5HIncome test definitions

#### 5H Income test definitions (1) In this Act, unless the contrary intention appears: > adjusted income, in relation to a person for the purpose of assessment of the rate of income support supplement, means the sum of: (a) the person’s ordinary income; and (b) a payment to the person that is a payment in respect of incapacity or death resulting from employment in connection with a war or war‑like operations in which the Crown has been engaged, other than: (i) a pension under Part II or IV (other than a pension that is payable under section 30 to a dependant of a deceased veteran); or (ii) a pension payable because of subsection 4(6) or (8B) of the Veterans’ Entitlements (Transitional Provisions and Consequential Amendments) Act 1986 (other than a pension payable in respect of a child); and (c) any instalment of pension payable to the person under subsection 30(1); and (ca) if compensation under section 233 of the MRCA is payable to the person and the person has not made a choice under section 236 of the MRCA—any payment of the weekly amount mentioned in paragraph 234(1)(b) of the MRCA; and (cb) if compensation under section 233 of the MRCA is payable to the person and the person has made a choice under section 236 of the MRCA—any weekly amount mentioned in paragraph 234(1)(b) of the MRCA that the person would have been paid if the person had not made that choice; and (d) any instalment of pension that is payable to the person under the law of a foreign country and is, in the opinion of the Commission, similar in character to the pension referred to in paragraph (c). > approved exchange trading system has the meaning given by subsection (11). > available money, in relation to a person, means money that: (a) is held by or on behalf of the person; and (b) is not deposit money of the person; and (c) is not the subject of a loan made by the person. > deposit money, in relation to a person, means the person’s money that is deposited in an account with a financial institution. > disposes of ordinary income has the meaning given by section 48. > domestic payment has the meaning given by subsection (3). > earned, derived or received has the meaning given by subsection (2). > exchange trading system has the meaning given by subsection (10). > exempt lump sum has the meaning given by subsections (12) and (12A). > home equity conversion agreement, in relation to a person, means an agreement under which the repayment of an amount paid to or on behalf of the person, or the person’s partner, is secured by a mortgage of the principal home of the person or the person’s partner. > Note 1: See also subsection (7). > Note 2: A home equity access scheme advance payment (within the meaning of Subdivision E of Division 11 of Part IIIB) is an example of a payment under a home equity conversion agreement. > income, in relation to a person, means: (a) an income amount earned, derived or received by the person for the person’s own use or benefit; or (b) a periodical payment by way of gift or allowance; or (c) a periodical benefit by way of gift or allowance; but does not include an amount that is excluded under subsection (4), (5) or (8). > Note 1: See also sections 46B and 46C (business income), Division 3 of Part IIIB (income from financial assets (including income streams (short term) and certain income streams (long term)) and Division 4 of Part IIIB (income from income streams not covered by Division 3 of Part IIIB). > Note 2: Where a person or a person’s partner has disposed of income, the person’s income may be taken to include the amount which has been disposed of—see sections 48–48E. > Note 3: Amounts of maintenance income are not excluded amounts. > income amount means: (a) valuable consideration; or (b) personal earnings; or (c) moneys; or (d) profits; (whether of a capital nature or not). > instalment of parental leave pay means an instalment of parental leave pay under the Paid Parental Leave Act 2010. > ordinary income means income that is not maintenance income or an exempt lump sum. > Note 1: For maintenance income see section 5K. For exempt lump sum, see subsections (12) and (12A). > Note 2: The receipt of periodic compensation payments may result in reduction of the person’s rate of service pension, income support supplement or veteran payment under Part IIIC. If this happens, the payments are not treated as ordinary income (see section 59X). > Note 3: For provisions affecting the amount of a person’s ordinary income see sections 46 and 46A (ordinary income concept), sections 46B and 46C (business income), Division 3 of Part IIIB (income from financial assets (including income streams (short term) and certain income streams (long term)) and Division 4 of Part IIIB (income from income streams not covered by Division 3 of Part IIIB). Earned, derived or received (2) A reference in this Act to an income amount earned, derived or received is a reference to: (a) an income amount earned, derived