Exempt income 108-04080010

Different rules apply to an approved Special Disability Trust (SDT). SDT income is exempt from the Income Test. SDT assets are exempt from the Assets Test if the assets are not over the concessional asset limit. This procedure does not cover SDTs. See Special Disability Trust (SDT) - initial contact.

If income is from:

• early withdrawal of superannuation, see Assessing withdrawals from superannuation
• restitution payments, see Foreign pensions
• another source, go to Step 2

Income received to cover out of pocket expenses includes, but is not limited to:

• Allowances paid with employment income for out of pocket work related expenses, see Allowances paid with employment income for full assessment information
• Amounts paid to providers of accommodation for international students, for example Homestay, Australian Asian Centre Exchange, are considered as a reimbursement to cover expenses.
• Allowances for out of pocket expenses for ministers of religion for expenses associated with their ministry, see Assessing income and assets for ministers of religion
• Allowances for out of pocket expenses for mayors, alderman, council members or Justice of the Peace members
• Reimbursement of travel and accommodation costs paid for attendance at meetings with state government agencies
• Reimbursement of out of pocket expenses for volunteer work or jury attendance
• Sitting fees paid to an individual to sit on a committee or council
• Income specific to indigenous customers, see Assessment of income for Centrelink payments
• Payments received by a carer of a disabled person from My Place Foundation Inc. if the carer can provide receipts of expenses incurred (if receipts of expenses cannot be provided, the income is assessable)

Is the income received to cover expenses?

• Yes, the income is exempt income
• Record details on a DOC or select to add Notes
• Exception: If the income received is more than the work related expense, the difference is assessed as income and needs to be reported. For income received to cover expenses paid from employment, see Allowances paid with employment income
• Procedure ends here
• No, go to Step 3

Is the income received as special financial assistance?

These are:

• payments made from specific trust funds that pay assistance to people suffering loss from natural disasters, or for medically acquired HIV
• a combination of lump sums and periodic payments
• not treated as income
• not coded on any income screens

Exception: Any money received from these grants which is invested, is subject to deeming.

• Yes, tell the customer of outcome. Record details on a DOC or select to add Notes. Procedure ends here
• No, go to Step 4

Is the income blocked income? This can be payments made by an overseas country that have stopped indefinitely due to civil unrest or political problems.

• Yes, see Step 2 in Table 2
• No, go to Step 5

• Yes, see Step 1 in Table 2
• No, go to Step 6

• Yes, see Step 5 in Table 2
• No, go to Step 7

Is the income other legislated income exempt from assessment?

Note: see Resources for more examples

• Yes, go to Step 8
• No, see Step 3 in Table 2

Is the other legislated income exempt from an equity or merit based scholarship (EMS) income?

• Yes, for coding advice, see Assessing scholarship income. Procedure ends here
• No, go to Step 9

Is the other legislated income exempt from assessment one of the following?

• free board and lodging
• exempt funeral bonds
• exempt lump sums
• early withdrawal of superannuation
• rental income from principal home for certain aged care residents
• for a child of a transitional rules pensioner or a Parenting Payment Single (PPS) customer
• certain payments made by the Department of Veterans' Affairs
• monies received from the National Disability Insurance Scheme (NDIS)
• Yes, see Step 6 in Table 2
• No, income is not included in any income assessments and not coded on any income screens. Tell the customer of outcome. Record details on a DOC or select to add Notes

Compensation for loss of wages is not covered in this procedure. See Treatment of compensation payments.

Compensation and insurance payments for damage to property and personal effects are not treated as income.

If the payment is invested, money earned on the investment is not deemed under the income test for up to 12 months after the person receives the payment. The exemption from the Income Test deeming rules may be extended past 12 months if the customer can show they meant to spend the compensation or insurance payment on repairs within 12 months, but were not able to do so for reasons beyond their control.

Exception: If the payment is not invested, but spent for a purpose other than for which it was paid, it may become immediately assessable under the income and assets tests.

See Exempt lump sums for more details about this.

