Calculating the rate of income support payments

Technical resource

The rate of social security payments are affected by an asset and income test. Generally, the test that results in a lower payment is what determines the rate payable.

Calculating the rate of pension 

Single pensioner

To calculate the rate of pension for your clients, you will need to apply the assets and income tests. The pension rate that applies will be the lower of these two rates. You will need to use the rate of pension that includes the pension and energy supplements, which as at 20 September 2020, is $944.30 per fortnight.

You’ll also need to:

  • Establish total assessable assets. As at 20 September 2020 the first $268,000 of assets for single homeowners or $482,500 for single non-homeowner does not reduce the pension. Every $1,000 of assets above these thresholds will reduce the pension by $3 per fortnight.
  • Establish assessable income. As at 20 September 2020 for singles the first $178 per fortnight of assessable income will not reduce the pension. Every $1 above the threshold will reduce the pension by 50 cents per $1.

Example

Fernando is a single homeowner with $400,000 of assessable assets and $36,400 per annum of assessable income.

Asset test $ amount
Assessable  $400,000
Threshold  $268,000
Reduction  $132,000 / 1,000 x 3 = $396 
Maximum  $944.30
Less  ($396)
Rate  $548.30 (per fortnight) 
Income test $ amount
Assessable  $1,400 (per fortnight) 
Threshold  $178
Reduction  $1,222 x 0.5 = $611 
Maximum  $944.30
Less  ($611)
Rate  $333.30 (per fortnight) 

Fernando will receive a pension of $333.30 per fortnight based on the income test.

Pensioner couple

For a pensioner couple, you will need to establish the total combined assessable assets and combined assessable income. The rate of pension that includes the pension and energy supplements, which as at 20 Septmeber 2020, is $711.80 per fortnight (per eligible member of the couple) will be the basis for the calculation.

As at 20 September 2020 the first $401,500 of assets for homeowners, or $616,000 for non-homeowners will not reduce the pension. Every $1,000 of assets above these thresholds will reduce the pension by $3 per fortnight.

As at 20 September the first $316 per fortnight of assessable income will not reduce the pension. Every $1 above the threshold will reduce the pension by 50 cents per $1.

Example

Age pensioners Arthur and Martha are homeowners with assessable assets of $700,000 and assessable income of $36,400 per annum.

Asset test $ amount
Assessable  $700,000
Threshold  $401,500
Reduction  $298,500 / 1,000 x 3 = $895.50 
Maximum  $1,423.60 ($711.80 x 2)
Less  ($895.50)
Rate  $528.10 (per fortnight) 
Income test $ amount
Assessable  $1,400 (per fortnight) 
Threshold  $316
Reduction  $1,084 x 0.5 = $542 
Maximum  $1,423.60
Less  ($542)
Rate  $881.60 (per fortnight)

Arthur and Martha will receive a pension of $528.10 combined per fortnight or $264.05 each, based on the asset test.

Pensioner and non-recipient couple

For pensioner and non-pensioner couples, the easiest way to make the calculation is to assume they’re both eligible.

Example

Janet is 67 and Fred is 56, retired and not seeking paid work. They are homeowners with assessable assets of $700,000 and assessable income of $36,400 per annum.

Asset test $ amount
Assessable  $700,000
Threshold  $401,500
Reduction  $298,500 / 1,000 x 3 = $895.50 
Maximum  $1,423.60
Less  ($895.50)
Rate  $528.10 (per fortnight) 
Income test $ amount
Assessable  $1,400 (per fortnight) 
Threshold  $316
Reduction  $1,084 x 0.5 = $542 
Maximum  $1,423.60
Less  ($542)
Rate  $881.60 (per fortnight) 

Janet would receive $264.05 (half the combined rate if both of them were eligible). Fred is not eligible for Age Pension as he is below age pension age, and is not eligible for JobSeeker as he is not seeking paid work.

Pensioner and allowee couple

For couples consisting of a pensioner and a recipient of an allowance, you will need to establish the total combined assessable assets and income.

As at 20 September 2020:

  • the first $401,500 of assets for homeowners, or $616,000 for non-homeowners will not reduce the pension. Every $1,000 of assets above these thresholds will reduce the pension by $3 per fortnight.

  • for all working age allowances, the thresholds of $401,500 for homeowners, or $616,000 for non-homeowners are absolute cut-offs for any allowance payment. If exceeded, the calculation is similar to the pensioner and non-pensioner couple.

  • the first $316 per fortnight of assessable income will not reduce the pension. Every $1 above the threshold will reduce the pension by 25 cents per $1.

  • the first $300 per fortnight of assessable income will not reduce the allowance. Every $1 above this threshold will reduce the allowance by 60 cents.

Example

Igor is of age pension age and his partner Svetlana is 50 and meets the eligibility criteria for the JobSeeker Payment. They are homeowners with assessable assets of $700,000 and assessable income of $36,400 or $1,400 per fortnight.

Igor would receive $264.05 per fortnight based on the previous calculations in Janet's and Fred's example.

Svetlana would not receive any JobSeeker Payment as the asset test preculudes her outright.

Svetlana now decides to contribute $300,000 to super (not assessable) and they spend $150,000 to renovate their home. Their assessable assets now become $250,000 and their assessable income is $22,900 per annum or $880.77 per fortnight. As their assets are now under the assets threshold, the income test will be the dominant test for both Igor’s Age Pension and Svetlana’s JobSeeker Payment.

The maximum rate of pension for a member of a couple is currently $711.80 per fortnight (50% of $1,423.60). Igor's rate is $570.61 as calculated below:

Income test $ amount
Assessable  $880.77 (per fortnight) 
Threshold  $316
Reduction  $564.77 x 0.25 = $141.19 
Igor's pension rate  $711.80 - $141.19 = $570.61 

The maximum rate of Job Seeker Payment for a member of a couple is currently $768.70 per fortnight. (including the $250 Coronavirus Supplement until 31 December 2020). Svetlana's rate of JobSeeker Payment is $684.47 as calculated below:

Income test $ amount
Assessable  $440.38 (per fortnight, half of couple's total income) 
Threshold  $300
Reduction  $140.38 @ $0.60 = $84.23
Svetlana's JobSeeker rate 

$768.70 - $84.23 = $684.47

Next: Your guide to means testing

An outline of what is assessed in the assets test and income test. All assets that the client has are assessable under the assets test.
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