or received by any means; and (b) an income amount earned, derived or received from any source (whether within or outside Australia). Domestic payments (3) A payment received by a person is a domestic payment for the purposes of this Act if: (a) the person receives the payment on the disposal of an asset of the person; and (b) the asset was used, immediately before the disposal, by the person or the person’s partner wholly or substantially for private or domestic purposes; and (c) the asset was used by the person or the person’s partner wholly or substantially for those purposes for: (i) a period of 12 months before the disposal; or (ii) if the Commission considers it appropriate—a period of less than 12 months before the disposal. Excluded amounts—home equity conversion (not a member of a couple) (4) If a person is not a member of a couple, an amount paid to or on behalf of the person under a home equity conversion agreement is an excluded amount for the person to the extent that the total amount owed by the person from time to time under home equity conversion agreements does not exceed $40,000. Excluded amounts—home equity conversion (member of a couple) (5) If a person is a member of a couple, an amount paid to or on behalf of the person or the person’s partner under a home equity conversion agreement is an excluded amount for the person to the extent that the total amount owed by the person and the person’s partner under home equity conversion agreements from time to time does not exceed $40,000. Home equity conversion (amount owed) (6) For the purposes of this Act, the amount owed by a person under a home equity conversion agreement is the principal amount secured by the mortgage concerned and does not include: (a) any amount representing mortgage fees; or (b) any amount representing interest; or (c) any similar liability whose repayment is also secured by the mortgage. Home equity conversion (principal home) (7) For the purposes of the definition of home equity conversion agreement in subsection (1), an asset cannot be a person’s principal home unless the person or the person’s partner has a beneficial interest (but not necessarily the sole beneficial interest) in the asset. Excluded amounts—general (8) The following amounts are not income in relation to a person for the purposes of this Act: (a) a payment under Part III or Part IIIA; (aa) a veteran payment; (ab) a home equity access scheme advance payment (within the meaning of section 52ZBA); (b) a payment of an instalment of pension under Part II or IV; (ba) a payment of an instalment of a supplement under Part VIIA (veterans supplement); (c) a payment of an instalment of a pension (other than a pension payable in respect of a child) payable because of subsection 4(6) or (8B) of the Veterans’ Entitlements (Transitional Provisions and Consequential Amendments) Act 1986; (e) a payment (other than a payment referred to in paragraph (b) or (c)) that is a payment in respect of incapacity or death resulting from employment in connection with a war or war‑like operations in which the Crown has been engaged; Note: However, a payment referred to in paragraph (b), (c) or (e) is counted in working out a person’s total income for the purposes of the hardship rules (see section 52Z). (ea) any payment of compensation (other than a payment referred to in paragraph (e)) to the extent that the payment is taken into account: (i) under Division 5A of Part II; or (ii) under section 74; to reduce a pension payable to the person under Part II or IV, as the case requires; > Note: However, a payment referred to in paragraph (ea) is counted in working out a person’s total income for the purposes of the hardship rules (see section 52Z). (f) a payment by way of allowance (other than a loss of earnings allowance) under Part VI of this Act; > Note: However, a payment referred to in paragraph (f) is counted in working out a person’s total income for the purposes of the hardship rules (see section 52Z). (faa) a payment, by a foreign country, of an allowance or annuity that is of a similar kind to decoration allowance payable under section 102 or to Victoria Cross allowance payable under section 103; Note: However, a payment referred to in paragraph (faa) is counted in working out a person’s total income for the purposes of the hardship rules (see section 52Z). (faaa) a payment under Part VIB (prisoner of war recognition supplement); Note: However, a payment referred to in paragraph (faaa) is counted in working out a person’s total income for the purposes of the hardship rules (see section 52Z). (fa) a payment known as a student start‑up scholarship payment, or a relocation scholarship payment, under the Veterans’ Children Education Scheme; (gb) a payment under Part VIIAD (energy supplement); (h) a payment under the Social Security Act; (ha) a payment under the ABSTUDY Scheme; (haa) the amount or value of a scholarship known as a Commonwealth Trade Learning Scholarship; (hab) a payment