Australia's Future Tax System

Final Report: Detailed Analysis

Chapter F: The transfer system

F2. Means testing

F2–4 A new system would treat assets more consistently

Recommendation 88:

The current income and asset tests for income support payments should be replaced with a comprehensive means test based on a combined measure of employment income, business income and deemed income on assets. The comprehensive means test would:

  1. extend deemed income on assets in addition to other financial assets, including superannuation income streams, rental housing and other asset classes (whether income-producing or not). Superannuation income streams where deeming income would be difficult to apply would be tested on gross income but with an actuarially fair deduction for capital;
  2. have low and high deeming rates based on the returns expected from a portfolio of assets held by a prudent investor. These rates should be set by reference to an appropriate benchmark;
  3. continue the means test exemption for owner-occupied housing up to a high indexed threshold;
  4. set a high capped exemption for personal-use assets;
  5. retain the current concessional treatment of employment income for certain allowances and pensions;
  6. have different free areas for pensions and allowances; and
  7. remove the liquid assets waiting period and the sudden-death cut-out that applies to people on certain payments.

Means testing should continue to be part of the transfer system. However, the inequitable treatment of assets under the current means test highlights the need for reform. The objectives of reforming the means test would be to:

  • ensure that the full range of a person's assets is effectively and fairly assessed;
  • achieve greater neutrality in the treatment of different forms of savings;
  • ensure people have appropriate incentives to use their savings effectively; and
  • provide appropriate incentives for people, particularly for older Australians, to undertake paid work.

A comprehensive means test

The Review Panel foreshadowed in its report on strategic issues in the retirement income system that there should be a comprehensive means test that removes the assets test and extends the income test by deeming returns on a greater range of assets (AFTS 2009). While that report focused on retirement income payments, the same holds for other income support payments, such as Disability Support Pension, Parenting Payment and Newstart Allowance.

The removal of the assets test would make income the sole test of a person's means. However, removing the assets test without capturing non-income-producing assets would worsen the inequities evident in the current means test between these assets and financial assets. Therefore, to protect equity, an income would need to be deemed on non-income-producing assets to ensure they are incorporated into the means test.

Extending deemed returns to a broader range of assets would target the first three objectives for a comprehensive means test outlined above. It would include a broad range of a person's private means (income and assets) in the means test. It would be fairer than the current means test arrangements, as it would treat most assets in the same way when determining a person's eligibility for income support. It would also encourage a person to use their assets to generate an income to support themselves while they are accessing income support.

The effectiveness of a comprehensive means test would depend on having the broadest possible asset and income base with minimal exclusions. If there were significant exclusions, there may still be a need for a residual assets test. There is a case for special arrangements to apply to owner-occupied housing and to personal-use assets (that is, assets that do not generate an income but may have sentimental value). These arrangements are discussed in the section titled 'Value of assessable assets' below.

The structure of the base for a comprehensive means test is illustrated in Chart F2-3.

Chart F2-3: A comprehensive means test base

    Chart F2-3: A comprehensive means test base

  1. Deeming on account-based superannuation assets would apply from Age Pension age. Special arrangements would apply to income streams where deeming is difficult. Superannuation assets would not be deemed for people under Age Pension age unless they are being drawn down.
  2. Free areas and withdrawal rates would apply to determine the amount of income support payment.

Under the means test, a person's income would depend on the value of their assets and the deeming rates that apply to these, in addition to their other income (income from employment, overseas pensions and other non-asset backed sources). Income for means testing purposes would continue to be based on a person's ordinary income — that is, income from employment, savings and other sources before deductions — as it better reflects a person's capacity to support themselves. However, payments should not be reduced as a result of the inclusion of compulsory superannuation contributions in taxable income (see Effect on government payments and child support in Section A2-2 Taxing retirement incomes).

The current income and assets tests treat income-producing assets in different ways. Under the income test, deeming is generally applied to the gross value of financial assets. By contrast, the assets test generally includes only the net value of assets. Under the comprehensive means test, deeming would be based on the net value of assets (that is, the market value of the assets less any encumbrances, such as loans, secured against them). The net value of assets provides a more accurate reflection of the amount of assets a person has at their disposal. Arrangements would need to be put in place to ensure that the allowance for encumbrances was not abused.

The amount of income support payments would also depend on the free area (the level of income a person can have before it affects their payment) and the withdrawal rate (how quickly payments are reduced as income increases). Chart F2-4 outlines the key components of a comprehensive means test.

