Assessing the amount of deprived income

If deprivation of income has occurred and discretion is being used to include it in the financial means assessment, we need to determine the level of financial resources available to the client.

For example, if the client has significant levels of cash in a non-interest earning account, firstly invite the client to change this arrangement so that they do earn interest. If the client does not agree to change this arrangement, use the Reserve Bank 6-month term deposit rate to calculate the amount of deprived income.

For more information see:

• Example of using Reserve Bank interest rate

In general, the amount of deprived income counted into the financial means assessment will be replaced by the level of resources available to the client.

Sometimes it is reasonable to assume other resources are available to the client. For example, a family trust has resources available, but the client refuses to seek assistance from the trust. In these cases, it might be reasonable to count in a deprived income amount based on the actual level of deprivation.

No notional income charge is assessed against gifts made under the allowable gift limits.

Generally, no notional income charge is assessed against gifts made in excess of the allowable gift limits.

This is because the gifted amount includes the future income earning potential of that asset.

• Example of using Reserve Bank interest rate
• Gifting
• Deprivation test

Note in some situations you can assess deprived income for a historic period. For more information see: Historic deprivation