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Assessment Process for ISS

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Last amended: 22 September 2009

Determining the rate for non-blinded ISS recipients

    

In determining the rate of income support supplement applicable to non-blinded war widow/widower-pensioners, two separate tests are applied:

How the income and assets tests are applied

For the adjusted income test, the total adjusted income is compared to the ordinary/adjusted income free area. The adjusted income free area for a person who is not a member of a couple differs from that for a person who is a member of a couple. It may also be increased if there are dependent children and the pensioner is on transitional rates.

For the assets test, the value of the person's assets is compared to the assets value limit which varies according to whether the person is a member of a couple and whether the person is a homeowner. The resulting rates are compared to the ceiling rate plus any rent assistance payable. Whichever is the lowest (the income reduced rate if all 3 are the same) is added to any remote area allowance payable. The result is the rate of income support supplement.    

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Reference Library – Historical Pension Rates

PRH

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Determining the rate for blinded ISS recipients

    

The rate of ISS for blinded ISS recipients is the ceiling rate, free of the income and assets tests. However, any rent assistance payable can be reduced by the disability income rent test. Any rent assistance or remote area allowance payable is added to the ceiling rate.

Income support payments received by the partner of a blind pensioner are not exempt from the income and assets tests.

ISS recipients with dependent children or FTB children

Whether an ISS recipient has a dependent child or an FTB child can affect:    

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Effect of Children on Assessment of Income Support Payments

Section 9.4.3

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  • rent assistance,
  • remote area allowance, and
  • the income free area, if the ISS recipient is assessed under the transitional rules..
Ceiling rate

    

The same ceiling rate applies regardless of whether the ISS recipient is paid under the standard rules or the transitional rules[glossary:.:]  The ceiling rate may be increased if the war widows pension is compensation reduced. The increased ceiling rate is the sum of the normal ceiling rate and the amount of the reduction in the war widows pension.  This increased ceiling rate is used in the overall calculation process to be compared against the income reduced rate and assets reduced rate.

Note: Service pensions payable to war widow/widower-pensioners is subject to the ceiling rate as outlined above.

ISS below ceiling rate

ISS may be paid at less than ceiling rate under the income and assets tests.  Any income/asset reduction will be applied to the relevant (transitional or standard) maximum rate.  The level of adjusted income at which ISS reduces below the ceiling rate and ceases are different for transitional rules and standard rules because of the different income test taper rates and different maximum rates.  Similarly, there are different levels of assets at which ISS reduces and ceases under transitional rules and standard rules because of the different maximum rates.

Overall ISS rate calculation process

    

The following table shows the steps involved in the overall rate calculation for income support supplement for a non blinded person.

Step

Action

1

Determine the person's maximum basic rate.    

1A

Work out the amount of pension supplement.     

2

Determine the amount per year (if any) of rent assistance.    

3

Add steps 1, 1A, and 2 to obtain the person's maximum payment rate.

4

Apply the adjusted income test to work out any reduction for income.    

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Ordinary/Adjusted Income Test

SCH6-E1 of VEA

ISS and the reduction for adjusted income

9.1.3/The Income Test

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5

Take the reduction for adjusted income (if any) away from the maximum payment rate. The result is called the income reduced rate.

6

Apply the assets test to work out any reduction for assets.    

7

Take the reduction for assets (if any) away from the maximum payment rate. The result is called the assets reduced rate.

8

Work out the person's ceiling rate.    

9

Add:

  1. the ceiling rate (step 8);
  2. rent assistance (step 2).

The result is called the increased rate.

10

Compare the:

  • income reduced rate (step 5),
  • assets reduced rate (step 7), and
  • increased rate (step 9).

The person's provisional payment rate is equal to the lowest of these rates, or the income reduced rate if the three rates are equal.

11

Work out the amount per year (if any) of remote area allowance payable to the person.    

12

Add any amount obtained in step 11 to the provisional payment rate. The result is the person's rate of income support supplement.

Note: current rates are found in the Reference Library.    

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Reference Library – Pension Rates

PRC/View

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ISS and pension supplement

War widow/ers are not paid the pension supplement as a separate payment. Instead, the payments that make up the pension supplement are incorporated into war widow/ers pension and the ISS ceiling rate.

Transitional arrangements – pre 20 September 2009 pensioners

    

Transitional arrangements protect pensioners who were in payment before 20 September 2009 and whose pension would be reduced under the standard rules. The process for the calculation of pension in these cases is:

  • determine the person's maximum basic rate of service pension in accordance with Schedule 5, Part 5, subclause 32(1), (2) or (3). This is the transitional MBR  (which is indexed by CPI only),     
  • add any amount of rent assistance to the transitional MBR to give the maximum payment rate,
  • work out the income reduced rate, allowing for additional child income free area (if applicable). There is no work bonus income concession and the 40 cents taper rate applies,
  • work out the assets reduction amount (using the standard rules in module F) and deduct from the maximum payment rate,
  • follow the standard steps to determine ceiling rate and increased rate, and
  • the lowest of the income reduced rate, the assets reduced rate and the increased rate is the provisional payment rate, or the income reduced rate if the three rates are equal.

