Income & Assets Tests
If a student is dependent on their parents, the Parental Means Test is used to measure if the parents can afford to financially support the student. If the student has a partner, the partner’s means are tested. All students are subject to a Personal Income test. A personal assets test applies to independent students.
Dependent students will be subject to an income and assets test of their natural parents (or adoptive parent or guardian) or, if their parents have separated, the natural parent with whom they last lived. If this parent now has a new partner, then the partner's income must also be included. This is the case unless the student does not normally live with the new step parent.
There are 3 types of parental means tests for dependent students:
- Income test: This test is mainly based on parents' taxable income for the previous financial year. It includes any fringe benefits and overseas income.
- Assets test: This test assesses the family's net assets excluding the family home. Only 25% of the assets pertaining to a farm or business are taken into account.
- Actual Means test: This test will apply for parents only it if they have overseas income, overseas assets, family trusts, partnerships, are self employed etc. This test is based on actual family expenditure for the financial year prior to the year of study.
For a rough guide to Youth Allowance rates based on the parental income test, visit the Department of Human Sevices' Rate Estimator.
Adjustments to Parents' Income
Adjustments are made for the number of dependent students in the family. The amount depends on the age of siblings and whether or not they live at home.
Has there been a recent drop in parents' Income?
There are a number of concessions for families who have recently suffered a drop in income. This is called the Current Income Concession.
This assessment may apply if your parents' income is likely to be substantially reduced in the current financial year, and the drop will last at least 2 years. This concession allows the current rather than the previous financial year's income to be used as the basis for assessment. Note: No possibility exists for the assessment to be based on income for the financial year which starts during the current year of study.
(2) Special assessment:
Special Assessment will apply if an income tested parent receives:
- a pension or benefit from the DSS (now FACS) or Department of Veteran's Affairs, and
- holds a current low income earner Health Care Card, or
- if they receive Farm Household Support from the Department of Primary Industries and Energy (under Part C of the Rural Adjustment Scheme).
Under Special Assessment, the Youth Allowance income test on parental income is waived.
Personal Income Test
Regular earnings can have an effect on your payment and need to be reported to Centrelink. Centrelink also need to know if you have no earnings as this has an effect on your income bank.
Income bank - The mystery explained
Any fortnight where less than $400 is earned, the amount not earned can be carried forward and added to potential earnings later. This is known as the Income Bank.
Any credit in the Income Bank (which is a hypothetical balance and not an actual bank account) can be carried forward. This system allows students to concentrate their earnings in the holiday periods. If you need clarification of the Income Bank system please contact your Centrelink office. Income bank credits can carry from one year to the next.
Liquid Assets Test
If a student has more than $5000 in liquid assets, a waiting period may have to be served before Centrelink payment commence. Liquid Assets include: cash on hand, shares and debentures and term deposits - generally, readily available funds which can be accessed within 28 days. For every $500 amount over $5000, there is a waiting period of one week, up to a maximum of thirteen weeks.
The amount of liquid assets that you have can be reduced by immediate and anticipated living and educational expenses. It is possible to self-serve the waiting period (That is - delay applying until after the appropriate period).
Personal Assets test
If a student is considered independent there is a personal assets test. There is a different limit to allowable assets for homeowners and non homeowners.
Living in a 'Marriage-like relationship' - the Partner Income Test
Many students are shocked to find their Centrelink payment cancelled when they report that they are living with a boyfriend or girlfriend. Their partner's income can affect their payment - sometimes dramatically, particularly if the partner is working. This applies to both same-sex and heterosexual couples.
Students considered 'dependent' usually will not be subject to the partner income test, as they will already be subject to the parental income test. However, students will be considered 'independent' and subject to the more stringent partner income test after they have been living in a de facto relationship for 12 months or turn 22.
Sudden loss of income can have major repercussions on academic performance and personal relationships. We strongly advise students who plan to move in with their partner to contact Financial Aid and discuss the financial implications before taking this step.