Employment income nil rate period 108-07010160

A customer may qualify for an employment income nil rate period if their social security pension or benefit is not payable because of ordinary income, made up entirely or partly of employment income and they:

• receive a social security pension or benefit, except Special Benefit (SpB) customers
• remain qualified for their social security pension or benefit, including meeting the employment qualifications (employment qualifications exist for Carer Payment (CP), Disability Support Pension (DSP) and ABSTUDY living allowance), and
• continue to satisfy the payability provisions for their social security pension or benefit, except for being not payable due to the income

If the employment income nil rate period occurs for 12 consecutive full fortnights, the customer’s payment will automatically suspend or cancel, See Resources for examples.

Note: See Extended suspension periods for pension payments for pension payments for Age Pension (AGE)/DSP and those with CP partners.

A customer may have multiple employment income nil rate periods without having to reclaim if basic qualification for the income support payment is still met.

There is no limit to how many times a customer can enter an employment income nil rate period.

The employment income nil rate period applies to other payments including Austudy and Youth Allowance (YA) students.

Age Pension (AGE)

Age Pension (AGE) customers can be suspended for up to 2 years if their Australian employment income precludes them from payment for more than 12 fortnights in a row. When the customer reports their employment income on the thirteenth fortnight of the employment income nil rate period, they will automatically be placed into the extended suspension period if their rate of payment is still nil. The suspension reason code is ESP. Staff must not code this suspension manually.

If the customer has a partner who receives AGE, DSP or Carer Payment (CAR), they will automatically be placed into the extended suspension period if their payment has also been reduced to nil rate due to employment income. The suspension reason code is EPP. Staff must not code this suspension manually.

Disability Support Pension (DSP)

DSP customers can be suspended, or cancelled deemed suspended, for up to 2 years if their employment income (combined with their partner’s employment income, if applicable), precludes them from payment. This does not have to be solely due to employment income earnt in Australia. They can earn employment income from any location. When the customer reports their employment income on the thirteenth fortnight of the employment income nil rate period, they are automatically placed into the extended suspension period if their payment is still nil rate. The suspension reason will be EAN. Staff must not code this suspension manually. If a customer reports their income late, their payment may be cancelled deemed suspended for reason code EAL (which is coded manually).

DSP customers can also have their payment suspended if they work 30 or more hours per week in open employment on an ongoing basis. This requires assessment by a Service Officer, who manually suspends the customer’s DSP if appropriate. The reason code is FTW or FTY.

If the customer has a partner who receives AGE, DSP or CAR, the partner is automatically placed into the extended suspension period if their payment is also nil due to employment income. The suspension reason code is EPP. Staff must not code this suspension manually.

Carer Payment (CAR)

Carer Payment (CAR) customers who earn employment income cannot access the extended suspension period unless they also have a partner receiving AGE or DSP who is also earning income. They may also access the extended suspension period if they are not earning any employment income, but have a partner on AGE or DSP who is earning employment income.

In both cases, they are automatically placed into the extended suspension period if their rate of payment is reduced to nil due to employment income. The suspension reason code is EPP. Staff must not code this suspension manually.

See Extended suspension periods for pension payments.

Customers who get loan payments under the Home Equity Access Scheme (HEAS) will continue to get loan payments (both fortnightly and/or advance payments) even if the qualifying pension payment stops due to employment income.

Where the pension payment cancels, suspends or reduces to nil rate due to employment income, the pension status will automatically adjust to CZR (Current Zero Rate) for reason PLS. This allows the customer's loan to continue, providing the customer is still otherwise qualified for the applicable pension. See Extended suspension periods for pension payments.

If the customer is:

• under Age Pension age, any Working Credits will be depleted before the employment income nil rate period is applied
• over Age Pension age, and in receipt of a pension (excluding Parenting Payment Single) they may be entitled to the Work Bonus

Note: the Work Bonus is not used in the customer's transitional rules calculation, however partners may still benefit by the reduction in total income. This is applied before the employment income nil rate period is applied

A job seeker who is in an employment income nil rate period, whether due to their own or their partner's income, does not have mutual obligation requirements.

The customer must remain qualified for their income support payment during the employment income nil rate period. If qualification is lost during the employment income nil rate period, the payment is to be cancelled from the date that qualification stops. For example:

• If a Disability Support Pension (DSP) customer commences working for 30 hours per week or more at the relevant minimum wage, they will not be entitled to the employment income nil rate period. However, payment may be suspended for up to 2 years
• If a Carer customer commences working for 25 hours per week or more (total for their activities away from their care receiver with no available TCC days)

Note: temporary cessation of care (TCC) must still be recorded if the carer exceeds 25 hours per week temporarily.

For Parenting Payment (PP) customers:

• an employment income nil rate period can continue if their relationship status changes, and
• their PP is reassessed (transfers between PPS and PPP)

However, an employment income nil rate period ends if a customer loses qualification for their payment and transfers to another income support payment. For example, a PPS customer's youngest dependent child turns 14 and they transfer to JSP.

During the employment income nil rate period a customer must continue to report fortnightly. Failure to report will result in the cancellation of payment. The payment can be restored if they report their employment income at a later date.

