A married couple receiving part Service Pension, and both have debts. They receive the following income per fortnight.

Reduced rate Service Pension

$232.70 each

Investment income

$317.13 each

Total

$549.83 each

Calculation

Step

Action

1

Calculate the total income from all sources. Write the total income at (a)

(a) $549.83

2

Is the amount at (a) ≥ the maximum basic rate (MBR)?

If yes, write the MBR at (b)

if no, copy (a) to (b)

(b) $387.60

3

Multiply (b) by 14% and copy (c)

(c) $54.26

4

Is the amount at (a) ≤ MBR?

If yes, write $0 to (d)

If no, subtract the MBR from (a), and write the amount to (d)

(d) $162.23

5

Is the amount at (d) ≥ the income free area (IFA)?

if yes, copy the IFA to (e)

if no, copy (d) to (e)

(e) $120.00

6

Multiply (e) by 55% and write the amount at (f)

(f) $66.00

7

Is the amount at (d) ≤ IFA?

If yes, write $0 to (g)

If no, subtract the IFA from (d), and write the amount to (g)

(g) $42.23

8

Multiply (g) by 27.5% and write the amount at (h)

(h) $11.61

9

Add up the amounts at (c), (f) and (h) to determine the formulated rate.

$131.87

Thus the Limitation Rate (rounded down to the nearest dollar) is $131.00 each per fortnight.