Chart F2-4: How the means test would work

Chart F2-4: How the means test would work

There may be circumstances where these parameters are adjusted to achieve particular participation or distribution goals. For example, for single parents and people with a disability, the means test arrangements should provide an incentive to work part-time and recognise the higher costs of work they may face (see Recommendation 85 and Recommendation 86).

Value of assessable assets

Deeming is a device to establish an income from an asset. The principle underlying deeming is that where an asset value can be simply and effectively determined, deeming would result in a fairer and straightforward means test assessment.

Deeming an income on more assets would involve more frequent assessment of their value. This would make the means test more responsive to changes in people's circumstances, including changes in market conditions. As with deeming on financial assets, this does not mean that income support recipients would need to report the value of their assets fortnightly.

Extending deeming would also change the means testing arrangements for many assets, including investment properties and some pensions paid from superannuation funds and life insurance companies.

Rental income from an investment property is currently included in the income test. Under the base for a comprehensive means test, income would be deemed on the value of the property. Other properties such as holiday homes would be treated in a similar way. The value of properties would be determined, and reviewed, using the approach currently adopted under the assets test, with properties valued at their net market value.

Account-based superannuation pensions, such as allocated pensions, would be included in the extended deeming arrangements. Such pensions are similar to other financial assets as there is an easily determined account value. Under the base for a comprehensive means test, an income would be deemed on the account value like other financial assets. The current rules for the assessment of these products (gross income minus a deduction for capital) would no longer apply.

However, there are some assets where deeming may be difficult to apply. In these cases other arrangements may be appropriate. Some examples of these assets are set out below.

Some people may receive a guaranteed income for life that commences when they retire. This may be paid from a defined benefit superannuation fund or purchased from a life insurance company. The Review has also identified the role that deferred annuities can play in an ageing society (see Section A2-3 Responding to increasing life expectancies). These products commence from a specified age and are a type of insurance against running out of income in retirement. When a person dies their premium can be used to support other people who have purchased this insurance. Deeming an income on these products would be difficult because an underlying asset value cannot be easily identified.

Where deeming cannot be simply and accurately applied, the gross income received may be the simplest measure of the asset's value to the person. However, as part of the gross income of these products is a repayment of the person's own capital, the income should be reduced by an actuarially fair deduction for capital.

The base of the comprehensive means test would include income received from private companies, sole proprietors, partnerships and trusts. Under the current system, income received from these arrangements is included in the income test (less deductions for expenses necessary to operate the business), and the value of the trust or company assets is included in the assets test. Income from these arrangements would be included in the base, but further work would need to be undertaken on the appropriate method for assessing assets in these entities.

Personal-use assets such as furniture, cars and clothing are usually purchased for reasons other than to generate a return. People may also have assets that have sentimental value, such as small collections. These assets are included under the current means test via the assets test, which effectively deems an income on them once a pensioner has total assets above the assets test free area. However, the base of the comprehensive means test would result in more of these assets being assessed. To help address sensitivities about reductions to payments due to the assessment of income from these assets, there would be a capped exemption from the means test for these assets. This would particularly assist people with moderate asset holdings.

The definition of personal-use assets would need to be considered carefully — in particular, whether it would extend beyond personal effects, household contents and cars to include boats and caravans. Such assets could be assessed at their market value, as they are currently, with the owner's estimate of market value accepted in some cases.

Deeming rate

Deeming is a device to establish an income from an asset. An appropriate deeming rate would be set with reference to the returns likely to be generated on a portfolio of assets a prudent investor is likely to hold. Actual income above the level of deemed income is not included in the means test.

Currently there are low and high deeming rates on financial assets that are set by agreement between the Minister for Families, Housing, Community Services and Indigenous Affairs and the Minister for Education, Employment and Workplace Relations. Financial assets include investments such as bank deposits, shares and managed investments.

The low deeming rate is set at a rate of return that people with relatively few savings are likely to receive. It also reflects the returns on highly liquid and safe assets, such as bank deposits, which are likely to be preferred by people with few savings. This rate applies to the amount of financial assets a person has below a prescribed threshold. The high deeming rate reflects an expectation that people with more savings can obtain, and should seek, higher returns on some of their savings. This rate applies to the value of financial assets above the threshold.16

The deeming rate applied is likely to vary between different classes of income support recipients because of the level of assets they hold. Few young people, for example, will have sufficient assets to incur the higher deeming rate, while many retirees will.

