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

One member of the couple receives a pension and the other member receives an allowance.

Did the customer receive:

• one of the following payments on or before 20 March 1995, and
• a Department of Veterans' Affairs (DVA) War Widows and Widowers Pension since 20 March 1995:
• Age Pension
• Carer Payment
• Disability Support Pension, or
• Wife Pension?
• Yes, see Completing Department of Veterans' Affairs (DVA) clearances and income coding. Procedure ends here
• No, go to Step 3

• Yes, go to Step 4
• No, go to Step 5

The customer may be entitled to the Work Bonus. This is an additional deduction for the assessment of eligible income. From 1 July 2019, eligible income includes both employment and self-employment income earned through personal exertion.

The Work Bonus is available to Age Pension age pensioners except for Parenting Payment Single (PPS) customers or a customer paid under the transitional rules for pension customers.

Calculate Work Bonus effected income before the Income Test is applied. For more information, see Work Bonus and balance for pensioners of Age Pension age.

• Yes, go to Step 6
• No, go to Step 7

If the customer or partner is eligible for Working Credit or Income Bank and in receipt of employment income they may be entitled to a deduction in the assessment of their employment income. For more information, see Working credits or Personal Income Test and Income Bank for ABSTUDY, Austudy and Youth Allowance (YA) students and Australian Apprentices.

Check to see if the customer has accrued a Working Credit or Income Bank balance on the:

• WC Balance Summary (WCBS) screen, or
• Income Bank (NIB) screen for Youth Allowance and Austudy customers, or
• ABSTUDY Income Bank (EYIB) screen for ABSTUDY customers

If there is a number greater than zero in the Balance: field, calculate the adjusted total ordinary income to be used in the rate calculation.

• A summary of income and asset details the customers have previously given will display on the Pensions Income and Asset Summary (PIAS) screen. The exception is for PPL and employment income coded with a frequency of IOP or LOP.

Note: Parental Leave Pay (PPL) for children born or entrusted to care on or after 1 October 2016 counts as ordinary income. However, it will not display on the PIAS screen. To view details of PPL or DAP, go to the P1RED screen.

The amount of PPL will be included in the ‘Income total’ amount displayed on the Factors Affecting Rate (PFAR) screen.

• Check with the customers to make sure these details are correct
• Calculate the total gross ordinary income from the details on this screen, taking into account any corrected balances given by the customers

Do not include any direct deduction income amount. If on the PIAS screen, the Forgn Pension: field or Compensation: field has income amounts, check Pensions Rate Calculation (PRC) screen to see if these are direct deduction amounts. If so, do not include them in assessing the effect of ordinary income on the customer's rate of payment.

Divide the assessable income amount result by two to establish the personal income allocation for each customer.

Note: do not include any direct deduction amounts.

Apply the appropriate Income Test:

• allowance income test to the partner on allowance. For the allowance income test, see the Allowances - Personal Income Test thresholds link on the Rates and Thresholds page
• student or Australian Apprentice income threshold for partner on a student payment. For the student or Australian Apprentice income threshold, see the Allowances - Personal Income Test thresholds link on the Rates and Thresholds page

For more information, see Income Test for single allowance customers.

• For the allowance customer, the procedure ends here
• For the pension customer, go to Step 2

Is the adjusted assessable income less than or equal to half of a couple’s pension income free area limit? Note: from 20 September 2009 the additional income free area for children only applies to PPS or pensioners paid under the transitional rules for pension customers.

• Yes, there is no effect on the rate of payment under the Income Test, go to Step 4
• No, go to Step 3

If the adjusted assessable income is more than half of the couple’s pension income free area limit, determine the affecting income:

• affecting income for the individual pensioner customer = (annual individual's personal income - half of a couples pension income free area limit) x 0.50
• to convert to a daily amount, divide result by 364 (not 365)

Determine the amount payable including the Pension Supplement and Rent Assistance, if eligible.

Amount payable = (maximum rate - direct deduction income amount) - affecting income.

If the amount payable is more than nil but equal to or less than the full Pension Supplement, the full Pension Supplement will be paid.

If the customer's income reduces their fortnightly rate to nil and some of that income is employment income, the customer's payment may remain current at nil rate for up to 12 fortnights, known as the employment income nil rate period.

For help, see Assets Test for partnered pension customers.

The pension customer's entitlement will be the lower of the amounts. The customer will be subject to the test under which the lower rate was calculated.

From 20 September 2009, customers are payable under the transitional rate for as long as the daily rate of this is higher than the daily rate under the current rules.

A customer will not be eligible for payment under the transitional rules if they claim on or after 20 September 2009.

Is the pension customer eligible to be considered for payment under the transitional rules for pension customers? Note: if unsure, see the Grandfathering Summary (GFS) screen.

• Yes, a rate calculation is also required under transitional rules with the higher amount under the current Means Test and the transitional rules applying. For an explanation of the transitional rules, see Transitional rules for pension customers on payment at 19 September 2009. Go to Step 7
• No, go to Step 7

If the customer is affected by the Income Test and:

• will receive nil rate because of the Income Test, and
• some of that income is employment income, tell them about details of Employment income nil rate period

Record details of assessment on a DOC.