Family and Community Services Legislation Amendment (Australians Working Together and other 2001 Budget Measures) Act 2003 (Incorporating amendments up to Act No. 122 of 2003) (35 of 2003)
Schedule 6 Working credit
Part 2 Amendment of the Social Security Act 1991
Social Security Act 1991
26 After Division 1 of Part 3.10
Insert:
Division 1AA - Employment income attribution rules
1073A Employment income attribution over a period for social security pensioners
(1) Employment income:
(a) that is a lump sum amount either:
(i) in respect of a period greater than a fortnight; or
(ii) resulting from remunerative work although not in respect of any particular period; and
(b) that is earned, derived or received, or is taken to have been earned, derived or received, by a person:
(i) who is receiving a social security pension; and
(ii) whose rate of payment of that pension is worked out with regard to the income test module of a rate calculator in this Chapter; and
(iii) who has not reached pension age;
is to be taken to have been earned, derived or received over such period, not exceeding 52 weeks, as the Secretary determines.
(2) The person's employment income for the period determined by the Secretary is to be reduced to a fortnightly rate rounded to the nearest cent (rounding 0.5 cents downwards).
1073B Daily attribution of employment income
If:
(a) a person is receiving a social security pension or a social security benefit; and
(b) the person's rate of payment of the pension or benefit is worked out with regard to the income test module of a rate calculator in this Chapter; and
(c) the person has not reached pension age; and
(d) the person earns, derives or receives, or is taken, either by virtue of the operation of section 1073A or any other provision of this Act, to earn, derive or receive, employment income during the whole or a part of a particular instalment period of the person;
the person is taken to earn, derive or receive, on each day in that instalment period, an amount of employment income worked out by dividing the total amount of the employment income referred to in paragraph (d) by the number of days in the period.
1073C Fortnightly or yearly expression of attributed employment income
If, in accordance with the operation of section 1073B, a person is taken to earn, derive or receive a particular amount of employment income on each day in an instalment period:
(a) the rate of the person's employment income on a fortnightly basis for that day may be worked out by multiplying that amount by 14; and
(b) the rate of the person's employment income on a yearly basis for that day may be worked out by multiplying that amount by 364.
Division 1AB - Working credit accrual and depletion rules and their consequences
1073D To whom do working credit accrual and depletion rules apply?
The rules in this Division apply to a person (a working credit participant ):
(a) who is receiving a social security pension or a social security benefit; and
(b) whose rate of payment of the pension or benefit is worked out with regard to the income test module of a rate calculator in this Chapter; and
(c) who has not reached pension age; and
(d) to whom the student income bank does not apply.
1073E Opening balance
Basic opening balance rule
(1) Subject to this section, each working credit participant has, on becoming a working credit participant, a working credit opening balance of nil.
Opening balance following cancellation of social security pension or benefit
(2) If:
(a) a person ceases to be a working credit participant or a person to whom the student income bank applies because of a determination to cancel, or an automatic cancellation of, the person's social security pension or social security benefit; and
(b) the person had a working credit balance or a student income bank balance greater than nil immediately before the date of effect of the determination or cancellation; and
(c) the person makes, or is taken to have made, a new claim for a social security pension or social security benefit; and
(d) the Secretary determines that the new claim is to be granted with effect from a day within 12 months after the date of effect mentioned in paragraph (b); and
(e) the person becomes a working credit participant on a day (the participation day ), being either the day with effect from which the new claim is granted or a day following that day;
the working credit balance mentioned in paragraph (b), or the student income bank balance mentioned in that paragraph to the extent that it does not exceed $1,000, becomes the opening balance of the working credit applicable to the person on the participation day.
Opening balance following suspension of social security pension or benefit
(3) If:
(a) a person ceases to be a working credit participant because of a determination to suspend the person's social security pension or social security benefit; and
(b) the person had a working credit balance greater than nil immediately before the date of effect of the determination; and
(c) within 12 months after the date of effect of the determination, the payment of the person's pension or benefit is resumed; and
(d) the person becomes a working credit participant on the day with effect from which the person's pension or benefit is resumed;
the working credit balance mentioned in paragraph (b) becomes the opening balance of the working credit applicable to the person on the day mentioned in paragraph (d).
