Australia's Future Tax System

Architecture of Australia's tax and transfer system

2.11 Additional tax and transfer tables (continued)

Table 2.21: Income support payments as at 1 July 20081

Rates (per fortnight) Income test (per fortnight) Assets test
Pensions — includes Age Pension, Disability Support Pension, Carer Payment, Parenting Payment Single, Bereavement Allowance, Wife Pension, Widow B Pension and Service Pension

Single: $546.80

Partnered: $456.80 (each)

Single DSP under 21, no children

(Youth Allowance plus Youth Disability Supplement of $100.60, total cannot exceed adult DSP rate):

<18, at home: $295.10

18-20, at home: $334.50

16-20 independent: $456.00

Member of a couple: $456.00

Rates are adjusted each March and September in line with increases in the CPI. Single adult rates are also benchmarked against 25% of MTAWE, with a proportional flow-on to partnered rates.

Pensions are taxable, except for DSP and Invalidity Service Pension paid to people under Age Pension age, and Carer Payment and Wife Pension spouse where the person being cared for or the spouse is receiving a non-taxable pension.

Free Area:

$138 (single)

$240 (couple)

plus $24.60 per child

Taper:

Singles: 40% of income above free area

Couples: 20% of combined income above free area for each member of couple.

Working Credit* available if aged under Age Pension age.

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

Some income types are subject to different arrangements (eg, compensation payments may be deducted directly from the rate otherwise payable).

Homeowners for full pension:

Single $171,750
Partnered (combined): $243,500

Non-Homeowners for full pension:

Single: $296,250

Partnered (combined): $368,000

Assets over the limit reduce pensions by $1.50 per fortnight for every $1,000 above the threshold.

Homeowners for part pension:

Single: $540,250

Partnered (combined): $856,500

Non-Homeowners for part pension:

Single: $664,750

Partnered (combined): $981,000

(Amounts are higher if receiving RA or separated due to illness)

For Parenting Payment Single, see Allowances.

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

Allowances — excluding student and youth payments. Includes Newstart Allowance, Parenting Payment Partnered, Sickness Allowance, Mature Age Allowance, Widow Allowance and Partner Allowance

Higher single rate: $472.80

Lower single rate: $437.10

Partnered: $394.40

Higher single rate applies to: a person with a dependent child; or a person aged 60 or more and on income support for at least 9 months; and to partnered people separated due to ill-health, infirmity or because the partner is in gaol.

Lower single rate applies to singles not covered by the higher rate.

Rates are adjusted each March and September in line with increases in the CPI. Payments are taxable.

Free Area: $62

Tapers: 50% of income $62-$250,

60% of income above $250

Partner income test:

Free Area: $751

Taper: 60%

If partner is a pensioner, then 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 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% taper.

Working Credit* applies.

Homeowners ineligible for allowance if assets exceed:

Single: $171,750

Partnered (combined): $243,500

Non-Homeowners ineligible if assets exceed:

Single: $296,250

Partnered (combined): $368,000

Allowances - youth and student payments. Includes Youth Allowance (Student), Austudy and Abstudy

Youth Allowance (YA)

<18, at home: $194.50

18 +, at home: $233.90

YA and Austudy

Partnered, no children; and Away from Home: $355.40

Single, with children: $465.60

Partnered, with children: $390.20

Higher rates are available to long‑term income support recipients aged 21 or over commencing full-time study or an apprenticeship.

YA with partial capacity to work receive YA rates plus Youth Disability Supplement of $100.60 (total is capped at adult Newstart rates).

Rates are adjusted each January in line with increases in the CPI.

Payments are taxable.

Personal income test

Free Area: $236

Tapers: 50% of income $236-$316;
60% of income above $316

Student Income Bank** available.

Partner income test as for other allowances.

Parental income test

YA for non-independent young people is paid subject to a parental income test, unless a parent receives income support or holds a low‑income Health Care Card. The family actual means test applies to specified families.

YA for independent young people and Austudy payment are assets tested as for other allowances.

YA for non-independent young people is paid subject to a family assets test, unless a parent receives income support or holds a Health Care Card.

Income support — veterans (does not include payments of a compensatory nature)

Income Support Supplement (ISS) is payable to eligible war widow(er)s with a maximum fortnightly rate of $163.20.

Indexed in March and September with reference to CPI and MTAWE.

ISS is not taxable when recipient is aged less than 65, but is taxable otherwise.

Free area for ISS: $1,097 (single).

ISS Taper: 40% of income above free area.

Different ISS free areas and taper rates apply for members of a couple.

Homeowners for full ISS*:

Single: $427,500

Non-Homeowners for full ISS*:

Single: $552,000

Assets over this limit reduce the ISS by $0.375 per fortnight for every $250 above the threshold.

Different thresholds apply for members of a couple.

Safety net

Special Benefit rate is discretionary but cannot exceed Newstart or Youth Allowance rates otherwise applicable.

No Free Area. $1 for $1 withdrawal rate. Plus strict liquid asset limits.

As for allowances.

  1. Veterans and their dependants are entitled to a further range of payments which are of a compensatory nature, and as such are not detailed here.

* Working Credit: a credit accrues for each $1 of unused free area (up to $48 per fortnight) up to a maximum of 1,000 credits. Credits can be used to reduce the amount of earned income subject to the personal income test.

** Student Income Bank: students can accrue up to $6,000 of unused free are to reduce income in other periods.