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3.1.12 Employment Income Nil Rate Period

Introduction

This topic covers:

  • summary,
  • qualification rules for an employment income nil rate period,
  • partners income and an employment income nil rate period,
  • duration of an employment income nil rate period,
  • getting back on a social security pension or benefit, and
  • multiple employment income nil rate periods.

 

Summary

A recipient whose social security pension or benefit is not payable because of ordinary income, made up entirely or partly of employment income (1.1.E.102), may qualify for an employment income nil rate period. During this period the recipient is considered to be receiving (1.1.R.55) a social security pension or benefit ONLY for the purposes of qualifying for the following:

  • FTB Part A at the non-income tested rate,
  • CCB at the non-income tested rate,
  • have their dependent child on YA exempted from the parental income test,
  • for the purposes of RA payments to their partner, have their partner treated as if both members of the couple are receiving a social security pension or benefit,
  • for the purposes of applying the allowance income test to their partner, have their partner treated as if both members of the couple are receiving a social security pension or benefit,
  • these supplementary benefits:
    • income support bonus,
    • language literacy numeracy supplement,
    • approved program of work supplement,
    • pensioner education supplement,
    • telephone allowance, or
  • retain their HCC or PCC.

 

If during an employment income nil rate period the recipient's income falls and their social security pension or benefit becomes payable again, the recipient's payment will recommence.

Explanation: The employment income nil rate period policy provides incentives for recipients to take up work, particularly substantial part-time or irregular casual work. It acknowledges the increasing casual nature of jobs and the lack of job security in some occupations, and enables recipients to get back onto payment easily during a nil rate period.

 

Act reference: SSAct section 23(4A) Despite subsection (4)…, section 23(4AA) For the purposes of subsection (4A)…, section 1061ZEA Further extended qualification rule: loss of payment because of employment income, section 1061ZMA Further extended qualification rule: loss of payment because of employment income

FAAct section 3(1) Definitions

Policy reference: SS Guide 3.9.1.10 Qualification for HCC - Automatic Issue, 3.9.2.30 PCC due to Employment

 

Qualification rules for an employment income nil rate period

Recipients qualify for an employment income nil rate period if their social security pension or benefit is not payable because of ordinary income, made up entirely or partly of employment income (1.1.E.102) and they:

  • are below age pension age (1.1.P.129), and
  • are receiving a social security pension or benefit (except SpB or PA for the partner of an SpB recipient), and
  • remain qualified, (1.1.Q.10) except for the requirement of WP to have a partner on Age or DSP, for their social security pension or benefit, including meeting the employment qualifications (employment qualifications exist for NSA, SA, CP, DSP and YA (job seeker), see example 2 below), and
  • continue to satisfy the payability provisions for their social security pension or benefit, except for being not payable due to the income.

 

The following table gives an indication of which recipient groups may or may not qualify for an employment income nil rate period.

Note: This table is an indication ONLY; the recipient's individual circumstances MUST be assessed against the qualification rules above.

May qualify

Will NOT qualify

Below age pension age recipients, including students, parents and carers, receiving a social security pension or benefit who take up paid work.

Recipients over age pension age who take up paid work.

NSA recipients who take up paid work and are still considered to be unemployed, e.g. casual or short term work.

NSA recipients who take up paid work and are no longer unemployed (1.1.U.30).

SA recipients who are below age pension age on a gradual return to paid work.

SA recipients who return to paid work and are no longer incapacitated.

DSP recipients who are below age pension age and have paid work for less than 30 hours a week.

DSP recipients, but not those on supported wages (1.1.S.430), who have paid work for more than 30 hours a week.

CP recipients who are below age pension age and have paid work for less than 25 hours a week.

CP recipients who have paid work for more than 25 hours a week.

YA (student) recipient who participates in full-time study and starts paid work.

 

YA (job seeker) recipients who take up work and are still considered to be unemployed, e.g. casual or short term paid work.

YA (job seeker) recipients who take up paid work and are no longer unemployed (1.1.U.30).

Recipients below age pension age receiving a social security pension or benefit who increase their paid work hours.

Recipients who do not have employment income, and whose other ordinary income (e.g. investment or business income) increases.

Below age pension age recipients whose paid work is undertaken within an employee/employer relationship.

Recipients whose income is from running a business.

 

Example 1: A recipient qualified for an employment income nil rate period.

Jamie is a university student receiving YA. Jamie earns income from her job, as a part-time swimming instructor throughout the academic year, so does not build up a student income bank. After exams at the end of the year she increases the hours she works at the pool and her income takes her YA rate to nil. Jamie is still qualified for YA as she plans to study next year, but it is not payable due to her level of income. She is qualified for an employment income nil rate period. After 5 fortnights Jamie starts back at university, she drops back to part-time work and her rate of YA increases to a part rate of payment.

