3.1.4.30 Rent Assistance

Summary

RA is included in calculating the maximum rate of FTB Part A when the rate is worked out using Method 1 or Method 3. Method 3 applies when an individual has a regular care child and no FTB children. RA recognises the housing costs that low income families face in the private (i.e. non-government) rental market.

This topic includes information about:

• RA eligibility requirements,
• RA child,
• current maximum RA rates and RA rent threshold amounts,
• how to calculate the gross rate of RA,
• shared care of RA child,
• RA for regular care children - Method 3,
• payment of RA while individual is overseas,
• verification of the amount of rent paid, and
• duplicate RA payments.

The assessment of eligibility and rate of RA for FTB is contained in the A New Tax System (Family Assistance) Act 1999. However the meaning of rent and the associated concepts are the same as under the Social Security Act 1991.

Policy reference: SS Guide 1.1.R.160 Rent (RA)

RA eligibility requirements

The individual who claims RA:

• must have at least one RA child,
• cannot be an ineligible homeowner (SS Guide 1.1.I.140),
• cannot be an aged care resident in a Commonwealth funded bed in a nursing home or hostel (SS Guide 1.1.A.110), and
• must pay, or be liable to pay rent, other than government rent, that is more than the rent threshold.

Note: Rent paid by an individual's partner is treated as rent paid by the individual.

RA is included in an individual's maximum FTB Part A for Method 1 rate if the individual:

• is receiving FTB Part A through fortnightly payments, or
• is entitled to FTB Part A for a past period in either of the 2 previous financial years or during the year in which the claim is made but the individual is not eligible for FTB at the time the past period claim is made, or
• is entitled to FTB Part A for a past period in either of the 2 previous financial years or during the year in which the claim is made and is eligible for FTB at the time the past period claim is made, and
• the past period claim (1.1.P.60) is accompanied by an instalment claim (1.1.I.100), unless the individual cannot lodge an effective instalment claim at that time because the individual:
  • is already receiving FTB fortnightly payments, or
  • had previously lodged an instalment claim which has not yet been determined, or
  • is not eligible for FTB by instalments at the time of the claim.

Act reference: FAAct Schedule 1 clause 38B Rent assistance children, Schedule 1 clause 38C Eligibility for rent assistance, Schedule 1 clause 38G Rent paid by a member of a couple, Schedule 1 clause 38H Rent paid by a member of an illness separated, respite care or temporarily separated couple

Policy reference: FA Guide 4.2.4.80 Claim Action 8 - Instalment Claim Required

SS Guide 1.1.I.140 Ineligible homeowner, 1.1.A.110 Aged care

RA child

An FTB child is a RA child of the individual (1.1.I.90) if the FTB child rate for the child is more than the base FTB child rate (1.1.B.10), or would be if the rate was not shared.

A regular care child is an RA child of the individual if:

• the child is under 16 years, or
• the child has turned 16 years of age and is a senior secondary school child (1.1.S.27), and
• the child is not an absent overseas regular care child.

Act reference: FAAct Schedule 1 clause 38B Rent assistance children

Current maximum RA rates

The rate of RA depends on the individual's circumstances. Rates of assistance vary according to family type, rent paid and whether the individual is a relevant shared carer. A relevant shared carer is an individual who has a shared care percentage for one or more of his or her FTB children. The relevant shared carer may also have one or more regular care children. The following table shows the maximum rates for RA, current from 20 March 2012 to 19 September 2012.

Current RA rent thresholds

Individuals who receive FTB must pay a minimum amount of rent before they become eligible for RA. This minimum amount is the rent threshold, and varies depending on the individual's circumstances. The following table shows the rent thresholds for RA, current from 20 March 2012 to 19 September 2012.

How to calculate the gross rate of RA

RA is payable with FTB only when the rate is calculated under Method 1 or Method 3. In either case, a (gross) amount of RA is worked out based on the individual's circumstances but the amount paid may be reduced due to an income test. If the rate is calculated under Method 1, the gross RA is added to other components of FTB and the resultant maximum rate may then be reduced due to income or maintenance income. If payments are reduced because of income or maintenance the reduction will affect both the RA and other components in excess of the base rate. If the rate is calculated under Method 3, the gross RA amount may be reduced under the ordinary income test but there is no maintenance income test.

The gross rate of RA, before any reduction due to income or maintenance, is worked out using the following formula:

• Gross RA = (annual rent - rent threshold) x 3/4

provided the result is not greater than the maximum rate for the relevant circumstances.

Annual rent is the amount the individual and/or partner pays for the person's principal home, and the rent threshold is the minimum rent a person must pay to qualify for RA. The rent threshold and maximum rates vary according to the individual's circumstances including whether they are a relevant shared carer.

