SOCIAL SECURITY ACT 1991 - SECT 8 Income test definitions

Commonwealth Consolidated Acts

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SOCIAL SECURITY ACT 1991 - SECT 8

Income test definitions

(1) In this Act, unless the contrary intention appears:

"approved scholarship" means a scholarship in relation to which a determination under section 24A is in force.

"available money" , in relation to a person, means money that:

(a) is held by or on behalf of the person; and

(b) is not deposit money of the person; and

"deposit money" , in relation to a person, means the person's money that is deposited in an account with a financial institution.

"dispose of income" has the meaning given by section 1106.

"domestic payment" has the meaning given by subsection (3).

"earned, derived or received" has the meaning given by subsection (2).

"employment income" , in relation to a person, means ordinary income of the person that comprises employment income under subsection (1A) and includes ordinary income that is characterised as employment income of the person because of the operation of subsection (1B).

"exempt lump sum" has the meaning given by subsection (11).

"home equity conversion agreement" , in relation to a person, means an agreement under which the repayment of an amount paid to or on behalf of the person, or the person's partner, is secured by a mortgage of the principal home of the person or the person's partner.

Note: see also subsection (7).

"income" , in relation to a person, means:

(a) an income amount earned, derived or received by the person for the person's own use or benefit; or

(b) a periodical payment by way of gift or allowance; or

but does not include an amount that is excluded under subsection (4), (5) or (8).

Note 1: See also sections 1074 and 1075 (business income), sections 1076‑ 1084 (deemed income from financial assets), sections 1095 to 1099DAA (income from income streams), section 1099F (exempt bond amount does not count as income) and section 1099K (refunded amount does not count as income).

Note 2: where a person or a person's partner has disposed of income, the person's income may be taken to include the amount which has been disposed of--see sections 1106‑1112.

Note 3: income is equivalent to ordinary income plus maintenance income.

"income amount" means:

(a) valuable consideration; or

(b) personal earnings; or

(d) profits;

(whether of a capital nature or not).

"income from personal exertion" means an income amount that is earned, derived or received by a person by way of payment for personal exertion by the person but does not include an income amount received as compensation for the person's inability to earn, derive or receive income through personal exertion.

"ordinary income" means income that is not maintenance income or an exempt lump sum.

Note 1: for maintenance income see subsection 10(1).

Note 2: amounts received as a series of periodic compensation payments may result in reduction of the person's rate of social security pension or benefit under Part 3.14: if this happens the amounts are not counted as ordinary income (see section 1176).

Note 3: For provisions affecting the amount of a person's ordinary income see sections 1072 and 1073 (ordinary income concept), sections 1074 and 1075 (business income), sections 1076‑ 1084 (deemed income from financial assets) and sections 1095‑ 1099DAA (income from income streams).

"student income bank" means the student income bank set out:

(a) in Module J of the Youth Allowance Rate Calculator; or

(b) in Module E of the Austudy Payment Rate Calculator.

"working credit participant" means a person who is a working credit participant within the meaning of section 1073D.

(1A) A reference in this Act to employment income , in relation to a person, is a reference to ordinary income of the person:

(a) that is earned, derived or received, or that is taken to have been earned, derived or received, by the person from remunerative work undertaken by the person as an employee in an employer/employee relationship; and

(b) that includes, but is not limited to, salary, wages, commissions and employment‑related fringe benefits that are so earned, derived or received or taken to have been so earned, derived or received;

but does not include:

(d) a payment of compensation, or a payment to the person under an insurance scheme, in relation to the person's inability to earn, derive or receive income from that remunerative work; or

(e) a leave payment to the person; or

(f) a payment to the person by a former employer of the person in relation to the termination of the person's employment; or

(g) a comparable foreign payment.

(1B) For the avoidance of doubt, if:

(a) a person is treated, for the purposes of working out the person's ordinary income, as having earned, derived or received any ordinary income that was in fact earned, derived or received, or taken to have been earned, derived or received, by the partner of the person; and

(b) that ordinary income would be characterised as employment income in the hands of the partner if the partner were not a member of a couple;

then, for the purposes of this Act, that ordinary income is to be similarly characterised in the hands of the person.

