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

The appropriate tax year for applying the Parental Income Test (PIT) is usually the base tax year. However, an assessment of combined parental income may be based on the tax year immediately following the base tax year when combined parental income for the current tax year exceeds both:

• 125% of the base tax year income
• 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 has increased by at least this amount, 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)
• for ABSTUDY and AIC, from 1 October

For AIC Additional Boarding Allowance (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 or applicant:

• no longer being exempt from the PIT, and
• losing an entitlement to a Centrelink allowance or benefit that enables an exemption to apply

Other categories of parental income (including net investment/business losses, reportable fringe benefits and superannuation contributions) need to be included in parental income for the current tax year and base tax year records.

An assessment of combined parental income may be based on the tax year immediately following the base tax year (known as the current tax year), when:

• combined parental income substantially decreases 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 YA customers

If a decrease in parental income occurs before 30 June, a current income assessment could apply from the start of the payment period the customer requests one, whether or not the customer makes that request before 30 June or later in the same calendar year.

For example

The current tax year income is applied from 22 January:

• If a customer, or their parent/guardian, request a current year assessment on 1 February, and
• the customer’s payment fortnight is 22 January to 4 February, and
• they meet the requirements for the current year assessment

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

If a decrease in parental income occurs after 1 July, this decrease would not need a current tax year assessment for YA/ABSTUDY. This is because the decrease occurs in the financial year after the current tax year. There is no provision in legislation or policy to allow an assessment in a calendar year for a financial year that is 2 years after the base tax year.

If the customer applies for a current tax year assessment before 31 December, and:

• they are claiming/receiving YA, the current tax year assessment could only apply from the start of the YA payment period that includes 1 January. This is because the base and current tax year changes. Service Officers should record the event date as 1 January, and the system will apply the income with an effect of the Entitlement Period Start Day (EPSD)
• they are claiming/receiving ABSTUDY, the current tax year assessment would apply from 1 January

If the customer applies for a current year assessment after 1 January, the date of event would be the date of the request for YA, or 1 January for ABSTUDY.

• For YA, the new income will take effect from the EPSD immediately prior to the date of event coded
• For ABSTUDY, the new income will take effect from the date of the request

This procedure does not apply on the basis that the reduced parental income entitles the parent/guardian/person(s) deemed to be a parent for the purposes of the parental means tests, or their partner, to a Low Income Health Care Card (LIC). In the case of ABSTUDY and AIC customers, this includes an auto issue Health Care Card (HCC) based on receiving maximum rate Family Tax Benefit (FTB) Part A.