If the individual has only a regular care child (in care for between 14% and less than 35% of the time) or has a shared care percentage (35% to 65% of the time) for each of their FTB children the gross RA amount is first worked out using the maximum rates and rent thresholds for individuals who are not relevant shared carers, and then using the maximum rates and rent thresholds for a relevant shared carer. The individual is entitled to the higher of the 2 amounts. The maximum rates and rent thresholds specified for relevant shared carers are comparable to those applying to a person claiming RA with a social security payment. This rule is intended to ensure that a person paying low rent is not disadvantaged when they accept responsibility for the shared care of a child.

Individual shares the care of RA children

An individual who shares the care of all of his or her FTB children is known as a 'relevant shared carer'. An individual must have at least 35% care of an eligible child to be considered a relevant shared carer. RA for a relevant shared carer is assessed by comparing the rate they would normally be entitled to based on the number of RA children they have with the rate they would be entitled to receive if they did not have any RA children. The individual is eligible for the higher of the 2 rates. To receive RA a shared care individual must be eligible for more than the base rate of FTB.

Explanation: As the RA threshold with children is higher than the threshold without children, this provision prevents the small number of individuals who pay low rent and who care for a child from being disadvantaged by ensuring they are paid the higher rate of RA.

Example: Simon receives NSA and also pays private rent for his accommodation. Simon and Natalie are divorced and have 2 children, Joshua aged 13 and Susan aged 21. Both children have been living in the full-time care of one of their parents, but Joshua now wishes to live some of the time with his other parent. Simon and Natalie agree to share the care of Joshua 50%/50%. Because Simon is paying rent, a comparison will be made between the FA RA rate and the applicable RA rate for NSA and Simon will be paid the higher of the 2 rates.

Act reference: FAAct Schedule 1 clause 38D Rate of rent assistance payable to individual who has at least one FTB child and who is not a relevant shared carer, Schedule 1 clause 38E Rate of rent assistance payable to individual who is a relevant shared carer or who has only one or more regular care children

Policy reference: FA Guide 3.1.1.30 Shared Care Rate for FTB, 3.1.4.10 Method 1 - Calculating the Maximum Rate of FTB Part A, 3.1.3 Apportioning Income Test Reductions between FTB Part A Components

RA for regular care children - Method 3

A child can only be an FTB child of an individual if the individual has at least 35% care of that child. A child is regarded as a regular care child of an individual who provides care for between 14% and less than 35% of the time. A regular care child who is an RA child, and is taken into account in working out the maximum rate of RA.

Individuals who only have a regular care child(ren) are entitled to the same gross rate of RA as those classified as relevant shared carers. Their RA is calculated under Method 3 - their FTB consists only of RA. The FTB may be reduced due to income if neither the individual nor a partner receives an income support payment. The income test applied under Method 3 is the same as for Method 1, but there is no maintenance income test and no comparison with a base rate (the base rate would be zero).

Act reference: FAAct Schedule 1 clause 28A Method of calculating Part A rate

Payment of RA while individual is overseas

An individual may be able to continue to receive FTB Part A at more than the base FTB child rate during a temporary absence overseas. If the individual was renting before their departure and continues to pay rent for the same accommodation during their absence, RA is still payable providing the individual is still eligible to receive more than the base rate of FTB Part A during their absence.

Policy reference: FA Guide 2.1.2.30 Temporary Absence from Australia, 3.1.1.50 FTB Payments During Absence from Australia

Verification of the amount of rent paid

The amount of rent paid by the individual must be verified before RA can be paid. Generally, this can be verified using:

• a current 'lease' or written tenancy agreement, or
• a rent certificate, or
• private rent receipts.

See SS Guide 2.2.13.20 for more information about verifying the amount of rent paid by an individual.

Duplicate RA payments

Duplicate RA payments can occur when an individual or their partner:

• receives arrears of FTB Part A that includes an amount of RA for a period where RA had already been paid with a social security or veterans' entitlement payment, or
• is incorrectly paid RA with both their ongoing FA and social security or veterans' entitlement payments.

This means that the individual receives double the RA to which they were otherwise entitled.

Any RA paid as part of a social security or veterans' entitlements payment in respect of a particular day is taken into account in calculating an individual's entitlement to arrears of FTB Part A (including RA arrears) in respect to that day.

Act reference: FAAct Schedule 1 clause 38J Offsetting for duplicate rent assistance under family assistance and social security law, Schedule 1 clause 38K Offsetting for duplicate rent assistance under family assistance and veterans' entitlements law

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Last reviewed: 20 March 2012