Opening balance following suspension and subsequent cancellation of social security pension or benefit
(4) If:
(a) a person ceases to be a working credit participant or a person to whom the student income bank applies because of a determination to suspend the person's social security pension or social security benefit; and
(b) while the person's pension or benefit is suspended there is a determination to cancel the person's pension or benefit; and
(c) the person had a working credit balance or a student income bank balance greater than nil immediately before the date of effect of the suspension determination; and
(d) the person makes, or is taken to have made, a new claim for a social security pension or social security benefit; and
(e) the Secretary determines that the new claim is to be granted with effect from a day within 12 months after the date of effect mentioned in paragraph (c); and
(f) the person becomes a working credit participant on a day (the participation day ), being either the day with effect from which the new claim is granted or a day following that day;
the working credit balance mentioned in paragraph (c), or the student income bank balance mentioned in that paragraph to the extent that it does not exceed $1,000, becomes the opening balance of the working credit applicable to the person on the participation day.
Opening balance following cessation of full-time study by youth allowance recipient
(5) If:
(a) a person is receiving youth allowance and is undertaking full-time study; and
(b) the person ceases to undertake full-time study; and
(c) either because of a determination made as a result of that cessation or, if no determination is necessary, because of the cessation itself, the person, on a day (the participation day ):
(i) ceases to be a person to whom the student income bank set out in Module J of the Youth Allowance Rate Calculator applies; and
(ii) becomes a working credit participant; and
(d) the person had a student income bank balance greater than nil immediately before the participation day;
the student income bank balance mentioned in paragraph (d), to the extent that it does not exceed $1,000, becomes the opening balance of the working credit applicable to the person on the participation day.
Opening balance following cessation of ABSTUDY payment
(6) If:
(a) a person to whom the income bank under the ABSTUDY scheme applies stops being such a person; and
(b) the person becomes a working credit participant within 12 months after so stopping; and
(c) immediately before so stopping, the person had a credit balance greater than nil under the scheme;
the credit balance, to the extent that it does not exceed $1,000, becomes the opening balance of the working credit applicable to the person on the day on which the person becomes a working credit participant.
1073F Working out accruals and depletions of working credit for social security beneficiaries
This section determines, in respect of each working credit participant who is receiving a social security benefit, whether, for each day in an instalment period:
(a) there is an accrual to the participant's working credit balance; or
(b) the participant's working credit balance is unaffected; or
(c) the participant's working credit balance is depleted;
and, if there is an accrual to, or a depletion from, the participant's working credit balance, the amount of that accrual or depletion.
Method statement
Step 1. Work out the amount of the participant's employment income earned, derived or received on the day. This could be a nil amount or it could be an amount that is taken, under section 1073B, to have been earned, derived or received on the day.
Step 2. Multiply the amount determined under step 1 by 14. This is the participant's rate of employment income on a fortnightly basis for the day.
Step 3. Add to the participant's rate of employment income on a fortnightly basis for the day the participant's rate of any other ordinary income on a fortnightly basis for the day. This is the participant's fortnightly rate of total ordinary income on a fortnightly basis for the day.
Step 4. If the participant's rate of total ordinary income on a fortnightly basis for the day is less than $48, there is an accrual to the participant's working credit balance for the day of an amount equal to one fourteenth of the amount by which $48 exceeds that rate. The maximum working credit balance is $1,000.
Step 5. If the participant's rate of total ordinary income on a fortnightly basis for the day is at least $48 but does not exceed the ordinary income free area applicable to the participant for the day under the income test module of the appropriate rate calculator, the participant's working credit balance for the day is neither increased nor reduced.
Step 6. If the participant's rate of total ordinary income on a fortnightly basis for the day is at least $48 and exceeds the participant's applicable ordinary income free area for the day, the participant's working credit balance, if it is greater than nil on the day, is depleted on that day by the least of:
(a) the amount of employment income determined under step 1; or
(b) one fourteenth of the amount by which the participant's rate of total ordinary income on a fortnightly basis exceeds the participant's applicable ordinary income free area; or
(c) the participant's available working credit balance.
1073G Working out the effect of a working credit depletion on the fortnightly rate of ordinary income for a social security beneficiary
If, under section 1073F, the working credit balance of a working credit participant is depleted on a particular day, the participant's rate of ordinary income on a fortnightly basis for that day is reduced by the working credit depletion amount applicable to that day, determined under step 6 of the method statement, multiplied by 14.
1073H Working out accruals and depletions of working credit for social security pensioners
This section determines, in respect of each working credit participant who is receiving a social security pension, whether, for each day in an instalment period:
(a) there is an accrual to the participant's working credit balance; or
(b) the participant's working credit balance is unaffected; or
(c) the participant's working credit balance is depleted;
and, if there is an accrual to, or a depletion from, the participant's working credit balance, the amount of that accrual or depletion.
