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10.6.1 Overview of Maintenance Income
Last amended: 18 June 2010
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What is maintenance income?
Maintenance income is a payment received that provides for the support and maintenance of a person. Maintenance income may be paid to support a former partner, or a dependent child.
Child maintenance income
The amount of child maintenance or child support received by a pensioner does not affect the assessable value of the pensioner's ordinary income.
There is an important distinction between child support payments received and child support payments paid. Child support payments received by a person are not assessed under the ordinary income test that applies to service pensions. However, child support payments paid by a person are included within that person's assessable income.
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Spousal maintenance income
Spousal maintenance is money (or in kind payment) made to a former partner following a divorce or separation. It does not include payments for dependent children.
Spousal maintenance received by a person is not assessed as ordinary income under the income test for income support purposes.
Spousal maintenance income paid by a person may be disregarded from the payer's pension assessment if a delegate is reasonably satisfied that these amounts are no longer available for the payer's own use or benefit.
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Spousal maintenance agreements
Where a valid and binding spousal maintenance agreement exists, the amount paid should not be treated as income of the person paying the maintenance. In cases where the arrangement to pay spousal maintenance is not documented, or evidence of an agreement cannot be provided, the gross amount of income should be used in assessing the payer's rate of income support.
A delegate must be reasonably satisfied that a spousal maintenance agreement is fair and reasonable for the full amount of the maintenance payment to be exempt from the payer's assessment. In cases where payments are not fair and reasonable, the deprivation provisions may be triggered.
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Assessment and review of maintenance
The current rate of maintenance income depends on the following:
- the relationship between the person receiving and the person paying maintenance,
- whether the payments are voluntary or ordered by the court,
- whether a valid and binding spousal maintenance agreement for the maintenance of one person by another has been made, and
- whether the pensioner is receiving the benefit of any other payments made on their behalf.
Variation or cessation of maintenance is reviewable.
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Capitalised maintenance
Capitalised maintenance income is income provided by a:
- lump sum cash payment of an amount greater than $1500 that is not a regular payment of a series of periodic payments, or
- transfer or settlement of property (for example a home, car or business). More ?
Section 5H(1) VEA – definition of ordinary income
Section 5K(1) VEA – definition of maintenance income
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.
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.