• 1 January for ABSTUDY, the system applies the assessment from the date of request

This procedure does not apply where the reduced parental income results in the PIT parent, or their partner being granted a Low Income Health Care Card (LIC). For ABSTUDY and AIC customers, this includes a Health Care Card (HCC) issued based on receiving the maximum rate Family Tax Benefit (FTB) Part A.