Tell the customer of outcome.

Procedure ends here.

Blocked income is not treated as income.

The term 'blocked income' is used if a customer has severely limited or no access to income they have a legal entitlement to.

If a customer has blocked income not from an overseas source, clarify through local Policy or Helpdesk contacts to ensure correct assessment.

Overseas income

In certain circumstances it may be accepted an overseas pension is not income for social security purposes, if the prospect of receiving the money is so remote the moneys are not 'earned, derived or received for the person's own use or benefit', that is, effectively 'blocked'.

See the References page for a link to the Guide to Social Security Law, section 4.3.6.10, Income from overseas pension. Overseas income is not considered blocked just because the country of payment will not allow funds to be transferred out of that country unless it is unreasonable for the customer to travel to that country, for example, medical reason stopping travel or civil unrest in that country. International Programme must determine if a payment is blocked.

See the Resources page for a link to the International Programme contacts.

Review cases where blocked income is being disregarded regularly. The timing of the review depends on the particular situation.

• Tell the customer of outcome
• Record details on a DOC or select to add Notes

Procedure ends here.

Other specifically approved income exempt from assessment

Note: see Resources for further examples.

These payments are not treated as income. If they are paid to a customer's business such as a sole trader, disregard this income when assessing the profit and loss statement.

Exception: If any money received is invested, deeming provisions apply to the amount invested.

• Yes, tell the customer of outcome. If necessary, adjust bank account balance or change of assets. Record details on a DOC or select to add Notes. Procedure ends here
• No, go to Step 4

• Code income on relevant income screen(s). See Assessment of employment income for Centrelink payments or Assessment of other ordinary income for Centrelink payments
• Tell the customer of outcome
• Record details on a DOC or. select to add Notes

Procedure ends here.

Self-Employment Allowance payments are treated as a direct deduction for the following payments:

• Age Pension
• Carer Payment (CP)
• Disability Support Pension (DSP)
• JobSeeker Payment (JSP)
• Parenting Payment (Single (PPS) or Partnered (PPP))
• Special Benefit (SpB)

Recipients of CP, PPP, PPS and DSP can elect to remain on their Centrelink payment while participating in Self-Employment Assistance, up to the maximum of 52 weeks, providing all other pension/payment and Self-Employment Assistance eligibility criteria is met.

Effect of Self-Employment Allowance payment on partner's payments

If a DSP or Age Pension customer is receiving Self-Employment Allowance, and their partner is receiving CP (caring for the DSP or Age Pension partner or spouse), the system will treat 50% of the payments made to the participant as a direct deduction against both members of the couple.

If their partner is receiving a payment other than CP, or the CP customer is not caring for DSP or Age Pension partner, Self-Employment Allowance does not affect their payment rate under section 1187(2) and 8(8)(t) of the Social Security Act 1991.

See Self-Employment Assistance.

Further action is required for the following income types. See the information available on the treatment and coding of the following specific income types:

• Assessing income from withdrawal of superannuation
• Exempt Funeral Investments (Funeral Bonds)
• Exempt lump sums
• Rental income from principal home for certain residential aged care residents
• Certain income from Department of Veterans' Affairs (DVA)

Note: from 20 September 2009, the additional income free area for dependent children is only available to pensioners paid under the transitional rules and Parenting Payment Single (PPS) customers. If a pensioner is paid under the transitional rules or a PPS customer receives income for a child, it is to be coded on the Pensions Additional Assessment (PAA) screen unless it is exempt child income. Note: child superannuation is coded on the Superannuation/Annuities Details Variable (SUPV). For information about the additional free area and dependants, see Parenting Payment Single (PPS) income and assets tests, or Transitional rules for pension customers who were on payment at 19 September 2009.

Update customer's record as required.

Note: funds received from the National Disability Insurance Scheme (NDIS), are exempt from the income and assets test and deeming. They are not required to be reported or if reported must not be taken into account in the income and asset assessment.

Record details on a DOC or select to add Notes.