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The Income and Assets Test - General Provisions

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Last amended: 30 September 2008

Calculating a person's rate of service pension or ISS

In calculating a person's rate of service pension or income support supplement ISS[glossary:):], the ordinary/adjusted income test and assets tests are applied as follows:     

 

In determining the rate of

for a person who is

the ordinary/adjusted income and assets tests

service pension

not permanently blind and not a war widow/widower-pensioner[glossary:.:]

are applied and the test resulting in the lower rate is used in the pension rate calculation. If both test results are the same, the income reduced rate is used.

 

permanently blind and not a war widow/widower pensioner

are applied only in calculating the rate of rent assistance payable. The rate of service pension payable is the higher of the notional income/assets tested rate compared to the non-income/assets tested rate. Rent assistance is not included in the calculation of the non-income/assets tested rate.

 

not permanently blind and a war widow/widower pensioner

are applied and the resulting income and assets tested rates plus any remote area allowance payable are compared to the sum of the ceiling rate and any remote area allowance and rent assistance payable. The rate of pension is the lower of the two amounts.

 

permanently blind and a war widow/widower pensioner

are not applied. The rate of pension is automatically the ceiling rate plus any rent assistance and remote area allowance payable.

income support supplement

not permanently blind

are applied and the resulting income and assets tested rates are compared to the ceiling rate plus any rent assistance payable. The lowest rate is the income support supplement rate. If all three rates are the same, the income reduced rate is used. Any remote area allowance payable is then added.

 

permanently blind

are not applied. The rate of pension is automatically the ceiling rate plus any rent assistance and remote area allowance payable.

Income and assets of a member of a couple

    

 

For the purpose of the income and assets test, if two people are members of a couple, they are treated as pooling their income and assets and sharing those resources equally.

Blinded pensioners and income and assets test

    

The income and assets of a blind service pensioner or ISS recipient will not affect the rate of pension payable to the blind person. However, rent assistance is not payable to blind service pensioners/ISS recipients unless the blind person would be better off to be treated as a non-blind person and be subject to the income and assets tests.

In order to determine the most appropriate rate of payment for a blind pensioner who is renting, the payment should be calculated without subjecting it to the income and assets tests. It should also be calculated using the income and assets tests, but including any rent assistance that may be payable (as for a non-blind pensioner). The higher of these rates is the rate payable to the blind pensioner. Service pension or ISS payable to the partner of a blind person will still be subject to the income and assets tests.


 

 

A service pension is an income support payment broadly equivalent to the social security age and disability support pensions. It may be paid once a veteran or partner has reached the nominated age or is incapacitated for work.

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.

 

 

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).

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.

 

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

 

 

Income reduced rate is the amount calculated when the reduction for ordinary/adjusted income is subtracted from the maximum payment rate. See SCH6-A1(2) of VEA (Method Statement 1 Step 6) and SCH6-A1(6) of VEA (Method Statement 5 Step 6).

 

 

Rent Assistance is an allowance, which may be paid to a service pensioner or income support supplement (ISS) recipient to assist in meeting the cost of rental accommodation.

To receive rent assistance, a pensioner must be paying rent (other than Government rent) for accommodation in Australia, and the amount paid must exceed a certain threshold.

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.

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.