Deciding amount of income exemption

The income exemption applies to both open and sheltered employment. When you have decided that your client is severely disabled and the exemption applies, you may exempt all or part of their income (full-time or part-time) earned from personal effort when assessing their benefit entitlement.

There is no formula for working out how much of your client's income to exempt. This is a matter of discretion and will depend on your client's individual circumstances.

Note the income exemption does not apply to hours of employment. For Supported Living Payment (health condition, injury or disability or total blindness), the hours of employment only apply if your client is regularly working in open employment.

The income exemption is intended to provide an incentive for severely disabled clients to participate in their community by working. Generally, the exemption should help them to be better off financially because they are in employment.

These factors may help you to decide the amount of income to exempt:

• the additional costs your client has (that a non-disabled person would not incur) due to them participating in employment
• any increase in existing cost of services due to changes in income levels from employment
• the extra personal effort that is required by your client to participate in employment and a reasonable amount to be an incentive to recognise that personal effort

You should consider exempting a level of income equivalent to any direct costs related to the client's participation in employment.

For example, if you have worked out that your client has $25 of transport costs to go to employment (that are over and above what a non-disabled person would incur) and this wasn't being reimbursed another way, you would include this amount in the client's income exemption.

You should consider any increase to the cost of existing services for your client due to the change in income level from employment when deciding how much income to exempt.

For example, your client lives in a Kāinga Ora or community housing provider rental property and is charged a calculated rate of Income Related Rent. Their rent may increase if their income has increased.

Another example, a client may be receiving income tested Home Help provided by the Ministry of Health. If they earn income, they may lose their Home Help.

You can consider exempting a reasonable amount of income as an incentive to recognising your client's personal effort in participating in employment.

Extra effort may be signalled by the following situations:

• the time required to get your client to work. Your client may need to get up earlier in order to prepare for and travel to work
• your client has to organise personal support workers so they can participate in their work
• your client needs to organise transport to accommodate their disability to ensure they can get to and from work
• any other situation where your client is showing extra effort to participate in their work

You will need to use your discretion to decide how much of the client's income to exempt for their personal effort.

For more information see:

• Review income exemption when client's circumstances change

All decisions require comment from your Regional Disability Advisor or Regional Health Advisor.

For more information see:

• Process for decisions
• Deciding if your client is severely disabled