4. Income Test

4.1  Recipients of maximum rate Centrelink payments

An applicant receiving a Centrelink income support payment at the maximum rate satisfies the income test.

See Means Test 4.7 Income Test for Centrelink recipients for more details.

4.2  All other applicants

The following table is the income test which applies to all other applicants.

Applicant's net assessable incomeDo they satisfy the Income Test?
$450 or less per weekYes
Greater than $450 per weekOnly in exceptional circumstances. See Means Test 9: Discretions

All applicants must also satisfy the Assets Test and Liftstyle Test.

Eligible applicants must pay an income contribution in all matters except those listed in Means Test 7.6 Matters exempt from initial contributions.

See Means Test 7: Means Test determines initial contribution.

4.3  How to calculate net assessable income

The Income Test is applied to the applicant's net assessable income.

Net assessable income is:

  • the applicant's gross assessable income, less
  • allowable deductions.

4.4  Gross assessable income - what is included?

Income from all sources is included in gross assessable income, except:

  • Centrelink Carer Allowance, and
  • NDIS amounts.

Gross assessable income includes, but is not limited to, the following:

  • pensions, benefits and allowances (including Family Tax Benefit and Rent Assistance);
  • income from wage/salary, including overtime;
  • income from self-employment;
  • periodic receipts, including payments from investments, dividends, interest earned and payment of debts owed to the applicant;
  • board or rent received;
  • spousal maintenance and child support received;
  • workers' compensation or other compensation payments, and
  • superannuation payments;
  • Commonwealth Government Parental Leave Pay and employer funded parental leave payments.

NOTE: Income is calculated net of business overheads/expenses reasonably incurred in or for the purposes of gaining or producing that income. Such overheads/expenses will not be considered reasonably incurred merely because they have been, or are likely to be allowed or allowable deductions by the Commissioner of Taxation for the purposes of the Income Tax Assessment Act 1997 (Cth).

4.5  Allowable deductions

The following table sets out the allowable deductions in the Income Test.

Allowable deductionMaximum weekly amount
Income tax (including Medicare levy)Income tax paid
Housing costsGreater Metropolitan Region - $500
All other regions - $400
Financially associated person allowance$225
Dependant allowance (per dependant)$135
Child support (maximum per child)$135
Childcare costs$325

4.6  Information about allowable deductions

General information

Except for financially associated person allowance and dependant allowance, applicants may only deduct the amount they actually pay for each allowable deduction, up to the maximum set out above.

For the purposes of the Means Test, an applicant is a resident of the Greater Metropolitan Region if he or she lives in a local government area defined in Schedule 1 of the Greater Cities Commission Act 2022 (NSW).

Housing costs include amounts paid for any style of housing as a place of residence on a regular basis and include rent, half board, mortgage instalments and municipal and water rates.

Child care costs may only be deducted if they are necessarily incurred by the applicant in order to work or study.

A financially associated person allowance is to be deducted for each financially associated person whose income is included in assessable income.

A dependant allowance is to be deducted for all genuine dependants whether or not they reside with the applicant (except dependent children who do not reside with the applicant).

A deduction may be made for child support or child maintenance payments made for children who do not reside with the applicant.

4.7  The Income Test for Centrelink recipients

(a) Centrelink income support payment at the maximum rate

An applicant receiving a Centrelink income support payment at the maximum rate satisfies the Income Test if:

  • he or she has no financially associated person, or
  • any financially associated person is also receiving a Centrelink income support payment at the maximum rate.

Centrelink recipients must also satisfy the Assets Test and the Lifestyle Test

Applicants who are granted legal aid are required to pay an income contribution of $75.00 unless the matter is exempt from initial contributions: see Means Test 7.6 Matters exempt from initial contributions.

The Centrelink income support payments to which this policy applies are set out in the following table.

Centrelink income support payments
ABSTUDY Scheme payments
Age Pension
Austudy Payment
Carer Payment
Disability Support Pension
Parenting Payment
Farm Household Allowance
Special Benefit
Youth Allowance
JobSeeker Payment

NOTE: A current Centrelink Statement of Benefit which states that the applicant or financially associated person is currently entitled to a Centrelink benefit or pension payable at the maximum rate is evidence of that fact.

(b) Partial Centrelink income support payment

If:

  • the applicant,
  • any financially associated person, or
  • both

receive a partial Centrelink income support payment, the applicant must satisfy the standard income test at Means Test 4.2: All other applicants.

See also Assets test and Lifestyle test.