Chart F2-5 shows how these deeming rates have changed over time. Given the likely risk preferences of income support recipients with low asset balances, retaining both low and high deeming rates remains appropriate.

Chart F2-5: Deeming rates — March 1999-August 2009

Chart F2-5: Deeming rates — March 1999-August 2009

Source: Department of Family, Housing, Community Services and Indigenous Affairs.

However, it would be more transparent if these rates were set with reference to a benchmark rather than by the relevant ministers. The low and high rates could be set at a discount or premium to a relevant benchmark, such as the cash rate or Treasury bond rate, at least twice a year. A mechanism would also be put in place to allow for changes to the deeming rates to occur more regularly in case of sudden movements in the market.

Other income

The actual value of employment income and overseas pensions would be included in the means test, subject to any disregards or discounts applied to particular groups (see below).

One of the objectives of reforming the means test is to provide appropriate incentives to work, particularly to older Australians. For this reason the existing concessional treatment of employment income for some income support recipients should be retained. For example, under the Work Bonus, only half of the first $500 of fortnightly employment income is included in the means test for pensioners over Age Pension age.17

The Working Credit scheme, which applies to other income support recipients,18 and the Student Income Bank19 should also be retained. Working Credit allows a person to accrue up to $1,000 of credits they can use to offset employment income once they commence work.20 Student Income Bank allows a person to accumulate up to $6,000 of any unused portion of their fortnightly income free area that can later be used to offset income above the free area. This recognises that students generally earn much of their income during their holidays, rather than throughout the year.

Means test free area

Currently there are separate free areas for the income and assets tests. These free areas set the level of income or assets a person can have before they start to lose some of their payment. Tables F2-2 and F2-3 following set out the current free areas and cut-out points for pensions and allowances.

Table F2-2: Pension income and assets tests free areas and cut-out points(a)

Income test (per fortnight) Assets test

Free Area:

$142 (single)
$248 (couple)

Cut-out points:

$1,485.80 (single)
$2,274.00 (couple)

Pensions are withdrawn at 50 per cent for every dollar above the free area.(b)

The income test does not apply to a permanently blind person receiving an Age, Service or Disability Support Pension.

Cut-out points for part pension may be higher if receiving Rent Assistance or if separated due to illness.

Cut-out points for full pension


Single $178,000
Partnered (combined): $252,500


Single: $307,000
Partnered (combined): $381,500

Cut-out points for part pension


Single: $626,000
Partnered (combined): $928,500


Single: $755,000
Partnered (combined): $1,057,000

Pensions are withdrawn at a rate of $1.50 per fortnight for every $1,000 above the threshold.

Cut-out points for part pension may be higher if receiving Rent Assistance or if separated due to illness.

The assets test does not apply to a permanently blind person receiving an Age, Service or Disability Support Pension.

  1. Cut-out points as at 20 September 2009. Free areas are indexed in line with CPI and increase from 1 July each year.
  2. Parenting Payment (Single) recipients have a withdrawal rate of 40 per cent. They have a free area of $166.60 per fortnight, plus $24.60 for each additional child.

Source: Australian government administrative data.

Table F2-3: Allowance income and assets tests free areas and cut-out points(a)

Income test (per fortnight) Assets test

Free Area:



50 per cent on income between $62-$250
60 per cent on income above $250

Cut-out points:

$853.34 (single)
$1,558.34 (couple)

Partner income test:

Free Area: $780
Withdrawal: 60 per cent

If the recipient's partner is a pensioner, a joint income test applies. Individual income is calculated as half the combined income of the couple. This amount is then subject to the person's individual income test.

If the recipient's partner is not a pensioner, a sequential income test applies. Individual income test is applied to own income. Partner income over the partner income free area is subject to a 60 per cent withdrawal.

Cut-out points for part pension may be higher if receiving Rent Assistance or if separated due to illness.


Single $178,000
Partnered (combined): $252,500


Single: $307,000
Partnered (combined): $381,500

If assets are assessed as being above the free area by any amount entitlement to payment is zero. The free area and cut-out points are therefore identical.