The provisional payment rate calculated under the transitional arrangements applies until such time as the standard rules provide a higher rate of pension.

ISS Calculation where there are saved children

Where a person has saved children, the steps set out in 'overall ISS rate calculation process' are modified, as follows:    

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Payments in Respect of Saved Children

Section 9.4.4

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  • the maintenance income test is applied to the maintenance income of the person to work out the reduction for maintenance income,     
  • the reduction for maintenance income is then subtracted from the sum of dependent child add-on, guardian allowance (if payable) and rent assistance (if payable). The resulting amount is added to the provisional payment rate (see step 10 of  'overall ISS rate calculation process'),
  • when calculating any rent assistance payable, the higher rent assistance thresholds and rates of rent assistance payable to pensioners with saved children are to be used.    
    More →

    Reference Library – Pension Rates

    PRC/View

    More → (go back)


ISS is an income support payment that may be paid to eligible war widows and widowers under the VEA and persons receiving wholly dependent partners' compensation under the MRCA, and who satisfy the means tests. It is an indexed rate, increased twice-yearly in March and September in line with changes to the cost of living and/or average wages. Income Support Supplement (ISS) legislation commenced on 20 March 1995. It is a payment created to replace the ceiling rate income support age, carer, wife and disability support pensions, paid to war widows/widowers by Centrelink.

 

 

War widow/widower — pensioner means a person who is receiving a war widow's/widower's pension from the Australian Government.

 

 

One element of the means test for income support pensions whereby the rate of pension payable to a pensioner reduces progressively as their income increases above a certain threshold known as the income free area (IFA).

 

 

One element of the means test for income support pensions whereby the rate of pension payable to a pensioner reduces progressively as their assets increase above a certain threshold known as the assets value limit (AVL).

Adjusted income is defined in section 5H VEA and is the sum of the person's:

  • ordinary income
  • disability pensions paid by other governments
  • war widow's/widower's pension (VEA) or equivalent wholly dependent partner payments (MRCA)
  • a foreign pension, similar in character to a war widow's/widower's pension.

 

 

The ordinary/adjusted income free area provides that the pensioner may receive income up to a certain amount without any reduction in their maximum rate of pension.

Any income in excess of the free area will reduce the pension at the rate of 50 cents in the dollar, or 40 cents for those receiving a transitional rate of pension. The amount of ordinary and adjusted income free areas is specified in item 1 in Table E-1 in point SCH6-E6 VEA.

 

Note:  War widow's pension is included as income under the adjusted income test. Neither disability pension nor war widow's pension are included as income under the ordinary income test.

 

 

The term not a member of a couple covers all persons who are not covered by the definitions of member of a couple.

 

 

According to Section 5E(2) of the VEA a person is a member of a couple, if they are:

  • legally married to another person and is not living separately and apart from the other person on a permanent basis; or
  • living in a prescribed registered relationship with the other person (whether of the same sex or a different sex) and is not living separately and apart from that other person on a permanent basis; or
  • all of the following conditions are met:
  • living with another person, whether of the same sex or a different sex;
  • not legally married to that person;
  • in a de facto relationship with that person; and
  • not in a prohibited relationship

The term “partnered” is also commonly used.

Section 5F(1) of the VEA defines dependent child as having the same meaning as in the Social Security Act 1991.  For income support purposes, dependent child is defined as:

Child under 16 years

  •       the pensioner has legal responsibility either alone or jointly with another person for the day to day care, welfare and development of the young person AND the young person is in the pensioner's care, or
  •       the young person is not a dependent child of someone else AND the young person is wholly or substantially in the pensioner's care.

A child under 16 years cannot be considered a dependent child if:

  •       they are not a full-time student, and
  •       their weekly income from any source is more than the amount specified in section 5(3)(c) of the Social Security Act.    

Child 16 years or older

A young person who has turned 16 years but is under 22 years can still be a dependent child of the pensioner if:

  •       they are wholly or substantially dependent on the pensioner, and
  •       their income in the financial year will not exceed the personal income limit, and
  •       they are receiving full-time education at a school, college or university.

A child over 16 years cannot be considered a dependent child if:

  •       they receive a social security pension or benefit such as youth allowance, or
  •       their personal income is more than the amount specified in section 5(4)(b) of the Social Security Act.    

Income includes earning from casual, part-time or full-time earnings.

Note: the meaning of a dependent child for DVA income support pension purposes is not the same as the meaning for Family Tax Benefit purposes.

