You are here

Disability Income Rent Test (ceased 2022)

Document
Last amended 
25 February 2022

The Disability Income Rent Test was removed 1 January 2022 and no longer affects the rate of rent assistance from that date. 

The information below is for historical reference only.

What was the disability income rent test?
VEA →

 

When calculating the amount of rent assistance (RA) payable to a service pensionincome support supplement or veteran payment recipient, any disability income received by that person or their partner, was counted as income and may have reduced the rate of RA payable to the person. The method of calculating the amount by which RA was reduced due to disability income was known as the disability income rent test. The amount calculated was the RA reduction amount.

Rent assistance free area

    

VEA →

 

The disability income rent test incorporated a rent assistance free area. The RA free area was the amount of disability income an income support pensioner could receive before their rate of rent assistance was reduced by the disability income rent test. The RA free area applicable to a person was identical to the income free area the person received as an income support pensioner and was determined by their family situation. If a person's disability income did not exceed the applicable RA free area, there was no reduction to the rate of RA under the disability income rent test.    

More →

 

Application of the disability income rent test

If the amount of disability income a person received exceeded the applicable rent assistance free area, a RA reduction amount was calculated by applying the disability income rent test. The calculation formula was as follows:

RA reduction amount = (disability incomeRA free area) X taper rate

The taper rate in the above formula was identical to the taper rate that applied to the person's income support payment. This meant that rent assistance was reduced by 50 cents for each dollar of disability income in excess of the RA free area for a person assessed under the standard rules, and reduced by 40 cents per dollar for a person assessed under the transitional rules.

Example of the disability income rent test for a single assessment

A single pensioner was paying $250.00 per fortnight in rent as at 25 September 2009. The fortnightly rate of rent assistance (using the thresholds current as at 25 September 2009) was calculated as follows:

$250.00 (rent) – $99.40 (threshold) x 0.75 = $112.95    

More →

 

If the same pensioner was in receipt of 100% Disability Compensation Payment (formerly disability pension), the disability income rent test applied. This is because the amount of disability income, $363.10 per fortnight (100% DCP as at 20 September 2009), exceeded the RA free area for a single pensioner of $142.00 per fortnight. As a result, the rate of rent assistance of $112.95 per fortnight (calculated above) was reduced by 50 cents in the dollar for each dollar of disability income that exceeded $142.00. This equalled:

($363.10 (disability income) – $142.00 (RA free area)) x 0.50 = $110.50 (RA reduction amount)

The rate of rent assistance payable was therefore:

$112.95 – $110.50 (RA reduction amount) = $2.45 per fortnight

Example of the disability income rent test for a single transitional assessment

If the above pensioner was in receipt of 100% Disability Compensation Payment (formerly disability pension) and was a single service pensioner assessed under the transitional rules, the 40 cent taper applied in the disability income rent test.

That is:

($363.10 (disability income) – $142.00 (RA free area)) x 0.40 = $88.44 (RA reduction amount)

The rate of rent assistance payable was therefore:

$112.95 – $88.44 (RA reduction amount) = $24.51 per fortnight

Example of the disability income rent test for a partnered assessment

A couple was paying a total of $250.00 per fortnight in rent as at 25 September 2009. The fortnightly rate of rent assistance for each member of the couple (using the thresholds current as at 25 September 2009) was calculated as follows:

$250.00 (total rent) – $162.00 (combined threshold) x 0.375 = $33.00 each (rounded)    

More →

 

If the same couple was in receipt of disability income consisting of the veteran's 100% Disability Compensation Payment (formerly disability pension), the disability income rent test applied. This is because the amount of disability income, $363.10 per fortnight (100% DCP as at 20 September 2009), exceeded the combined RA free area for a couple of $248.00 per fortnight. As a result, the couple's combined rent assistance was reduced by 50 cents in the dollar for each dollar that exceeded $248.00. For the purposes of the disability income rent test formula, this was a reduction of 25 cents in the dollar for each member of the couple. This equalled:

$363.10 (disability income) – $248.00 (RA free area) x 0.25 = $28.78 each (RA reduction amount)

The rate of rent assistance payable to each member of the couple was therefore:

$33.00 – $28.78 (RA reduction amount) = $4.22 each per fortnight

Disability income rent test not applied if hardship pension payable

As disability income is assessable under the financial hardship provisions, it was not considered to be income again for rent assistance purposes. Therefore, if a pension was payable to a person under the financial hardship provisions and rent assistance was also payable to that person, the disability income rent test was not applied.    

