Chapter 2: Assessable income
November 2017
Revision history
Version / Amended section / Effective / Details1.0 / November 2017 / Incorporation of version control table
Accessible format
More information
To find out about housing options visit the Housing website< or contact your local Housing Office <
To receive this publication in an accessible format contact Housing Practice and Complex Support <>.
Authorised and published by the Victorian Government, 1 Treasury Place, Melbourne.
© State of Victoria, Department of Health and Human Services, November 2017.
ISBN: 978-1-76069-125-7(pdf/online/MS word)
Available on the Rental rebate manual page on Services Providers website <
Contents
Revision history
Definitions
Overview
How is household information gathered and used?
Assessable or non-assessable income
Treatment of assessable income
Determining a household’s assessable income
Overseas pension
Primary Incomes
Wages
Payments in kind (Fringe benefits/Salary sacrifice)
Household member has been retrenched or voluntarily left employment
Household members on strike
Liquid Assets Waiting Period
Leave without pay
Self-employed income
Seasonal workers
Ongoing Employment with Periods of Non-Payment
Students receiving Austudy loans
Casual employees
Investments
Interest on savings and investments
Shares
Income Stream Products
Superannuation
Real estate
Determining equity in real estate
Determining real estate rent and related Income
Determining real estate equity related Income
Children’s trust funds
Tenants who gift money or assets
Winnings
Family Payments
Family Tax Benefit payments
Family Tax Benefit lump sum supplements
Child Support Payments (Maintenance)
Compensation and Related Payments
Regular and Periodic Payments
Lump Sum Payments
TAC Lump Sum Payments
Compensation
WorkCover
Treatment of Lump Sum Payments
Calculation of interest on Lump Sum Payments
Household member has used the lump sum payment for other purposes
WorkCover Lump Sum Payments for death
Appendix 1
Assessable and Non-Assessable Income
Definitions
ICIncome Confirmation
ICSIncome Confirmation Service
FREDFixed Rent Effective Date
FTBAFamily tax benefit part A, paid by Centrelink
FTBB Family tax benefit part B, paid by Centrelink
TACTransport Accident Commission
Overview
How is household information gathered and used?
To assess eligibility for rental rebates for tenants, incomes are collected and recorded by the Department of Human Services (the Department) at a client level for each household member.
These incomes are recorded by type, effective date and income amount.
For Centrelink clients using the automated Centrelink Confirmation eServices (CCeS) Income Confirmation Service (ICS):
•incomes are received from Centrelink in a file format and are then captured and stored in the Housing Integrated Information Program (HiiP) with an effective date of the Centrelink file, or
•an income statement is obtained via Centrelink’s Single Service Enquiry.
Centrelink clients not using CCeS Income Confirmation must to provide a hard copy of their Centrelink income statement.
When incomes are captured from Centrelink using the Income Confirmation Single Service Enquiry, or are provided in hard copy statements by the client:
•the effective date recorded in HiiP is the actual date (start date) of the income or household change.
For non-Centrelink clients, the documentation required is outlined in this chapter.
Assessable or non-assessable income
When calculating a household’s rental rebate, the income received by tenants and their household is categorised by the Department into assessable and non-assessable income types.
Assessable incomes are incomes that are determined to be for general income support such as wages, Age Pension, Newstart Allowance, Disability Support and Parenting Payments, Child Support Payments (Maintenance), Department of Veterans’ Affairs income support payments and investments.
Non-assessable incomes are usually payments that are provided for a specific purpose such as pharmaceutical allowance and large family supplement.
Refer to Appendix 1 for a full list of Assessable and Non-Assessable incomes on page 19.
Treatment of assessable income
Of the assessable income types, primary payments, such as Age pension and wages, are calculated at 25 per cent, while Family related payments, including Maintenance, are calculated at 15 per cent.
Family payments were assessed at 11 per cent and increased one percentage point per year for four years starting 25 May 2008.
Determining a household’s assessable income
Since the implementation of the Income Confirmation batch process in November 2008, the Department has based its calculation of household incomes on actual incomes reported by Centrelink for clients participating in the Income Confirmation Service (IC or ICS).
Eligible household members who participate in Centrelink’s ICS do not have to submit documentation to the Department to calculate the rent. However, the tenant is still required to provide income documentation for non-IC household members and complete, sign and have witnessed, an Application for rebated rent form.
