Assessment of parental income
The parental income test
Entitlement to Student Allowances for students who are under 24 years old with no supported children, is assessed on their parents' income.
Definition of parental income
The definition of parental income for Student Allowances purposes is largely taken from the 'family scheme income' definition for Working for Families Tax Credits under the Income Tax Act 2007.
Parental income assessments are based on the parents' combined income for the relevant tax year.
The assessment uses the current income for the period of time the student will be studying.
For more information see:
Parental income abatement - how it works
The amount of parental income over the threshold (the lower limit) abates or reduces the gross rate of Student Allowance.
The cut-out points are the upper parental income limits at which the amount of parental income will reduce the gross rate of Student Allowance payable to zero.
The rate of abatement of the net rate Student Allowance where the parental income is over the threshold (the lower limit) is 25%.
For more information see:
Parental income - change in income
When the parental income amount increases (due to a change in income) after the initial assessment, there is no obligation on the parents or the student to advise MSD the change. Therefore, there is no requirement to review the student's entitlement where the parental income increases after the initial assessment.
When information is received that the parental income has increased, that information should be recorded.
When the parental income amount decreases by at least 25% (due to a change in income) the parents can apply for a Reassessment of Parental Income (RPI).
Parental income - a change in circumstances
When the parental income increases after the initial assessment due to a change in circumstances (e.g. a parent enters into a new relationship) there is no obligation on the parents or the student to advise MSD of the change. Therefore, there is no requirement to review the student's entitlement where the parental income increases after the initial assessment.
When information is received that the parental income has increased, that information should be recorded.
When the parental income reduces after the initial assessment due a change in circumstances (e.g. a parent dies), there is no obligation on the parents or the student to advise MSD of the change. Therefore, there is no requirement to review the student's entitlement where the parental income decreases after the initial assessment.
When information is received that the parental income has reduced, that information should be recorded.
Entitlement may be reviewed
While there is no requirement to review the student's entitlement where there has been a change in circumstances, a student's entitlement may be reviewed if in all the circumstances it would be appropriate.
Note when a change in circumstances leads to a reduction of the parental income, the reduction does not need to be by at least 25%.
For more information see:
A student has more than 2 parents
If a student has more than 2 parents, the student must nominate the 2 parents who are the major contributors to the student's support. The combined parental incomes of these 2 contributors is the parental income of the student.
MSD does not have to accept the nomination, if there is information that confirms the nominated parents' are not the major contributors to the student's support.
Parents unable to determine their current annual income
Parents whose annual income cannot be determined until the end of the tax year (e.g. they are self-employed), can declare an estimate of their income.
For more information see:
Legislation
- parental income (definition) regulation 2(1) Student Allowances Regulations 1998
- family scheme income (definition) regulation 2(1) Student Allowances Regulations 1998
- Assessment of parental income regulation 4(2) Student Allowances Regulations 1998
- Review of certain allowances regulation 45 Student Allowances Regulations 1998
- Amounts of certain grants clause 3 schedule 2, Student Allowances Regulations 1998
- Some definitions for family scheme section MA 8 Income Tax Act 2007