(1C) For the purposes of paragraph (1A)(e), a leave payment:

(a) includes a payment in respect of sick leave, annual leave, maternity leave or long service leave; and

(b) may be made as a lump sum payment, a payment that is one of a series of regular payments or otherwise; and

(i) at the direction of the first‑mentioned person or of a court; or

(ii) on behalf of the first‑mentioned person; or

(iii) for the benefit of the first‑mentioned person; or

(iv) if the first‑mentioned person waives or assigns his or her right to the payment.

Earned, derived or received

(2) A reference in this Act to an income amount earned, derived or received is a reference to:

(a) an income amount earned, derived or received by any means; and

(b) an income amount earned, derived or received from any source (whether within or outside Australia).

Domestic payments

(3) A payment received by a person is a domestic payment for the purposes of this Act if:

(a) the person receives the payment on the disposal of an asset of the person; and

(b) the asset was used, immediately before the disposal, by the person or the person's partner for private or domestic purposes; and

(i) a period of 12 months before the disposal; or

(ii) if the Secretary considers it appropriate--a period of less than 12 months before the disposal.

Excluded amounts--home equity conversion (not member of a couple)

(4) If a person is not a member of a couple, an amount paid to or on behalf of the person under a home equity conversion agreement is an excluded amount for the person to the extent that the total amount owed by the person from time to time under home equity conversion agreements does not exceed $40,000.

Excluded amounts--home equity conversion (member of a couple)

(5) If a person is a member of a couple, an amount paid to or on behalf of the person or the person's partner under a home equity conversion agreement is an excluded amount for the person to the extent that the total amount owed by the person and the person's partner under home equity conversion agreements from time to time does not exceed $40,000.

Home equity conversion (amount owed)

(6) For the purposes of this Act, the amount owed by a person under a home equity conversion agreement is the principal amount secured by the mortgage concerned and does not include:

(a) any amount representing mortgage fees; or

(b) any amount representing interest; or

Home equity conversion (principal home)

(7) For the purposes of the definition of home equity conversion agreement in subsection (1), an asset cannot be a person's principal home unless the person or the person's partner has a beneficial interest (but not necessarily the sole beneficial interest) in the asset.

Excluded amounts--general

(8) The following amounts are not income for the purposes of this Act:

(a) a payment under this Act;

(b) any return on a person's investment in:

(i) a superannuation fund; or

(ii) an approved deposit fund; or

(iii) a deferred annuity; or

(iv) an ATO small superannuation account;

until the person:

(v) reaches pension age; or

(vi) starts to receive a pension or annuity out of the fund;

(ba) any return on a person's investment in an FHSA (within the meaning of the First Home Saver Accounts Act 2008 );

(e) a payment under the Handicapped Persons Assistance Act 1974 ;

(f) a payment under Part III of the Disability Services Act 1986 or the value of any rehabilitation program (including any follow‑up program) provided under that Part;

(g) a payment of domiciliary nursing care benefit under Part VB of the National Health Act 1953 as in force immediately before 1 July 1999;

(h) a payment under a law of the Commonwealth, being a law having an object of assisting persons to purchase or build their own homes;

(ha) a payment made by a State or Territory for the purpose of assisting the person to purchase or build his or her own home;

(j) a payment made to the person for or in respect of a dependent child of the person;

(jaa) a payment of family assistance, or of one‑off payment to families, under the Family Assistance Act;

(jab) a payment under the scheme determined under Schedule 3 to the Family Assistance Legislation Amendment (More Help for Families--One‑off Payments) Act 2004 ;

(jac) a payment under the scheme determined under Schedule 2 to the Social Security Legislation Amendment (One‑off Payments for Carers) Act 2005 ;

(jad) a payment under the scheme determined under Schedule 4 to the Social Security and Veterans' Entitlements Legislation Amendment (One‑off Payments to Increase Assistance for Older Australians and Carers and Other Measures) Act 2006 ;

(jae) a payment under the scheme determined under Schedule 4 to the Social Security and Veterans' Affairs Legislation Amendment (One‑off Payments and Other 2007 Budget Measures) Act 2007 ;

(jaf) a payment under the scheme determined under Schedule 4 to the Social Security and Veterans' Entitlements Legislation Amendment (One‑off Payments and Other Budget Measures) Act 2008 ;

