The phrase 'engaged in work on his or her own account' clearly is directed at situations of self-employment, including situations in which the young person is genuinely working as an independent contractor.
In its context, 'ordinarily' has the meaning 'usually' or 'on a regular basis'. Accordingly, it is necessary to examine the factual situation in each case to determine whether the young person is 'ordinarily' in self-employment. Common situations are discussed below.
If the young person has only recently commenced self-employment, it would be inappropriate to determine that they are 'ordinarily' engaged in work on their own account. A history of self-employment of more than three months is an appropriate period for this assessment. It would also be appropriate to consider periods of work for another employer in making this assessment.
On the other hand, if the young person has a long history of self-employment and/or employment, and, just before the relevant event they temporarily ceased those activities, it may be appropriate to determine that they are still 'ordinarily' engaged in work on their own account.
The reasons for the cessation of self-employment may be relevant, for example:
- a decision to cease work and return to full-time study
- incapacity for work which is likely to be of considerable duration.
If a young person is engaged in work on their own account, but the business is not profitable and has not been profitable for some time, it may be the case that they continue to be financially dependent upon another person. In such a case, the self-employment could be disregarded for the purposes of the definition of 'prescribed child'.
A student aged between 16 and 24 (inclusive) who undertakes:
- full-time self-employment during school, college or university vacations, or
- part-time self-employment throughout the year
will continue to be regarded as a full-time student and not 'ordinarily engaged in work on his or her own account' provided their net annual income from employment and self-employment is less than 200% of the 'income bank' amount for Austudy Payment under S1067L-E2 of the Social Security Act.
In 1999/00, 2000/01, 2001/02 and 2002/03, this amount is $12,000 (200% x $6,000 allowable income).