  1. Cut-out points as at 20 September 2009. Free areas are indexed in line with CPI and increase from 1 July each year. Allowances include Newstart Allowance, Parenting Payment Partnered, Sickness Allowance, Mature Age Allowance, Widow Allowance and Partner Allowance and exclude student and youth payments. Allowance assets test limits also apply to Parenting Payment (Single). Cut-out points for student and youth payments vary based on age, whether the person is living at home or not, and whether they are partnered. A single person aged 18 or over living at home can earn up to $236 a fortnight and still receive full student payments, with the benefits cutting out at $656. If they were living away from home, these limits are $236 and $868 respectively. The personal income threshold is proposed to increase to $400 from 1 July 2012. The withdrawal rates are set out in the Withdrawal rates section below.

Source: Australian government administrative data.

Free areas serve a range of purposes, including to:

  • avoid reducing payments on the basis of small levels of income and assets;
  • reduce the administrative burden associated with reporting on small levels of income and assets;
  • provide some recognition of the costs associated with obtaining income (whether through employment or investment); and
  • provide incentives for people to take up paid work.

These objectives must be balanced against the broader objectives of maintaining a targeted and sustainable income support system. There are different free areas depending on the type of income support payment. The pension free areas are currently more generous than those for allowances. The different free areas for pensions and allowances should be maintained under the proposal.

The free areas for pensions are designed to protect the adequacy of the income of pensioners with small amounts of non-pension income. Many pensioners are not able, or expected, to support themselves through paid work. This means that pensioners have a heavier reliance on their savings to provide their non-pension income. A higher free area ensures they are not forced to dissipate these savings too quickly. At the same time the higher free area provides an incentive for pensioners to supplement their income where they are able to do so.

The free areas for allowances are set at a level that ensures that targeting is met and workforce incentives are maintained. This recognises that people on allowances generally have more opportunity to support themselves through paid work.

There are also free areas for family payments and child care assistance. These operate to ensure that family payment and child care assistance withdrawal do not coincide with income support payments for those likely to be able to take up employment (for example, allowance recipients).

Withdrawal rates

A person's income support payment is reduced by a set amount for every dollar of income, or $1,000 of assets, in the case of asset tested pensions, above the respective free areas. The withdrawal rates vary between the various payments. For example, the income test withdrawal rate for the Age Pension is 50 per cent while for Newstart Allowance there are two withdrawal rates: 50 per cent applies for income over $62 per fortnight up to $250 per fortnight and 60 per cent applies from that point.

The design of withdrawal rates seeks to balance a range of objectives, including workforce incentives and targeting assistance to those most in need. In general, a steeper withdrawal rate would reduce incentives to work and save (although this impact can be reduced by the use of activity requirements). A shallow withdrawal rate would not reduce incentives by as much but, as more people would receive some payment, it would increase the number of people exposed to reduced incentives to work and save. In the case of Newstart Allowance, the stepped withdrawal rate of the income test seeks to balance these two effects.

Arrangements for couples

The means test for members of a couple currently operates differently depending on the type of payments the couple receives. If neither member of the couple receives a pension, a person's income first reduces their own payment. If their income completely withdraws their payment, their remaining income then reduces their partner's payment. This arrangement does not apply to couples who are both pensioners, or where one receives an allowance and the other receives a pension. In these cases, a person's income is split 50:50 with their partner and therefore reduces both payments at the same time.

Requiring pensioner couples to split their income in this way can weaken their incentives to participate in the workforce. It also means that a person's payment is reduced at a low level of partner income, which may not reflect an increase in the resources available to them. The option of having a consistent treatment of income for all couples on income support should be further explored. However, this should take into consideration the potential increase in complexity these people would face in how they manage their affairs. This complexity would arise due to the distribution of assets between a pensioner couple affecting the total pension payment to the couple.

Arrangements for payments to young people

A parental income test applies to people receiving Youth Allowance and ABSTUDY who are regarded as being dependent on their parents. Currently, Youth Allowance and ABSTUDY are withdrawn at a rate of $1 for every $4 above the parental income threshold (currently $32,800), which is based on the previous year's taxable income.21

A family assets test also applies to Youth Allowance and ABSTUDY. Under this test, a person is not eligible for a payment once their family's assets exceed a threshold (currently $571,500).22

Given the need for a means test to consider most of the resources available to an individual, the parental income test and family means test should remain until the individual is assessed as being independent.

Interactions with taxation settings

Making transfer payments non-taxable will lead to simpler interactions between the tax and transfer systems (see Section A1 Personal income tax). When payments are withdrawn at the same time as tax is paid, the stacking of the means test and tax scale can result in high effective tax rates. This can harm participation incentives. Where appropriate, means tests could be adjusted to take account of the underlying tax scales to deliver a desired effective tax rate. Given the different treatment of income and period of assessment in the two systems, this may be difficult to achieve precisely.