More →

 

Treatment of disability income if compensation or damages payable

If a person receiving a Disability Compensation Payment (formerly disability pension) also receives compensation or damages payments, their rate of Disability Compensation Payment may be reduced. In these cases, it is the reduced rate of Disability Compensation Payment that is used in calculating the person's rate of RA, not the rate prior to reduction.    

More →

 

Blinded pensioners

The disability income rent test also applied to blinded service pensioners, income support supplement and veteran payment recipients if their income support payment included a rent assistance component.     

More →

 

 


 

 

Rent Assistance is an allowance which may be paid to a service pensioner, income support supplement (ISS) or veteran payment 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.

 

 

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.

 

 

The term 'disability income' was removed from the VEA 1 January 2022.  The following is for historical reference only.

For service pension or veteran payment recipients, disability income, when calculating the rent assistance reduction amount (as was set out in the table in SCH6-C13 of the VEA), referred to:

  • disability compensation payment (as defined by section 5Q(1) of the VEA) including disability pension paid by foreign governments; and
  • weekly permanent impairment compensation payments made under section 68, 71 or 75 of the Military Rehabilitation and Compensation Act 2004; and
  • weekly amounts a person would have been paid if the person had not instead received permanent impairment compensation under section 68, 71 or 75 of the Military Rehabilitation and Compensation Act 2004 as a lump sum.

For ISS recipients, disability income when calculating the rent assistance reduction amount (as was set out in the table in SCH6-C14B of the VEA) had the same meaning as adjusted disability pension.

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

The disability income rent test ceased on 1 January 2022. It was the method of calculating the amount by which a pensioner's rent assistance was reduced because of the disability income paid to them or their partner. The amount calculated was the RA reduction amount.

RA reduction amount = (disability incomerent assistance free area) x taper rate

Note: The rent assistance free area and taper rate were identical to those that normally applied to the person's income support payment and family situation.

 

 

The rent assistance free area ceased 1 January 2022 due to the removal of the disability income rent test.  It was the amount of disability income an income support pensioner received without suffering any reduction in rent assistance under the disability income rent test. The rent assistance free area applicable to a person was identical to the income free area the person received as an income support pensioner and was determined by their family situation.

 

 

The income free area is the amount of income that an income support pensioner may receive without suffering any reduction in pension under the income test.

The term 'disability income' was removed from the VEA 1 January 2022.  The following is for historical reference only.

For service pension or veteran payment recipients, disability income, when calculating the rent assistance reduction amount (as was set out in the table in SCH6-C13 of the VEA), referred to:

  • disability compensation payment (as defined by section 5Q(1) of the VEA) including disability pension paid by foreign governments; and
  • weekly permanent impairment compensation payments made under section 68, 71 or 75 of the Military Rehabilitation and Compensation Act 2004; and
  • weekly amounts a person would have been paid if the person had not instead received permanent impairment compensation under section 68, 71 or 75 of the Military Rehabilitation and Compensation Act 2004 as a lump sum.

For ISS recipients, disability income when calculating the rent assistance reduction amount (as was set out in the table in SCH6-C14B of the VEA) had the same meaning as adjusted disability pension.

The rent assistance free area ceased 1 January 2022 due to the removal of the disability income rent test.  It was the amount of disability income an income support pensioner received without suffering any reduction in rent assistance under the disability income rent test. The rent assistance free area applicable to a person was identical to the income free area the person received as an income support pensioner and was determined by their family situation.

 

 

The taper rate is used to reduce the rate of a person's service pension or income support supplement if they or their partner have any ordinary income in excess of the ordinary/adjusted income free area (IFA). Any income in excess of the IFA will reduce the maximum payment rate by a 'taper rate' of 50 cents in the dollar (or 40 cents for transitional rate of pension). The result is the income reduced rate.

The same taper rate is also used in disability income rent test calculations to determine the amount of rent assistance for service pensioners and income support supplement recipients.

In addition to the income test taper, any assets in excess of the assets value limit will reduce the maximum payment rate per fortnight by 37.5 cents for every $250 over the Asset Value Limit. The result is the assets reduced rate

 

The disability income rent test ceased on 1 January 2022. It was the method of calculating the amount by which a pensioner's rent assistance was reduced because of the disability income paid to them or their partner. The amount calculated was the RA reduction amount.

RA reduction amount = (disability incomerent assistance free area) x taper rate

Note: The rent assistance free area and taper rate were identical to those that normally applied to the person's income support payment and family situation.