 

Example 2: This example illustrates that recipients who lose their employment qualifications are not qualified for an employment income nil rate period. These recipients are:

  • NSA recipients who commence full-time employment, i.e. they are no longer unemployed,
  • YA (job seeker) recipients who commence full-time employment, i.e. they re no longer unemployed,
  • DSP recipients who work more than 30 hours a week,
  • CP recipients who work more than 25 hours a week, and
  • SA recipients who are no longer incapacitated.

Tanya is a NSA recipient who starts a full-time job, so she is no longer unemployed. Tanya is not qualified for an employment income nil rate period as she is no longer qualified for NSA (the third dot point in the qualification rules above).

 

If, during an employment income nil rate period, a recipient's circumstances change such that they no longer qualify for nil rate, their employment income nil rate period ends.

Examples of circumstances that will end an employment income nil rate period:

  • Loss of qualification,
    • A NSA recipient gets a full-time job during an employment income nil rate period,
    • A PPS recipient's last dependent child turns 8,

Note: A PP recipient going from single to partnered, or vice versa, is a change in rate, and not a qualification matter.

  • Recipient reaches age pension age,
  • Recipient loses payability by having assets above the threshold, and
  • Recipient loses payability by being imprisoned.

 

Partner's income & the employment income nil rate period

For couples, except where both members are over age pension age, if a recipient loses payability because of their partner's income, part of which is employment income, the recipient is qualified for an employment income nil rate period, provided the recipient satisfies the qualification rules above.

 

For allowance couples who are subject to the partner income test, partner excess income that precludes payability of the recipient may mean that the recipient is qualified for an employment income nil rate period.

Explanation: The partner income test applies unless one member of a couple is a pensioner.

 

Example: Amy is receiving PPP and her partner Sean is receiving NSA. Sean gets a job and earns over the partner excess income cut-out point. The excess income is high enough so that Amy's PPP is no longer payable. Because it was employment income that affected her payment, Amy will qualify for an employment income nil rate period.

Note: This works in the same way if all of Sean's income is employment income, or other ordinary income plus employment income. If none of Sean's income is employment income, Amy is not qualified for an employment income nil rate period.

 

For pensioner couples, if one recipient earns employment income in a fortnight under the combined income test, half that income will be attributed to the partner once the income is combined and halved.

Example: Jane is caring for her elderly mother and receiving CP. Her husband Cameron is receiving NSA. Cameron gets a job and after the combined income test is applied, Jane's half of the combined income means that her CP is no longer payable. The income earned by Cameron is considered to be employment income in Jane's income assessment so she will qualify for a nil rate period.

 

Duration of employment income nil rate period

An employment income nil rate period starts on the date of effect of the nil rate determination and runs until 6 fortnights after the end of the instalment period in which the nil rate determination happened. In effect an employment income nil rate period can last up to 6 to 7 fortnights, or until the recipient's social security pension or benefit is reinstated due to a drop in income whichever is the earlier. If the recipient doesn't have their income support reinstated their payment is cancelled at the end of an employment income nil rate period.

Example: Nancy commences employment and her working credit balance is reduced to nil on day 6 of the fortnight and her rate of payment is reduced to nil. She is eligible to receive the nil rate from day 7 to the next EPED, and for 6 fortnights following the EPED.

 

Note: In the case of DSP and WP (DSP) recipients, the employment income nil rate period runs concurrently with the 2-year return to work provisions (3.6.1.100).

 

Getting back on a social security pension or benefit

If the recipient reports a fall in income during an employment income nil rate period (sufficient to give at least a part rate of social security pension or benefit) a rate increase enables the social security pension or benefit to be resumed without the need to lodge a new claim The restriction on new grants for payment such as WidB, WP and PA does not apply in this situation during an employment income nil rate period as the social security pension or benefit has not been cancelled.

 

Multiple employment income nil rate periods

An employment income nil rate period can start only when a recipient has been receiving a payment of at least a part rate and then has an assessment that changes the rate to nil. Consequently an employment income nil rate period cannot run immediately after a previous one, i.e. during an employment income nil rate period, they cannot qualify to start another employment income nil rate period.

 

For a recipient to qualify for a second or subsequent employment income nil rate period their social security pension or benefit must have been resumed. Then their total ordinary income (of which employment income is a component) has to increase to reduce their rate of payment to nil. There is no limit to the number of employment income nil rate periods a recipient can have, provided they meet the qualification rules each time.

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Last reviewed: 11 November 2013


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Last Edited: 14/10/2013 2:25:45 PM


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