Transitions to a new system

A more equal treatment of assets under the comprehensive means test base may reduce a person's entitlement to income support if they have assets not currently captured by the income test. Transitional arrangements could be put in place to reduce the impact of this change. This could include freezing the current level of payment a person receives but not indexing that amount until their income support is equivalent to that which would apply under the new arrangements.

If such arrangements were considered too complex, an alternative would be to announce that the comprehensive means test would be introduced some years in the future. This would give people time to make adjustments. This approach has been adopted for the increase in superannuation preservation age from 55 to 60 and increases in Age Pension age.

Owner-occupied housing

Owner-occupied housing plays an important role in Australian society. In the strategic report on the retirement income system (AFTS 2009), the Panel supported continuing the exemption of owner-occupied housing from the means test. However, the report highlights that an uncapped exemption provides for very high levels of wealth to be sheltered from means testing.

Owner-occupied housing would continue to be exempt from the proposed comprehensive means test base. However, to increase the fairness of the means test, a cap should be applied to the exemption. Only the amount above the cap would be included in the means test and subject to deeming. This would ensure that the means test exemption applies to housing that meets the primary role of providing shelter and other support. Beyond this point, housing can be considered like any other asset a person purchases with an expectation of generating a future return.

The cap would ensure that the means test targets only housing of significant value. For example, it is estimated that a cap of $1.2 million would currently mean that around 10,000 age pensioners' homes would be partially assessed under the means test. In setting a threshold, consideration should be given to the effect on regional areas.

The design of a comprehensive means test also needs to deal with housing transitions. Neutrality between housing choices is an important public policy goal. These choices include whether to be a homeowner or renter, and different home ownership options, for example, downsizing from a three-bedroom family home to a smaller unit.

Currently, a number of aspects of the tax and transfer systems may deter people from downsizing. A person must pay stamp duties when choosing to sell their home and purchase a new one. The Review is recommending that stamp duty be reduced or removed (see Section C2 Land tax and conveyance stamp duty). Selling a home can also result in a person losing part of the income support payment. For example, a person who sells their home for $600,000 and purchases a new one for $400,000 would have the $200,000 difference included in the means test.

In the existing means test arrangements, the difference in the assets test free areas for homeowners and non-homeowners reduces the disincentives for a pensioner to sell their home and become a renter. While the assessable assets of a pensioner who has sold their home and becomes a renter increase, they benefit from a higher free area.

The removal of the assets test and assets test free areas under a comprehensive means test would remove any difference in the treatment of homeowners and non-homeowners. The reforms to Rent Assistance recommended in Section F5 (Housing assistance) would mean that homeowners and renters would be treated equitably in the income support system. There would therefore be no reason to maintain different free areas for homeowners and non-homeowners under the comprehensive means test. However, consideration would need to be given to how retirement village entry contributions and eligibility to Rent Assistance for those in retirement villages might be assessed.

The proposed comprehensive means test would have less impact than the current dual means tests on income support payments for people who move from owner-occupied housing to renting. This is due to the combination of the proposed reforms to Rent Assistance and the lower pension withdrawal rates that would apply under a comprehensive means test. The lower effective withdrawal rate would also reduce disincentives to move from larger to smaller houses. A pensioner who moves from a large to a small house would still be moving assets from an exempt to an assessable environment but the lower withdrawal rate in the new comprehensive means test would result in an increase in their total income.

In addition, the Review is recommending that the comprehensive means test base incorporate rules that create flexibility for homeowners who experience temporary changes in their circumstances, or who are moving from one housing arrangement to another. These rules would generally be based on the assets test rules that currently operate in these circumstances:

  • Where an income support recipient temporarily vacates their principal home, the home continues to be considered as their principal home and remains exempt under the assets test for up to 12 months. The exemption applies even when the person expects to be absent for more than 12 months. Where the home is lost or damaged the temporary absence can be extended to up to 24 months if certain criteria are met.
  • The value of an accommodation bond of unlimited value paid on entry to residential aged care is an exempt asset. A pensioner's former principal home is generally exempt from the assets test for up to two years from the time they move into residential aged care.
  • The proceeds from the sale of a pensioner's principal home they intend to use to purchase another home are an exempt asset, generally for up to 12 months.