(ja) disability expenses maintenance;

(k) insurance or compensation payments made by reason of the loss of, or damage to, buildings, plant or personal effects;

(ka) where:

(i) the person owes money under a mortgage or other arrangement; and

(ii) the person has insurance which requires the insurer to make payments to the creditor when the person is unemployed or ill or in other specified circumstances; and

(iii) payments are made to the creditor under the insurance;

a payment so made;

(m) money from an investment that is:

(i) an investment of payments of the kind referred to in paragraph (k); and

(ii) an investment for:

(A) a period of not more than 12 months after the person receives the payments; or

(B) if the Secretary thinks it appropriate--of 12 months or more after the person receives those payments;

(ma) money from an exempt funeral investment;

Note: for exempt funeral investment see section 19E.

(n) an amount paid, under a law of, or applying in, a country or part of a country, by way of compensation for a victim of National Socialist persecution;

(q) in the case of a person who pays or who is liable to pay rent, a payment by way of rent subsidy made by the Commonwealth, by a State or Territory or by an authority of the Commonwealth or of a State or Territory to or on behalf of the person who pays or who is liable to pay rent;

(r) a payment received by a trainee in full‑time training under a program included in the programs known as Labour Market Programs, to the extent that the payment includes one or more of the following amounts:

(i) an amount calculated by reference to a rate of newstart allowance;

(ii) an amount known as the training component;

(iii) an amount by way of a living away from home allowance;

(s) in the case of a person who is receiving a social security pension, a social security benefit, a service pension or income support supplement and is in part‑time training, or engaged in part‑time work experience, under a program included in the programs known as Labour Market Programs--a payment received by the person under that program in respect of the person's expenses associated with his or her participation in the training or work experience;

(t) a payment received by the person under the scheme known as the New Enterprise Incentive Scheme;

(ta) a payment made by the Commonwealth known as the Apprenticeship Wage Top‑Up to the person;

(u) a benefit under a law of the Commonwealth that relates to the provision of:

(i) pharmaceutical, sickness or hospital benefits; or

(ii) medical or dental services;

(v) a payment (other than a periodical payment or a payment representing an accumulation of instalments) made for or in respect of expenses incurred by a person for hospital, medical, dental or similar treatment;

(va) a payment made by the Mark Fitzpatrick Trust to a person by way of assistance with expenses incurred in relation to a person who has medically acquired HIV infection;

(vb) a payment made by the New South Wales
Medically‑Acquired HIV Trust to a person by way of financial assistance with expenses incurred in relation to a person who has medically acquired HIV infection;

(w) in the case of a member of:

(i) the Naval Reserve; or

(ii) the Army Reserve; or

(iii) the Air Force Reserve;

the pay and allowances paid to the person as such a member (other than pay and allowances in respect of continuous full‑time service);

(y) a payment by way of:

(i) service pension or income support supplement; or

(ia) one‑off payment to the aged under regulations made under the Veterans' Entitlements Act; or

(ii) attendant allowance under section 98 of the Veterans' Entitlements Act; or

(iii) recreation allowance under section 104 of that Act; or

(iv) an allowance for the running and maintenance of a motor vehicle under the Vehicle Assistance Scheme referred to in section 105 of that Act; or

(v) decoration allowance under section 102 of that Act; or

(vi) Victoria Cross allowance under section 103 of that Act; or

(vii) clothing allowance under section 97 of that Act; or

(viia) utilities allowance under Part VIIAC of that Act; or

(viib) seniors concession allowance under Part VIIAD of that Act; or

(viii) a bereavement payment under Part III, or section 98A of that Act; or

(ix) a funeral benefit under Part VI of that Act; or

(x) a payment under Part VIIAB (DFISA) of that Act (including a payment made under regulations made under that Part);

(ya) a payment made by the Commonwealth and known as the one‑off payment to the aged; or

(yb) 2006 one‑off payment to older Australians under the Veterans' Entitlements Act;

(yc) a payment under a scheme determined under Schedule 2 to the Social Security and Veterans' Entitlements Legislation Amendment (One‑off Payments to Increase Assistance for Older Australians and Carers and Other Measures) Act 2006 ;