of an approved scholarship (within the meaning of subsection 8(1) of the Social Security Act 1991) awarded on or after 1 September 1990; (hac) the amount or value of a scholarship: (i) provided for under Part 2‑2A of the Higher Education Support Act 2003 (Indigenous student assistance grants); and (ii) specified under subsection 8(8AAA) of the Social Security Act 1991; (hb) the amount or value of: (i) a scholarship known as a Commonwealth Education Costs Scholarship; or (ii) a scholarship known as a Commonwealth Accommodation Scholarship; provided for under the Commonwealth Scholarships Guidelines made for the purposes of Part 2‑4 of the Higher Education Support Act 2003; (hc) an amount covered by subsection (8A) (about reductions of amounts payable for enrolment or tuition in certain courses); (hd) a payment covered by subsection (8B) (about payments that are made to an educational institution or the Commonwealth to reduce a person’s liability to the educational institution or Commonwealth and that are made by someone other than the person); (he) a payment of a scholarship, to the extent that the payment is not income for the purposes of the Social Security Act 1991 because of paragraph 8(8)(zjd) of that Act; (i) any return on a person’s investment in: (i) a superannuation fund; or (ii) an approved deposit fund; or (iiia) an ATO small superannuation account; until the person: (iv) reaches pension age; or (v) commences to receive a pension or annuity out of the fund; > Note 1: For pension age see subsection (9) and sections 5QA and 5QB. > Note 2: For superannuation fund, approved deposit fund and ATO small superannuation account see subsection 5J(1). (j) the value of emergency relief or like assistance; (m) a payment under Part III of the former Disability Services Act 1986 or the value of any rehabilitation program (including any follow‑up program) provided under that Part; (maa) the value of supports or services that are specified in an instrument under subsection 8(8AAAB) of the Social Security Act and are provided under an arrangement or grant under the Disability Services and Inclusion Act 2023; (ma) a payment under the Business Services Wage Assessment Tool Payment Scheme Act 2015; (mb) a payment under the National Redress Scheme for Institutional Child Sexual Abuse Act 2018; (mc) a payment under the scheme known as the Territories Stolen Generations Redress Scheme; (n) a payment of domiciliary nursing care benefit under Part VB of the National Health Act 1953 as in force immediately before 1 July 1999; (na) a payment of subsidy made to a registered provider under Division 4 of Part 2 of Chapter 4 of the Aged Care Act 2024 in respect of care delivered to the person; (nb) an accommodation bond balance (within the meaning of the Aged Care Act 2024) refunded to the person under that Act; (nba) a payment under section 186 of the Aged Care Act 2024; (nc) while a person is accruing a liability to pay an accommodation charge—any rent from the person’s principal home that the person, or the person’s partner, earns, derives or receives from another person; Note 1: Accommodation charge has the same meaning as in the Aged Care Act 2024: see subsection 5L(1). Note 2: For rent, see subsection 5N(2). Note 3: Under subsections 5LA(8) and (9), the principal home of a person in a care situation may be a place other than the place where the person receives care. Note 4: The operation of this paragraph is limited by subsection (11A). (nd) while a person is liable to pay all or some of an accommodation bond by periodic payments—any rent from the person’s principal home that the person, or the person’s partner, earns, derives or receives from another person; Note 1: For rent, see subsection 5N(2). Note 2: Under subsections 5LA(8) and (9), the principal home of a person in a care situation may be a place other than the place where the person receives care. Note 3: The operation of this paragraph is limited by subsection (11A). (ne) a refundable deposit balance refunded to the person under the Aged Care Act 2024; (nf) while a person is liable to pay a daily accommodation payment or a daily accommodation contribution—any rent from the person’s principal home that the person, or the person’s partner, earns, derives or receives from another person; Note 1: For rent, see subsection 5N(2). Note 2: Under subsections 5LA(8) and (9), the principal home of a person in a care situation may be a place other than the place where the person receives care. Note 3: The operation of this paragraph is limited by subsection (11A). (o) a payment under a Commonwealth law, one of whose objects is that of assisting people to purchase or build their own homes; (oa) a payment by a State or Territory for the purpose of assisting people to purchase or build their own homes; (p) a payment made to the person for or in respect of a child of the person; (paa) a payment of family assistance, or of one‑off payment to families, economic security strategy