Liquid assets waiting period and sudden-death cut-outs

The liquid assets waiting period applies to Newstart Allowance, Youth Allowance, Sickness Allowance and Austudy. If a person would otherwise be eligible for one of these allowances but has more than $5,500 in liquid assets ($11,000 for a couple or single with dependents) they have to wait for a period before they can access a payment. This period can range from one week to 13 weeks depending upon the level of liquid assets. The purpose of the waiting period is to ensure that people rely on their readily accessible assets such as bank deposits before becoming eligible for income support.

However, the liquid assets waiting period can result in inconsistent and inequitable treatment of some people with relatively small levels of savings. It can act as a disincentive to save, especially for people who expect to need income support in the near future. It can also encourage people to run down their savings more quickly in order to qualify for income support.

A more consistent treatment of assets for means testing purposes would provide a better measure of means for people applying for allowances, removing the need for the liquid assets waiting period.

A sudden-death assets test exists for Newstart Allowance, Widow Allowance, Partner Allowance, Sickness Allowance, Special Benefit, Parenting Payment, Youth Allowance and Austudy. This means that once a person's assets (not including the family home) are $1 above the threshold they lose 100 per cent of their payment. The Review is not recommending that this aspect of the current means test arrangements be retained in the comprehensive means test. A sudden-death threshold can result in an inequitable situation where people with assets marginally below the threshold receive full income support while people with assets marginally above the threshold receive no support.

How the comprehensive means test affects pensioners and allowees

Table F2-4 sets out some indicative means test parameters for a single age pensioner and Newstart Allowance recipient that may apply under a comprehensive means test. The actual impact of the proposals on payments will depend on the setting of parameters such as the precise treatment of particular assets (for example, personal-use assets and assets in trusts), withdrawal rates, free areas and transition arrangements.

Table F2-4: Indicative parameters of a comprehensive means test (single person)

  Age pensioner Newstart allowee
Free area (per fortnight) $142 $62
Withdrawal rate (on income above the free area) 50 per cent 65 per cent
Employment income The means test only includes 50 per cent of the first $500 of fortnightly income. Amounts above $500 are fully included in the means test. 100 per cent from first dollar of income is included in the means test.
Treatment of assets

First $42,000 of assets deemed at low rate
Assets above $42,000 deemed at high rate


Owner-occupied housing up to a threshold of $1.2 million
First $75,000 of personal-use assets

Same as for pensioners

The comprehensive means test would reduce the effect assets have on a person's payment relative to the effect from the current assets test. Under the indicative comprehensive means test the withdrawal rate on a pension would reduce to 50 per cent until the payment phases out completely. Under the current assets test, the effective withdrawal rate of a pension can be higher than 50 per cent. For example, a pensioner loses $1.50 of payment per fortnight (or $39 a year) for every $1,000 of assets over the free area. This equates to an effective marginal withdrawal rate on income of 78 per cent, assuming a 5 per cent annual return on those assets. This rate will vary depending on asset holdings and the assumed rate of return.

The indicative comprehensive means test would increase the assets people could hold before their payment is phased out completely. It would also increase the effective 'cut-out' point for allowees who rely solely on income from their assets.

16 The low deeming rate applies to: the first $42,000 of total financial assets for a single allowee (a person receiving an allowance) or pensioner; the first $70,000 of a pensioner couple's total financial assets; and the first $35,000 of total financial assets for each member of an allowee couple. These amounts are indexed yearly to the consumer price index (CPI).

17 This commenced from 20 September 2009. For example, a person over Age Pension age who has $400 of employment income per fortnight will only have $200 included in the means test for that fortnight.

18 Working Credit applies to Newstart Allowance, Youth Allowance (Job Seeker), Partner Allowance, Mature Age Allowance, Sickness Allowance, Widow Allowance, Parenting Payment (Partnered), Parenting Payment (Single), Wife Pension, Widow B Pension, Carer Payment, Disability Support Pension and Bereavement Allowance.

19 Student Income Bank applies to full-time students who receive Youth Allowance, Austudy or ABSTUDY.

20 A person accumulates credits if their income from all sources is less than $48 a fortnight.

21 The threshold increases for each additional child in the parent/s care. The parental income test does not apply if the parent/s gets an income support payment or has a low-income Health Care Card. In determining a person's payment the parental income test applies before the personal income test.

22 A 75 per cent discount applies for farm/business assets.