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Example 4 - Single Service Pensioner on Reduced Rate due to Non-financial Assets

A single service pensioner on reduced rate of service pension (due to non-financial assets). No other income.

Reduced rate Service pension

$50.00

Total

$50.00

Calculation

Step

Action

1

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

(a) $50.00

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) $50.00

3

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

(c) $7.00

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) $0.00

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) $0.00

6

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

(f) $0.00

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) $126.80

8

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

(h) $0.00

9

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

$7.00

Thus the Limitation Rate (rounded down to the nearest dollar) is $7.00 per fortnight.