Deprivation of income

Student Allowance is a targeted form of financial assistance.

The respective income tests reflect the shared responsibility for funding study between the student, the government, their partner, or their parents.

If a student, (and, from 1 January 2012, a student's parent or partner) directly or indirectly deprives themselves of income resulting in the student getting a Student Allowance, an Independent Circumstances Allowance or payment at a higher rate (as applicable), that deprived income may be included in their income assessment.

In general, if deprivation of income has occurred, it should be included back in their income assessment unless there are good reasons not to.

There are three essential questions that assist in deciding whether to include deprived income in an income assessment:

• Has the person (directly or indirectly) deprived himself/herself of income?
• Would the deprivation result in the student becoming entitled for an allowance or for payment at an increased rate?
• Exercise discretion: Having regard to all relevant circumstances, is it fair and appropriate to cancel or reduce the allowance?

It is recommended that advice is sought from the Business Support team or Legal Services before any decisions are made, including the best approach to take in any particular case. It is important that a consistent approach is taken.

Deprivation of income involves deliberately giving up or foregoing income.

This can be by an act or by omission (eg, choosing not to do something) as long as a "deliberate choice" has been made.

Some examples of deprivation include where:

• the person re-arranges their financial circumstances which reduces their income
• the person makes a significant interest free loan
• the person makes a gift of cash or property that could otherwise have been used to generate income
• the person owns a rental property but does not collect rent from the property
• the person has invested in Bonus Bonds instead of an interest-bearing account or term deposit
• an income stream from an estate or trust is stopped or not accessed at the person's request

Generally deprivation of income will not have occurred in the following situations:

• the person chooses to reduce their work hours during their study period
• the person sells, purchases or exchanges items for their normal value
• the person has a loss or reduction of income that was outside of their control - for example the investment marker return is under performing
• the person is not renting out a room in the home where the student lives
• the person chose to take a conservative approach to financial decisions

Deprivation of income can occur in respect of a trust that an applicant, their partner or their parent has a responsibility to administer, manage or has some other form of relationship with (e.g. a beneficiary).

Listed below are some examples of how deprivation may occur in relation to a trust:

• a loan made to a trust without the requirement for the payment of interest
• investments within a trust which are designed for capital gain rather than earning income
• making a decision to not receive income as a beneficiary of a trust

The decision as to whether to include deprived income in an income assessment involves the exercise of discretion. You must take into account the individual circumstances of the situation and decide whether it is fair and appropriate to include the deprived income.

Generally, the following matters should be taken into consideration:

• At what point were the decisions made for the student to undertake study?
• Has the student already been advised of the outcome of their application?
• Does the person have any right to access income from either an estate or trust or other agreement?
• What are the terms of the person's investments and when were the investments established?
• Is it possible for the person to rearrange their finances to restore the deprived income?
• Has the person recently rearranged the investment from previously high return to low return?
• Would the person be put into serious financial hardship if the deprived income were included?
• Are there any other individual factors which are relevant?

Note it may be appropriate to give the person a reasonable opportunity to rearrange their finances to restore the income that they've deprived themselves of, eg, allow a period of time before the deprived income is included back in their income assessment.