(yd) 2007 one‑off payment to older Australians under the Veterans' Entitlements Act;

(ye) a payment under a scheme determined under Schedule 2 to the Social Security and Veterans' Affairs Legislation Amendment (One‑off Payments and Other 2007 Budget Measures) Act 2007 ;

(yf) 2008 one‑off payment to older Australians under the Veterans' Entitlements Act;

(yg) a payment under a scheme determined under Schedule 2 to the Social Security and Veterans' Entitlements Legislation Amendment (One‑off Payments and Other Budget Measures) Act 2008 ;

(z) a periodical payment by way of gift or allowance, or a periodical benefit by way of gift or allowance, from the person's father, mother, son, daughter, brother or sister;

Note: the rule in paragraph 8(8)(z) is reversed in Youth Allowance Rate Calculator (point 1067G‑H21), Austudy Payment Rate Calculator (point 1067L‑D15), Benefit Rate Calculator B (point 1068‑G5) and the Parenting Allowance Rate Calculator (point 1068B‑D5). Points 1067G‑H21, 1067L‑D15, 1068‑G5 and 1068A‑D6 are contrary intentions (see the opening words in subsection 8(1) and the definition of income in that subsection).

(za) the value of board or lodging received by the person;

(zb) a domestic payment;

(zc) so much of a payment received by the person as is, in accordance with an agreement between the Commonwealth and a foreign country, applied in reduction of the amount of social security payment that would otherwise be payable to the person under this Act;

(zd) a payment made to the person by the Government of New Zealand, being a payment known as:

(i) accommodation benefit; or

(ii) disability allowance; or

(iii) home help payment; or

(iv) special benefit; or

(v) training incentive allowance;

(ze) a payment made to the person by the Government of the United Kingdom, being a payment known as:

(i) clothing allowance; or

(ii) constant attendance allowance; or

(iii) decoration allowance; or

(iv) mobility supplement;

(zf) a payment under the ABSTUDY Scheme;

(zfa) a payment of financial supplement made to the person under a Student Financial Supplement Scheme;

(zg) a payment received by the person for serving, or being summoned to serve, on a jury;

(zh) a payment received by the person for expenses as a witness, other than an expert witness, before a court, tribunal or commission;

(zi) a payment towards the cost of personal care support services for the person, being a payment made under a scheme approved under section 35A;

(zia) the amount or value of a scholarship known as a Commonwealth Trade Learning Scholarship;

(zj) a payment of an approved scholarship awarded on or after 1 September 1990;

Note: for approved scholarship see subsection 8(1).

(zja) the amount or value of:

(i) a scholarship known as a Commonwealth Education Costs Scholarship; or

(ii) a scholarship known as a Commonwealth Accommodation Scholarship;

provided for under the Commonwealth Scholarships Guidelines made for the purposes of Part 2‑4 of the Higher Education Support Act 2003 ;

(zjb) an amount covered by subsection (8B) (about reductions of amounts payable for enrolment or tuition in certain courses);

(zjc) a payment covered by subsection (8C) (about payments that are made to an educational institution or the Commonwealth to reduce a person's liability to the educational institution or Commonwealth and that are made by someone other than the person);

(zk) an amount paid by a buyer under a sale leaseback agreement;

(zl) if a person is a member of an approved exchange trading system--an amount credited to the person's account for the purposes of the scheme in respect of any goods or services provided by the person to another member.

Note: For approved exchange trading system see subsections (9) and (10).

(zm) if a person:

(i) is a member of a couple; and

(ii) is receiving a social security benefit;

a payment received by the person either directly or indirectly from his or her partner.

(zn) while a person is accruing a liability to pay an accommodation charge--any rent from the person's principal home that the person, or the person's partner, earns, derives or receives from another person;

Note 1: For rent , see subsection 13(2).

Note 2: Under subsections 11A(8) and (9), the principal home of a person in a care situation may be a place other than the place where the person receives care.