payment to families, back to school bonus, single income family bonus, clean energy advance, ETR payment, first 2020 economic support payment, second 2020 economic support payment, additional economic support payment 2020 or additional economic support payment 2021, under the Family Assistance Act; (pab) a payment under the scheme determined under Schedule 3 to the Family Assistance Legislation Amendment (More Help for Families—One‑off Payments) Act 2004; (paba) an NDIS amount; (pabb) any return on a person’s NDIS amounts; (pabc) a payment of a bursary under the program established by the Commonwealth and known as the Young Carer Bursary Programme; (pac) disability expenses maintenance; (pa) if: (i) the person owes money under a mortgage or other arrangement; and (ii) the person has insurance which requires the insurer to make payments to the creditor when the person is unemployed or ill or in other specified circumstances; and (iii) payments are made to the creditor under the insurance; a payment so made; (q) insurance or compensation payments made because of the loss of, or damage to, buildings, plant or personal effects; > Note: These payments are to be disregarded in calculating the value of a person’s assets (see paragraph 52(1)(o)). (r) money from an investment that is: (i) an investment of payments of the kind referred to in paragraph (q); and (ii) an investment for: (A) a period of not more than 12 months after the person receives the payments; or (B) if the Commission thinks it appropriate—of 12 months or more after the person receives those payments; (s) an amount paid, under a law of, or applying in, a country or part of a country, by way of compensation for a victim of National Socialist persecution; (u) if the person pays, or is liable to pay, rent—a payment by way of rent subsidy made by the Commonwealth, by a State or Territory or by an authority of the Commonwealth or of a State or Territory to or on behalf of the person who pays or who is liable to pay rent; (v) a payment received by a trainee in full‑time training under a program included in the programs known as Labour Market Programs, to the extent that the payment includes one or more of the following amounts: (i) an amount calculated by reference to a rate of jobseeker payment or youth allowance under the Social Security Act; (ii) an amount known as the training component; (iii) an amount by way of a living away from home allowance; (w) in the case of a person who: (i) is receiving a service pension, income support supplement, a veteran payment, a social security pension or a social security benefit; and (ii) is in part‑time training, or engaged in part‑time work experience, under a program included in the programs known as Labour Market Programs; a payment received by the person under that program in respect of the person’s expenses associated with his or her participation in the training or work experience; (x) a payment received by the person under a self‑employment program; (xaa) a payment made by the Commonwealth known as the Apprenticeship Wage Top‑Up to the person; (xab) a payment to the person made by the Commonwealth under the program known as Skills for Sustainability for Australian Apprentices; (xac) a payment to the person made by the Commonwealth under the program known as Tools for Your Trade (within the program known as the Australian Apprenticeships Incentives Program); (xad) a payment made by the Commonwealth, under the program established by the Commonwealth and known as “Youth Jobs PaTH”, to an individual placed in an internship under that program; (xa) a payment made by the Mark Fitzpatrick Trust or the New South Wales Medically‑Acquired HIV Trust to a person by way of assistance with expenses incurred in relation to a person who has medically acquired HIV infection; (xb) a payment by the Thalidomide Australia Fixed Trust: (i) made to, or applied for the benefit of, a beneficiary of the Trust; or (ii) made to a person in respect of a beneficiary of the Trust; (xc) a payment under the program established by the Commonwealth and known as the Support for Australia’s Thalidomide Survivors program; (y) a benefit under a law of the Commonwealth that relates to the provision of: (i) pharmaceutical, sickness or hospital benefits; or (ii) medical or dental services; (ya) a payment towards the cost of personal care support services for the person that is made under a scheme approved under section 35A of the Social Security Act; (z) a payment that: (i) is made by an organisation that is registered under a law referred to in paragraph (y); and (ii) is made in respect of expenses incurred by a person for: (A) hospital treatment; or (B) medical treatment; or (C) dental treatment; (za) in the case of a member of: (i) the Naval Reserve; or (ii) the Army Reserve; or (iii) the Air Force Reserve; the pay and allowances paid to the person as such a member (other than pay and allowances in respect of continuous full‑time service); (zb) a