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This severe financial hardship test is applied when establishing whether recipients serving a LAWP, SWPP, IMP or OWP are in severe financial hardship.
Recipients who are not a member of a couple are considered to be in severe financial hardship when the total value of their liquid assets (1.1.L.50) is less than their fortnightly maximum payment rate.
Members of a couple are considered to be in severe financial hardship when the total value of their joint liquid assets is less than twice the recipient's fortnightly maximum payment rate. In this test it is important to double the maximum payment rate of the recipient who is seeking to rely on the severe financial hardship test, NOT to add together the separate maximum payment rates of both members of the couple.
Example:
Unavoidable or reasonable expenditure by a recipient serving a waiting period includes the day-to-day cost of living, (referred to as the reasonable cost of living) for that part of the waiting period already served, plus other unavoidable or reasonable expenditure.
Act reference: SSAct section 19C(4) Meaning of unavoidable or reasonable expenditure
The maximum payment rate includes RA, pension supplement, CES and PhA if payable in the recipient's circumstances. It does not include family assistance or add-ons such as RAA.
Act reference: SSAct section 19C Severe financial hardship definitions
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Last reviewed: 20 March 2013
