Income Test for pension customers with partners on allowance 108-03010050

The allowance income test and the student or Australian Apprentice income threshold is assessed differently to the pension income threshold. The procedure, Personal Income Test and Income Bank for ABSTUDY, Austudy and Youth Allowance (YA) students and Australian Apprentices, has further information. For the allowance income test, see the Allowances - Personal Income Test thresholds link on the Rates and Thresholds page.

The Income Test has different applications for the following pension customers:

• single pensioners
• pensioners with children
• partnered pensioners
• partnered pensioners where the partner is on an allowance payment
• pensioners separated because of ill health
• pensioners with children - if the pensioner is paid under the transitional rules for pension customers and the customer has children, an extra income amount per child may be deducted before the rate of pension payable is calculated

A separate rate is calculated under both the Income Test and Assets Test with the one resulting in the lowest rate of pension being applicable to that person.

Customers receiving Age Pension (Blind) or Disability Support Pension (Blind) may be exempt from the means test. Income and assets details are required to determine the partner's entitlement to payments or if the customer is claiming rent assistance.

The procedure, Exempt income, provides information about assessing income that is exempt from the Income Test.

Customers may be subject to a direct dollar for dollar rate deduction if they are:

• granted a pension under an International Agreement, and
• in receipt of a pension or superannuation payment from that agreement country

Certain compensation payments or New Zealand Pension payments may also result in a direct deduction.

Additional deductions may apply if the customer is of:

• workforce age, apply the Working Credit rules before applying the Income Test
• Age Pension age and receiving an income support payment other than PPS. Apply the Work Bonus to their eligible income. Apply the Work Bonus before the Working Credit calculations. Eligible income for Work Bonus is:
• employment income, and
• self-employment income earned through personal exertion

The customer's payment may remain current at nil rate for up to 12 fortnights' employment income nil rate period, if:

• the customer's income reduces their fortnightly rate to nil, and
• some of that income is employment income

For children born or entrusted to care on or after 1 October 2016, Parental Leave Pay (PPL) is counted as ordinary income for pensions. PPL for children who were born or entrusted to care before 1 October 2016 was treated as exempt income.

A customer may have their pension rate calculated using the transitional rules. The transitional rules will apply for as long as the customer receives a higher rate of payment under the old Income Test (pre 20 September 2009) with no Work Bonus applied. This is in comparison to the Income Test in place from 20 September 2009, which does include the Work Bonus.

It is possible for their partner's income support payment rate to be calculated under a different income test, that is:

• the customer could receive a higher rate under the old income test, and
• their partner may have been granted after 20 September 2009 and is only eligible to be paid under the new income test

When making an unfavourable decision, speak to the customer:

• explain the decision
• give them a chance to provide more information, and
• tell them their review and appeal rights