Method statement
Step 1. Work out the amount of the participant's employment income earned, derived or received on the day. This could be a nil amount or it could be an amount that is taken, under section 1073B, to have been earned, derived or received on the day.
Step 2. Multiply the amount determined under step 1 by 364. This is the participant's rate of employment income on a yearly basis for the day.
Step 3. Add to the participant's rate of employment income on a yearly basis for the day the participant's rate of any other ordinary income on a yearly basis for the day. This is the participant's rate of total ordinary income on a yearly basis for the day.
Step 4. Divide the participant's rate of total ordinary income on a yearly basis for the day by 26. This is the participant's rate of total ordinary income, expressed on a fortnightly basis, for the day.
Step 5. Divide the yearly ordinary income free area applicable to the participant for the day under the ordinary income test module of the appropriate rate calculator by 26. This is the participant's applicable ordinary income free area, expressed on a fortnightly basis, for the day.
Step 6. If the participant's rate of total ordinary income, expressed on a fortnightly basis, for the day, is less than $48, there is an accrual to the participant's working credit balance, for the day, of an amount equal to one fourteenth of the amount by which $48 exceeds that rate. The maximum working credit balance is $1,000.
Step 7. If the participant's rate of total ordinary income, expressed on a fortnightly basis, for the day, is at least $48 but does not exceed the participant's applicable ordinary income free area, expressed on a fortnightly basis for the day in accordance with step 5, the participant's working credit balance for the day is neither increased nor reduced.
Step 8. If the participant's rate of total ordinary income, expressed on a fortnightly basis, for the day, is at least $48 and exceeds the participant's applicable ordinary income free area, expressed on a fortnightly basis for the day in accordance with step 5, the participant's working credit balance, if it is greater than nil on the day, is depleted on that day by the least of:
(a) the amount of employment income determined under step 1; or
(b) one fourteenth of the amount by which the participant's rate of total ordinary income, expressed on a fortnightly basis, exceeds the participant's applicable ordinary income free area, expressed on that basis; or
(c) the participant's available working credit balance.
1073I Working out the effect of a working credit depletion on the yearly rate of ordinary income for a social security pensioner
If, under section 1073H, the working credit balance of a working credit participant is depleted on a particular day, the participant's rate of ordinary income on a yearly basis for that day is reduced by the working credit depletion amount applicable to that day, determined under step 8 of the method statement, multiplied by 364.
1073J Working credit balance prevents loss of qualification in certain cases
(1) If:
(a) a person receiving disability support pension, carer payment, youth allowance, newstart allowance or sickness allowance is a working credit participant; and
(b) either:
(i) the participant commences to earn, derive or receive, or to be taken to earn, derive or receive, employment income; or
(ii) there is an increase in the employment income that is earned, derived or received, or taken to be earned, derived or received, by the participant; and
(c) the participant has a working credit balance greater than nil at the start of the instalment period of the participant in which the commencement or increase occurs; and
(d) but for the commencement or increase, the participant would have continued to be qualified for the payment mentioned in paragraph (a) until the earlier of:
(i) a day determined under Division 8 or 9 of Part 3 of the Administration Act; or
(ii) the day on which the participant's working credit balance is reduced to nil;
the participant is to be treated as if he or she had continued to be so qualified until the earlier of the days determined as referred to in subparagraphs (d)(i) and (ii).
(2) If:
(a) a woman receiving wife pension is a working credit participant; and
(b) the partner of the participant ceases to receive age pension or disability support pension on and from a day (the cessation day ); and
(c) the partner ceases to receive that pension:
(i) because of the employment income of the partner (either alone or in combination with any other ordinary income earned, derived or received, or taken to have been earned, derived or received, by the partner); and
(ii) after any working credit balance of the partner is reduced to nil; and
(d) as a result of the partner's so ceasing to receive that pension, the participant ceases to be qualified for wife pension on and from the cessation day; and
(e) the participant has a working credit balance greater than nil at the start of the instalment period of the participant in which the cessation day occurs; and
(f) but for the employment income, or combined income, referred to in paragraph (c), the participant would have continued to be qualified for wife pension until the earlier of:
(i) a day determined under Division 8 or 9 of Part 3 of the Administration Act; or
(ii) the day on which the participant's working credit balance is reduced to nil;
the participant is to be treated as if she had continued to be so qualified until the earlier of the days referred to in subparagraphs (f)(i) and (ii).