 

 

Assets value limit is the maximum value of assets a person can have without affecting the person's pension rate. The assets value limit is worked out in accordance with SCH6-F3 of the VEA.

A person is a homeowner if he or she has a right or interest, which gives reasonable security of tenure in the principal home. A person is also considered to be a homeowner if they have sold their home in the previous 12 months and intend to use part or all of the proceeds to purchase another home.

The ceiling rate of service pension and income support supplement (ISS) is applied to all war widows/widowers when assessing the rate of pension. This amount was previously frozen at $124.90 per fortnight, however, since legislation was introduced in September 2002, is now indexed twice yearly in line with percentage increases in the maximum rate service pension. A higher ceiling rate can apply, however, in the following cases:

If a person:

  • became a war widow/widower-pensioner before 1 November 1986,

  • has continually received service pension, social security pension or ISS since that date, and

  • the rate of pension immediately before that date was more than $120.10

in such a case the ceiling rate is equal to the pre-November 1986 rate plus 4%.

If a person:

  • is a person to whom ISS is payable,

  • is not permanently blind, and

  • whose Part II or IV pension is [glossary:compensation reduced:DEF/Compensation reduced pension],

the ceiling rate is the sum of the ceiling rate as calculated above and the amount of the reduction in the Part II or Part IV pension. The maximum ceiling rate cannot exceed the maximum rate of single service pension. For ceiling rates refer to SCH6-A4 to A9 of VEA. The amount of increase to the ceiling rate pension under Part II or Part IV is worked out by using the formula in SCH6-A9 of the VEA.

 

 

Remote area allowance is a supplementary payment added to the rate of income support pension where the pensioner's usual place of residence is situated in a remote area, and where the pensioner is physically present in the remote area.

ISS is an income support payment that may be paid to eligible war widows and widowers under the VEA and persons receiving wholly dependent partners' compensation under the MRCA, and who satisfy the means tests. It is an indexed rate, increased twice-yearly in March and September in line with changes to the cost of living and/or average wages. Income Support Supplement (ISS) legislation commenced on 20 March 1995. It is a payment created to replace the ceiling rate income support age, carer, wife and disability support pensions, paid to war widows/widowers by Centrelink.

 

 

A person may be regarded as permanently blind in both eyes where:

  • there is a total loss of sight; or
  • visual acuity after correction with suitable lenses is less than 6/60 in both eyes on the Snellen Scale; or
  • where, in the written opinion of an ophthalmologist, the visual field deficits and/or combination of deficits results in a visual impairment which is the equivalent of a corrected visual acuity measure of less than 6/60 in both eyes.

The Commission Guideline CM5829: Determining 'permanently blind', 'no useful sight' and 'blinded in both eyes' may be instructive in making a blinded/blindness determination.

 

The ceiling rate of service pension and income support supplement (ISS) is applied to all war widows/widowers when assessing the rate of pension. This amount was previously frozen at $124.90 per fortnight, however, since legislation was introduced in September 2002, is now indexed twice yearly in line with percentage increases in the maximum rate service pension. A higher ceiling rate can apply, however, in the following cases:

If a person:

  • became a war widow/widower-pensioner before 1 November 1986,

  • has continually received service pension, social security pension or ISS since that date, and

  • the rate of pension immediately before that date was more than $120.10

in such a case the ceiling rate is equal to the pre-November 1986 rate plus 4%.

If a person:

  • is a person to whom ISS is payable,

  • is not permanently blind, and

  • whose Part II or IV pension is [glossary:compensation reduced:DEF/Compensation reduced pension],

the ceiling rate is the sum of the ceiling rate as calculated above and the amount of the reduction in the Part II or Part IV pension. The maximum ceiling rate cannot exceed the maximum rate of single service pension. For ceiling rates refer to SCH6-A4 to A9 of VEA. The amount of increase to the ceiling rate pension under Part II or Part IV is worked out by using the formula in SCH6-A9 of the VEA.

 

 

The disability income rent test is the method of calculating the amount by which a pensioner's rent assistance is reduced because of the disability income paid to them or their patner. The amount calculated is the RA reduction amount.

RA reduction amount = disability incomerent assistance free areaX taper rate

Note: The rent assistance free area and taper rate are identical to those that normally apply to the person's [glossary:income support payment:DEF/Income support payment] and family situation.

 

 

A person's 'partner' is someone who is a member of a couple with that person.

FTB child has the same definition as given in section 22 and 22A of the Family Assistance Act (i.e. A New Tax System (Family Assistance) Act 1999).

 

For more information, see also 9.4.3/Effect of Children on Remote Area Allowance (RAA) CS Policy Library.