The Department uses Centrelink’s information to obtain the client’s current or historical details of payments received, the number of dependants and percentage of care, Centrelink deductions, income, assets, confirmation of the current address and confirmation of marital status. Additional information will only be required if household circumstances change, such as the birth of a child or a person moving in to or out of the property.
The Department does not provide a higher rental rebate where a household member is entitled to a statutory income from another government department, but is not receiving it. Where a client is not accessing the income support available to them via Centrelink or is ineligible for Centrelink assistance, for example being in jail, the Department will assess rent payable on the basis that the Centrelink entitlement is being received.This is termed imputation of income. Where specific circumstances apply, a subsidy may be applied to further reduce the rent.
An exception applies where the tenant provides confirmation from Centrelink that they are not entitled to a top up payment, for example the Department calculates that they are eligible for a small Newstart payment to supplement their wages however Centrelink confirms in writing that there is no such entitlement.
Where a self-employed client’s total combined income, including income from the business, is less than the Centrelink entitlement, but they are not accessing Centrelink assistance, the Department will include the difference between the actual income and the Centrelink entitlement for rent calculation.
Similarly, where the client receives other income, such as wages, but they are not accessing Centrelink assistance, the client’s total combined income is calculated as equivalent to the wages plus any balance of Centrelink entitlement for which they are eligible.
Overseas pension
The Department includes overseas pensions as assessable income.
Calculating an imputed income- HiiP procedure
Record actual income amount/s and manually calculate if an imputed amount is required (eg. Imputed Pension/Benefit).
Where there is no income and specific circumstances do not apply, manually impute an income based on statutory entitlement.
Where there is no income and specific circumstances apply, such as temporary absence, sponsored migrant or temporary visa, manually impute an income.
Where a self-employed client’s total combined income, including income from the business, is less than the Centrelink entitlement, use the income type ’TOPP’ to bring the client’s income to 100 per cent of the Centrelink entitlement amount.
After assessing the rebate, include details in the letter to advise the tenant of the imputed or top-up income, and that
the client does not claim a pension or benefit for which they may be entitled
the client earns a wage and may be entitled to a part benefit or pension
the client may make an application to the appropriate government Department to receive the correct payment and the tenant should then submit a further application for a rebate if they begin to receive a pension or benefit.
Overseas pensions may be received instead of, or in addition to, a Centrelink Pension. The household member may receive these payments as regular incomes or as a lump sum.
While some foreign pensions are treated by Centrelink based on the allowable incomes test, for others, 100 per cent of the foreign pension is counted, that is, there is a dollar for dollar reduction in the income test for their Centrelink pension.
For example, for most Centrelink Pension recipients, any UK Retirement or Widows pension is treated the same way as other types of income, which is that is only 40 per cent of these incomes are subject to the income test.
For customers who are paid an Australian Age Pension under the rules of the former Social Security Agreement between Australia and the UK, 100 per cent of the UK Retirement pension will be directly deducted from the Australian Pension. The Australian Pension will be deducted dollar for dollar.
Payments are made under the Agreement when the client does not have sufficient residence in Australia to qualify for the Australian benefit, for example, usually 10 years for age pension.
Non-Centrelink household members (clients who have not consented to IC or cannot present an income statement from Centrelink confirming their income and assets) are required to provide the Department with bank statements or bank books that show three consecutive months of deposits of an overseas pension. An average of the deposits will be used for the rebate assessment. The deposit amounts will be shown in Australian dollars. The amount of overseas pension and the Australian pension are assessable incomes.
Where the amount of the overseas pension is such that the recipient is entitled to income from another government Department but is not receiving it, as outlined in the previous section, the Department will impute the appropriate entitlement.
Managing Overseas Pensions in HiiP
The deposits are averaged out over a three-month period and used in the rent assessment as assessable income (for non-IC clients).
Where the household member receives a UK Pension and only 40 per cent of that pension is counted in the income test for their Centrelink Pension, enter the income type ‘OVER’
Where the household member receives a UK Pension and 100 per cent of the UK Pension is counted, that is, a dollar for dollar reduction in the income test for their Centrelink Pension, use the income type ‘OVERS’.
Primary Incomes
Primary incomes are assessed at 25 per cent when determining eligibility for a rental rebate.
Wages
The income received from wages from either full or part-time work is included as assessable income.