(zna) while a person is liable to pay all or some of an accommodation bond by periodic payments--any rent from the person's principal home that the person, or the person's partner, earns, derives or receives from another person;

(zo) a payment under section 217 or 266 of the Military Rehabilitation and Compensation Act to reimburse costs incurred in respect of the provision of goods or services (other than a payment to the person who provided the goods or service);

(zp) if subsection 204(5) of the Military Rehabilitation and Compensation Act applies to a person--an amount per fortnight, worked out under subsection (12) of this section, that would, apart from this paragraph, be income of the person;

Note: Subsection 204(5) of the Military Rehabilitation and Compensation Act reduces a Special Rate Disability Pension by reference to amounts of Commonwealth superannuation that the person has received or is receiving.

(zq) a payment under the Motor Vehicle Compensation Scheme under section 212 of the Military Rehabilitation and Compensation Act;

(zr) a payment under section 242 of the Military Rehabilitation and Compensation Act (continuing permanent impairment and incapacity etc. payments);

(zs) the value of the benefit provided under the initiative known as the Tools for Your Trade initiative.

(8A) For the purposes of the operation of section 5 in determining whether a person is:

(a) a student child; or

(b) a dependent child of another person;

this section has effect as if paragraph (8)(zf) were not included.

(8B) This subsection covers the amount of a reduction (by discount, remission or waiver) of an amount that would otherwise be payable by a person:

(a) to an educational institution for enrolment or tuition of the person by the institution in a course that:

(i) is determined, under section 5D of the Student Assistance Act 1973 , to be a secondary course or a tertiary course for the purposes of that Act; or

(ii) is a Masters or Doctoral degree course accredited as a higher education course by the authority responsible for accrediting higher education courses in the State or Territory in which the course is conducted or by the institution, if it is permitted by a law of the Commonwealth, a State or a Territory to accredit higher education courses that it conducts; or

(iii) is a course of vocational training; or

(b) to the Commonwealth as a result of the person's enrolment in, or undertaking of, such a course at an educational institution.

(8C) This subsection covers a payment:

(a) that is made to discharge, or to prevent from arising, to any extent:

(i) a person's actual or anticipated liability to an educational institution for enrolment or tuition of the person by the institution in a course described in paragraph (8B)(a); or

(ii) a person's actual or anticipated liability to the Commonwealth resulting from the person's enrolment in, or undertaking of, such a course at an educational institution; and

(b) that is made by someone other than the person; and

(d) that is not made at the direction of the person.

(9) An exchange trading system is an arrangement between a number of persons ( members ) under which each member may obtain goods or services from another member for consideration that is wholly or partly in kind rather than in cash. Each member has, for the purposes of the arrangement, an account:

(a) to which is credited:

(i) the amount representing the value of any goods or services provided by the member to another member; or

(ii) if the goods or services were partly paid for in cash--the amount referred to in subparagraph (i) less the amount so paid in cash; and

(b) to which is debited:

(i) the amount representing the value of any goods or services supplied to the member by another member; or

(ii) if the goods or services were partly paid for in cash--the amount referred to in subparagraph (i) less the amount so paid in cash.

(10) An exchange trading system is an approved exchange trading system if the Secretary is satisfied that:

(a) it is a local community‑based system; and

(b) its primary purpose is to help persons maintain their labour skills and keep them in touch with the labour market; and

(11) An amount received by a person is an exempt lump sum if:

(a) the amount is not a periodic amount (within the meaning of subsection (11A)); and

(b) the amount is not a leave payment within the meaning of points 1067G‑H20, 1067L‑D16 and 1068‑G7AR; and

(d) the amount is an amount, or class of amounts, determined by the Secretary to be an exempt lump sum.

Note: Some examples of the kinds of lump sums that the Secretary may determine to be exempt lump sums include a lottery win or other windfall, a legacy or bequest, or a gift--if it is a one‑off gift.

(11A) An amount is a periodic amount if it is:

(a) the amount of one payment in a series of related payments, even if the payments are irregular in time and amount; or

(b) the amount of a payment making up for arrears in such a series.

(12) For the purposes of paragraph 8(8)(zp), the amount per fortnight that is not income for the purposes of this Act is:

where:

"Special Rate Disability Pension reduction amount" means the amount by which the Special Rate Disability Pension (as reduced under subsection 204(3)) is reduced under subsection 204(6) of the Military Rehabilitation and Compensation Act (but not below zero).

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