 

 

Rules introduced as part of the Secure and Sustainable Pension Reforms that came into effect on 20 September 2009. For income and assets test purposes the changes include:

  • an increase to the income test taper rate from 40 cents to 50 cents in the dollar,
  • the abolition of the additional child income free area,
  • the introduction of a fortnightly pension supplement to replace telephone allowance, utilities allowance, pharmaceutical allowance and the GST supplement, and
  • the introduction of a work bonus, whereby only 50% of the first $500 per fortnight of employment earnings is assessable for eligible pensioners.

Pensioners and ISS recipients who were in receipt of pension on or before 19 September 2009 are eligible to be assessed under transitional rules, if:

  • transitional rules will result in a higher rate of pension, and
  • they have never been assessed under the new rules.

The requirement that the pensioner has never been assessed under the new rules, does not arise where the pensioner's entitlement is re-determined from a date prior to 20 September 2009.  Where new pension information is received and is effective prior to this date, the pensioner's right to receive the transitional rate is considered anew.

Once a pensioner or ISS recipient has been assessed under the new rules they cannot revert to transitional rules.  There is one exception to this, to cover respite care changes to pensioners who return to live as a couple again.

Recipients assessed under transitional rules:

  • have their payment calculated using the transitional maximum basic rate,
  • have a taper rate of 40 cents in the dollar for the income test, and
  • can still receive the additional income free area for children.

 

 

According to Schedule 6-B1 of the VEA a MBR is the person's maximum rate is ascertained at the date of grant of the designated pension, and is the maximum annual pension rate payable at the date of grant (excluding allowances).

 

 

One element of the means test for income support pensions whereby the rate of pension payable to a pensioner reduces progressively as their income increases above a certain threshold known as the income free area (IFA).

 

 

According to section 5H of the VEA income is:

  • an amount earned, derived or received by a person for the person's own use or benefit;
  • a periodical payment by way of gift or allowance; or
  • a periodical benefit by way of gift or allowance.

 

 

Adjusted income is defined in section 5H VEA and is the sum of the person's:

  • ordinary income
  • disability pensions paid by other governments
  • war widow's/widower's pension (VEA) or equivalent wholly dependent partner payments (MRCA)
  • a foreign pension, similar in character to a war widow's/widower's pension.

 

 

One element of the means test for income support pensions whereby the rate of pension payable to a pensioner reduces progressively as their assets increase above a certain threshold known as the assets value limit (AVL).

An asset means any property, including property outside Australia.

The ceiling rate of service pension and income support supplement (ISS) is applied to all war widows/widowers when assessing the rate of pension. This amount was previously frozen at $124.90 per fortnight, however, since legislation was introduced in September 2002, is now indexed twice yearly in line with percentage increases in the maximum rate service pension. A higher ceiling rate can apply, however, in the following cases:

If a person:

  • became a war widow/widower-pensioner before 1 November 1986,

  • has continually received service pension, social security pension or ISS since that date, and

  • the rate of pension immediately before that date was more than $120.10

in such a case the ceiling rate is equal to the pre-November 1986 rate plus 4%.

If a person:

  • is a person to whom ISS is payable,

  • is not permanently blind, and

  • whose Part II or IV pension is [glossary:compensation reduced:DEF/Compensation reduced pension],

the ceiling rate is the sum of the ceiling rate as calculated above and the amount of the reduction in the Part II or Part IV pension. The maximum ceiling rate cannot exceed the maximum rate of single service pension. For ceiling rates refer to SCH6-A4 to A9 of VEA. The amount of increase to the ceiling rate pension under Part II or Part IV is worked out by using the formula in SCH6-A9 of the VEA.

 

 

Remote area allowance is a supplementary payment added to the rate of income support pension where the pensioner's usual place of residence is situated in a remote area, and where the pensioner is physically present in the remote area.

From 1 January 1998 responsibility for administration of most income support child related payments was transferred to  Centrelink. However, saving provisions allow any person in receipt of service pension or income support supplement on 31 December 1997 who would be or is financially disadvantaged by the transfer to continue having their child related payments paid by DVA. Saved children are assessed under the rules contained in the VEA as at 31 December 1997.

 

 

According to subsection 5K(1) of the VEA, maintenance income in relation to a person, means:

  • child maintenance — that is, the amount of a payment or the value of a benefit that is received by the person for the maintenance of a maintained child of the person and is received from:
  • a parent of the child, or
  • the partner or former partner of a parent of the child, or
  • partner maintenance — that is, the amount of a payment or the value of a benefit that is received by the person for the person's own maintenance and is received from the person's partner or former partner, or
  • direct child maintenance — that is, the amount of a payment or the value of a benefit that is received by a maintained child of the person for the child's own maintenance and is received from:
  • a parent of the child, or
  • the partner or former partner of a parent of the child,

but does not include disability expenses maintenance.

 

 

Guardian allowance is included in the calculation of a person's service pension or ISS where that person has a saved child and where that person is either not a member of a couple or is a illness separated couple or respite care couple.