For household members who are participating in IC, the Department accesses that information from Centrelink via the six monthly automated Income Confirmation batch process. A snapshot of the income is taken and the wages are recorded according to the details from Centrelink at that point in time. For example, Centrelink can report the fortnightly earnings for the current payment period for a casual wage earner, or an annual salary.
Manual rebate assessments for household members who receive fluctuating wages and are in receipt of a Centrelink income require 12 weeks of income details from Centrelink’s income statement and the wages are averaged over that 12 week period. Where the Centrelink income statement displays an annual wage amount, 12 weeks of income details are not required.
Household members who receive a wage and are not in receipt of a Centrelink income, are required to provide the Department with a minimum of 13 weeks of consecutive payslips or an income statement signed by the employer stating the gross income received including overtime, shift allowances, bonuses and any ‘one off’ special payments received. Gross income details can also be provided for the period since the last rebate assessment.
Documentation provided must include:
•the date they commenced employment
•the total gross wages if they have been employed for less than 13 weeks
•13 weeks gross wage statement
•13 weeks of consecutive payslips.
If the wage statements provided covers more than one fixed rent period, i.e. if the 13-week wage statement crosses over a FRED, and the average results in a decrease in income, the decrease is applied from the Sunday prior to the first week in the wage statements.
If the 13-week average results in an increase in income, the increase is applied from the FRED following the last week in the wage statements.
Payments in kind (Fringe benefits/Salary sacrifice)
If a household member receives payments in kind as part of a salary sacrifice arrangement such as school fees, superannuation or health care, the use of a company vehicle or free rent, the Department includes the value of these payments as primary income to calculate the rebated rent, by adding these amounts to the gross income of the person receiving these payments/benefits.
Household member has been retrenched or voluntarily left employment
Where a household member has been retrenched or has voluntarily left their employment, Centrelink benefits usually commence after a waiting period. The Department continues to assess the rebate entitlement on the income before the household member was retrenched or voluntarily left employment.
Documentation is required from Centrelink confirming the commencement date of benefits. The Department will record the effective date for the income change date as the date that Centrelink payments commenced.
Household members on strike
If a household member who is a wage earner is on strike or is stood down as a result of strike action, the rebated rent does not change during the strike. The Department continues to assess the rebate entitlement on the income before the strike.
Liquid Assets Waiting Period
Where household members are subject to the Liquid Assets Waiting Period (LAWP) due to assets other than termination payments, the Department applies the Centrelink deemed interest rate to the resultant assets.
Where the resulting income is less than the relevant Centrelink income that the tenant would otherwise receive, the difference is imputed to lift the income to the relevant Centrelink rate for which the client is eligible.
If the household member is subject to the LAWP due to termination payments, the Department continues to impute the household member’s previous income until Centrelink payments to that household member commence, at which point the household income is reassessed with an effective date of the first Centrelink payment.
Leave without pay
The rebated rent for household members who choose to take leave without pay (including extended maternity leave without pay) is based on the income received prior to the commencement of the ‘leave without pay’ period, until the Centrelink payments to that household member commence, at which point the household income is reassessed with an effective date of the first Centrelink payment.
Self-employed income
Self-employed persons generally run their own business and receive income generated by the business. Income from self-employment is assessable by the Department for the purposes of calculating rent charges.
Tenants or residents who work at home but receive their income from an employer are assessed as self-employed unless they are permanent employees, in which case they are treated as wage earners. This must be confirmed with the employer prior to the assessment taking place.
From 23 November 2008, consistent with Centrelink, a taxi driver is classified as self-employed whether they own the taxi licence or work as a Bailee.
Some self-employed persons receive a part pension or allowance from Centrelink or may earn extra income from other sources. The Department uses the client’s Centrelink income statement to determine their self-employed income.
For the purposes of assessing rent charges, where a self-employed client’s total combined income, including income from the business, is less than the Centrelink entitlement and the client is not in receipt of a Centrelink income, the Department ‘tops up’ the client’s income to include what they are eligible to receive from Centrelink.Non-Centrelink clients who are self-employed are required to provide the following documentation:
•the latest 13-week Profit and Loss statement
•statutory declaration, declaring the information provided in the profit and loss statement is true and correct (this forms part of the Profit and Loss Statement and is only required where the tenant does not have an accountant)
In certain circumstances, the following documentation may also be requested, for example, when a household member commences or ceases self-employment during a financial year or the tenant requests their rent to be reviewed for the whole financial year: