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7.8.9 Income Support Supplement

Last amended: 7 November 2012

Income Support Supplement (ISS) is an income support pension that may be paid to:

The rate of income support supplement is generally assessed with reference to the following:

  • income and assets,   
  • marital status, and
  • residential situation.

There is no age restriction on eligibility for income support supplement. Once a person gains eligibility for income support supplement, that eligibility cannot be lost. However payability may be affected by, for example, an increase in assets or income.

For the purpose of the income and assets tests, if two people are members of a couple, they are treated as pooling their income and assets and sharing those resources equally.  Both an income and assets test is applied separately during the ISS assessment.     

The income and assets tested rates of ISS are then compared to a ceiling rate and the lower rate of the three is the amount payable. The ceiling rate is indexed each March and September in line with movements in the cost of living and average wages.

Adjusted Income Test for Wholly Dependent Partner

    

Wholly dependent partners' periodic payment is regarded as adjusted income (as per section 5H of the VEA) when determining the rate of ISS that can be paid. Where a wholly dependent partner's lump sum payment has been made, the amount that the person would have received, if the person had chosen to receive the payment periodically, is regarded as adjusted income when determining the amount of ISS that can be paid. Income limits for ISS vary, depending on the wholly dependent partner's marital status. The limits can be found in the current pension rates charts in the Comp and Support Reference library.    

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The asset limits at which ISS reduces and ceases varies according to the wholly dependent partner's marital status and whether they are regarded as a homeowner or a non-homeowner.    

The current limits can be found in the current pension rates charts in the Comp and Support Reference library.     

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The following common allowances and benefits can be accessed by a person receiving income support supplement, if the person meets the relevant eligibility criteria:

ISS is a compensation affected pension. This means that if a person is entitled to, or receives compensation made wholly or partly in respect of economic loss and has not reached qualifying age then their ISS payment may be affected.    

Qualifying age is equivalent to pension age for veterans. More information about qualifying age can be found in the Comp and Support policy library glossary.    

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Example of an ISS calculation (rates as at 20 March 2013):

Beth is a single widow. She received a death benefit of $132,693.24 in respect of her husband's death which she used to pay off her mortgage. She receives $820.70 per fortnight in Wholly Dependent Partner periodic payments in respect of her husband's death. She also received a lump sum ComSuper payment of $620,000 after her husband's death which she invested.  This amount is assessable under the assets test.

The asset limit at which ISS reduces is $561,500. As the value of Beth's investment is higher than this amount, the ISS payment rate is reduced by 37.5 cents for every $250 over the limit.

The calculation is therefore $620,000 - $561,500 = $58,500 over the asset limit at which ISS reduces.

Her ISS will therefore be reduced by 37.5 cents for every $250 over the limit. This means her ISS is reduced by $87.75 per fortnight. The ceiling rate of ISS is $241.50.

Beth would therefore receive $241.50 - $87.75 = $153.75 per fortnight in ISS under the assets test. The next step is for the income test to be applied.

Beth's investment is subject to the deeming rules. This means that investments are deemed to earn a specific amount of interest, regardless of the actual interest that they attract. Amounts of up to $45,400 are deemed to earn the lower deeming rate of 2.5%. Any portion of an investment over $45,400 is deemed to earn the higher deeming rate of 4%. The income test calculation is therefore:

Deemed income on first $45,400:  $45,400 X 0.025 = $1,135

Deemed income on remainder of investment:

$620,000 - $45,400 = $574,600.

$574,600 X 0.04 = $22,984

Total deemed income per year: $1,135 + $22,984 = $24,119

Deemed income per year = $24,119 /26 fortnights = $927.65 per fortnight income.

Beth's total income per fortnight: $927.65 (deemed income) + $820.70 (wholly dependent partners' periodic payments) = $1,748.35 per fortnight.

The ISS income cut off limit is $1,741.80.

Beth's income exceeds the ISS cut off limit, therefore no ISS can be paid under the income test.

The income tested rate and the assets tested rate are compared and the test which results in the lower payment is the one that is applied. The income test results in no ISS being able to be paid.

Beth can therefore not receive ISS as her fortnightly income is too high.

Qualifying age is defined in section 5Q(1) of the VEA and is equivalent to the pension age for a veteran which is described in section 5QA VEA as:

  •       60 years for a male,
  •       for females subject to age equalisation (refer to the table in section 5QA VEA).