payment that is a bereavement payment under section 98A; (zd) a periodical payment by way of gift or allowance, or a periodical benefit by way of gift or allowance, from a parent, child, brother or sister of the person; (ze) the value of board or lodging received by the person; (zea) an amount received under the scheme known as the Western Australian Cost of Living Rebate Scheme; (zeb) the value of a benefit obtained by using a card known as the Western Australian Country Age Pension Fuel Card; (zec) a payment, known as the Cost of Living Concession, made by the Government of South Australia; (zf) a domestic payment; (zh) a payment received by the person for serving, or being summoned to serve, on a jury; (zi) a payment received by the person for expenses incurred by the person as a witness, other than an expert witness, before a court, tribunal or commission; (zj) a return on an exempt funeral investment; Note: For exempt funeral investment see section 5PC. (zk) an amount paid by a buyer under a sale leaseback agreement; (zl) if a person is a member of an approved exchange trading system—an amount credited to the person’s account for the purposes of the scheme in respect of any goods or services provided by the person to another member; Note: For approved exchange trading system see subsections (10) and (11). (zm) an advance payment of pension under Part IVA; (zn) an amount worked out under section 115G; (zo) a payment under section 47, 56, 81, 205, 214, 217, 226, 239 or 266 of the MRCA to reimburse costs incurred in respect of the provision of goods or services (other than a payment to the person who provided the goods or service); (zp) a payment (either as a weekly amount or a lump sum) under section 68, 71, 75 or 80 of the MRCA (permanent impairment); (zq) a payment of a Special Rate Disability Pension under Part 6 of Chapter 4 of the MRCA; (zr) if subsection 204(5) of the MRCA applies to a person—an amount per fortnight, worked out under section 5I of this Act, that would, apart from this paragraph, be income of the person; Note: Subsection 204(5) of the MRCA reduces a Special Rate Disability Pension by reference to amounts of Commonwealth superannuation that the person has received or is receiving. (zs) a payment under the Motor Vehicle Compensation Scheme under section 212 of the MRCA; (zt) a payment of MRCA supplement under section 221, 245 or 300 of the MRCA; (zu) a payment of a lump sum mentioned in paragraph 234(1)(a) or subsection 236(5) of the MRCA or of the weekly amount mentioned in paragraph 234(1)(b) of the MRCA (including a reduced weekly amount because of a choice under section 236 of the MRCA) (wholly dependent partner payment); (zv) a payment under section 242 or 255 of the MRCA (continuing permanent impairment and incapacity etc. payments); (zw) a payment under section 251 or 253 of the MRCA (eligible young person payment); (zx) a payment under the scheme set up under section 258 of the MRCA (education scheme for eligible young persons); (zy) a payment under section 262 of the MRCA (compensation for other dependants); (zz) a payment under Division 1A, 2 or 3 of Part 4 of Chapter 6, or subsection 328(4), of the MRCA (compensation for treatment etc.); (zza) a payment under section 424 of the MRCA (special assistance); (zzaaaa) a clean energy payment under the MRCA; (zzah) a clean energy payment under Part IIIE; (zzaj) a one‑off energy assistance payment under Part IIIF; (zzak) a one‑off energy assistance payment under Part IIIG; (zzal) a first 2020 economic support payment under Division 1 of Part IIIH; (zzam) a second 2020 economic support payment under Division 2 of Part IIIH; (zzan) an additional economic support payment 2020 under Division 1 of Part IIIJ; (zzao) an additional economic support payment 2021 under Division 2 of Part IIIJ; (zzap) a 2022 cost of living payment under Division 1 of Part IIIK; (zzb) the value of the benefit provided under the initiative known as the Tools for Your Trade initiative; (zzc) a cash flow boost (within the meaning of the Boosting Cash Flow for Employers (Coronavirus Economic Response Package) Act 2020); (zzd) a payment: (i) paid in accordance with rules made under the Coronavirus Economic Response Package (Payments and Benefits) Act 2020; and (ii) stated, in those rules, not to be income in relation to the person for the purposes of this Act; (zze) a payment under an instrument made under any of the following: (i) section 115S of this Act; (ii) section 268B of the MRCA; (ii) section 41B of the Safety, Rehabilitation and Compensation (Defence‑related Claims) Act 1988; (zzf) a payment made by the Commonwealth to an individual under a program that is established by the Commonwealth and is determined in an instrument under subsection 8(8AC) of the Social Security Act to be an employment program; (zzg) a payment made by a State or Territory to an individual under a program that is established by the State or Territory and is determined in an instrument under