Note: if the customer's payment cancels due to failure to report income due to staff error (for example, the income was coded but the payment was not stimulated) then the payment can be restored.

During the employment income nil rate period, if the customer's income decreases or stops:

• they may become eligible for a part or full rate of income support payment, and
• payment may resume without the need to make a new claim

If the customer has a partner:

• their partner is also entitled to the employment income nil rate period if all of the following are met:
• the partner is receiving an income support payment entitled to the employment nil rate period
• the partner is receiving a nil rate due to employment income
• the customer's excess income reduces the partner's payment to zero
• the customer is entitled to the employment income nil rate period if all of the following are met:
• the customer is receiving an income support payment entitled to the employment nil rate period
• the partner has employment income
• the partner's excess income reduces the customer's payment to zero

If an allowance customer has returned to full time work, their payments will cancel once their Working Credits have been depleted and they have accessed an employment income nil rate period. If their partner is on Parenting Payment Partnered (PPP), the system will:

• SUS-INV the PPP customer's payments
• automatically send an income estimate form for customer to complete for FTB and CCS estimate of income details update
• create a manual follow up to check PPP entitlement

The PPP customer is entitled to the employment income nil rate period, the PPP will need to be restored if there are no other changes to their entitlement. Any Service Officer can do this once the customer's entitlement is established.

If the partner's payment is not dependent on the customer being current, the partner's entitlement needs to be assessed based on the payment that they are getting for:

• Working Credits or the Work Bonus, and
• the employment income nil rate period

Benefits the customer can retain vary according to the income support payment that they are qualified for. Provided the customer has the required qualification, the following benefits can be retained while the customer is in an employment income nil rate period:

• Family Tax Benefit (FTB) Part A payment at the income tested rate for certain customers:
• Single customers will need to provide an income estimate when they enter an employment income nil rate period
• Partnered customers will need to provide an income estimate when they enter an employment income nil rate period where:
  both customer and partner are receiving an income support payment and both are within an employment income nil rate period, or
  one member of the couple is in receipt of an income support payment and they enter an employment income nil rate period
• FTB Part B:
• Single customers receiving income support payments are paid FTB Part B at the maximum rate. FTB Part B is not income tested for single customers on income support payments
• Partnered customers will need to provide an estimate of their income to be paid Part B. Partnered customers will have their Part B payments reconciled at the end of the income year

For details on how an employment income nil rate period has impacted a customer's FTB Part A rate, navigate to the FTB Income Support Payment Explanation Screen (FTBISPX).

• For the Allowance Income Test the customer's partner is treated as if both members of the couple are receiving an income support payment
• Entitlement to a Health Care Card (HCC) or Pensioner Concession Card (PCC), whichever is applicable to customer. If a customer is currently entitled to retain their PCC for a longer period, that period starts at the date of the first fortnight of nil rate of payments
• Education Entry Payment entitlement maintained, if eligible
• Special Employment Advance entitlement maintained, if eligible
• Supplementary benefits/payments such as:
• Approved Program of Work Supplement
• Pensioner Education Supplement
• Telephone Allowance (TAL), if receiving TAL before employment nil rate period
• Language, Literacy and Numeracy Supplement (LLNS)

Customers may continue to be entitled to the HCC/PCC if they are in an employment income nil rate period. If a customer is entitled to retain their PCC for a longer period, the period starts at the first fortnight of nil rate payments see Extended entitlement to Concession Cards.

• Customers who enter an employment income nil rate period will continue to be treated as receiving an income support payment
• In regard to the customer’s partner, Rent Assistance is paid as if both are receiving an income support payment
• Whilst in the employment income nil rate period, their partner will receive 50% of the couple’s rent assistance entitlement
• The customer may choose to cancel their allowance payment or remain in the employment income nil rate period

For more information see Qualification for payment of Rent Assistance (RA)

• Customers who qualify for TAL can continue to get it for 6 months (12 months for DSP under 21 with no dependent children) after their income support payment is suspended or cancelled due to the customer or their partner commencing employment. The customer must remain qualified for TAL:
• that is, be a telephone subscriber, during the extension period
• if entitled, the 26 week extension of TAL starts from the end of the 24 week employment income nil rate period
• TAL continues to be paid for those entitled through the 24 week employment income nil rate period
• TAL is not payable for customers getting:
• Pension Supplement
• the transitional rate of pension, or
• the transitional rate of JSP
  Therefore, they are not eligible for a TAL extension if their payment is suspended or cancelled for an employment related reason.

Note: PP customers under Age pension age who were granted on or after 1 July 2006 and:

• have an assessed partial capacity to work due to a disability as assessed by an ESAT, and
• have their payments cancelled after their and/or their partner's employment income over the limit. They will have access to TAL for 52 weeks from the date of cancellation

The previous extension of nil rate (CZR) that applied for nil rates commencing between 30 March 2020 and 24 August 2020 changed.

All nil rate periods commencing between 30 March 2020 and 22 January 2021 (inclusive) ended on 16 April 2021.

For more information see Resources.