subsection 8(8AC) of the Social Security Act to be an employment program. > Note: However, some of the amounts referred to in paragraphs (zp), (zq), (zr) and (zu) are counted for the purposes of the hardship rules (see subsection 52Z(3A)). (8AA) Paragraph (8)(h) does not apply to a payment under an arrangement or grant referred to in section 1062A of the Social Security Act. This subsection does not prevent another paragraph of subsection (8) from applying to such a payment. (8A) This subsection covers the amount of a reduction (by discount, remission or waiver) of an amount that would otherwise be payable by a person: (a) to an educational institution for enrolment or tuition of the person by the institution in a course that: (i) is determined, under section 5D of the Student Assistance Act 1973, to be a secondary course or a tertiary course for the purposes of that Act; or (ii) is a Masters or Doctoral degree course accredited as a higher education course by the authority responsible for accrediting higher education courses in the State or Territory in which the course is conducted or by the institution, if it is permitted by a law of the Commonwealth, a State or a Territory to accredit higher education courses that it conducts; or (iii) is a course of vocational training; or (b) to the Commonwealth as a result of the person’s enrolment in, or undertaking of, such a course at an educational institution. (8B) This subsection covers a payment: (a) that is made to discharge, or to prevent from arising, to any extent: (i) a person’s actual or anticipated liability to an educational institution for enrolment or tuition of the person by the institution in a course described in paragraph (8A)(a); or (ii) a person’s actual or anticipated liability to the Commonwealth resulting from the person’s enrolment in, or undertaking of, such a course at an educational institution; and (b) that is made by someone other than the person; and (c) that is made to the institution or the Commonwealth; and (d) that is not made at the direction of the person. (9) For the purposes of the application of subsection (8) in relation to income support supplement, the reference in subparagraph (8)(i)(iv) to pension age is taken to be a reference to the qualifying age. > Note: For qualifying age see section 5Q. (10) An exchange trading system is an arrangement between a number of people (members) under which each member may obtain goods or services from another member that is wholly or partly in kind rather than in cash. Each member has, for the purposes of the arrangement, an account: (a) to which is credited: (i) the amount representing the value of any goods or services provided by the member to another member; or (ii) if the goods or services were partly paid for in cash—the amount referred to in subparagraph (i) less the amount so paid in cash; and (b) to which is debited: (i) the amount representing the value of any goods or services supplied to the member by another member; or (ii) if the goods or services were partly paid for in cash—the amount referred to in subparagraph (i) less the amount so paid in cash. (11) An exchange trading system is an approved exchange trading system if the Commission is satisfied that: (a) it is a local community‑based system; and (b) its primary purpose is to help people maintain their labour skills and keep them in touch with the labour market; and (c) it is not a system run by a person or organisation for profit. (11A) Paragraphs (8)(nc), (nd) and (nf) do not apply in relation to a person if: (a) those paragraphs did not apply in relation to the person immediately before the commencement of the Aged Care Act 2024; or (b) a period of 28 consecutive days ends after that commencement in which the person: (i) was not provided with residential care or flexible care through a residential care service or a flexible care service; and (ii) did not access ongoing funded aged care services in an approved residential care home; other than because the person was on leave. (11C) An expression used in subsection (11A) and in the Aged Care Act 2024 or the Aged Care Act 1997 (as in force immediately before the commencement of the Aged Care Act 2024) has the same meaning in that subsection as in those Acts. (12) An amount received by a person is an exempt lump sum if: (a) it is not a periodic amount (within the meaning of subsection (13)); and (b) it is not income from remunerative work undertaken by the person; and (c) it is an amount, or one of a class of amounts, that the Commission determines to be an exempt lump sum. (12A) An amount received by a person is also an exempt lump sum if the amount is an exempt lump sum within the meaning of subsection 8(11) of the Social Security Act 1991. (13) An amount is a periodic amount if it is: (a) the amount of one payment in a series of related payments, even if the payments are irregular in time and amount; or (b) the amount of a payment making up for arrears in such a series.