The income test
The income test decides how much of the maximum rate you keep. It is applied every fortnight to the income you and, if you have one, your partner actually receive. Gross employment income is generally what counts, while business and investment income are assessed on their net or deemed basis as Services Australia calculates it. The test is generous by working-age payment standards for single carers, but it still reduces the payment steadily once you pass the free area, and it cuts the payment to nil at a definite point.
Single principal carers: a 40-cent taper
| Number of children in your care | Income free area, per fortnight | Indicative cut-out, per fortnight |
|---|---|---|
| 1 child | $232.60 | $2,950.60 |
| 2 children | $257.20 | $2,975.20 |
| 3 children | $281.80 | $2,999.80 |
| Each additional child | Add $24.60 | Add $24.60 |
Above the free area, the payment reduces by 40 cents for every dollar of income. A single carer with one child who earns $332.60 in a fortnight, which is $100 over the free area, therefore loses $40.00 from that fortnight's payment. A single carer with one child who earns $732.60 loses $200.00. The cut-out points above are indicative, because supplements and family circumstances can move the exact nil-rate point slightly, but they are the right order of magnitude for planning. The free area rises with each additional child because the test recognises that a larger family has larger unavoidable costs, not because extra children attract extra Parenting Payment as such.
Partnered principal carers: two tapers at once
The partnered income test assesses your income and your partner's income separately, and both reductions can apply in the same fortnight. Your own income is free up to $150.00 per fortnight. From $150.00 to $256.00 it reduces the payment by 50 cents for every dollar, and above $256.00 it reduces the payment by 60 cents for every dollar, which works out as $53.00 plus 60 cents for each dollar over $256.00. Separately, your partner's income is free up to $1,440.00 per fortnight from 20 September 2026, and income above that reduces the payment by 60 cents for every dollar. A partnered carer can therefore lose payment from both sides in a fortnight when both partners are earning, which surprises families who only checked their own earnings.
When your partner receives a pension
If your partner receives a pension, such as the Age Pension, Disability Support Pension or Carer Payment, the test changes. Combined income is assessed instead of the two separate tapers above. The payment reduces by 25 cents for every dollar of combined income over $300.00 per fortnight, and then by 30 cents for every dollar over $512.00 per fortnight. This combined test is generally kinder than the ordinary partnered test, because a pension-partner household is already a household with one person on a pension rate. If your partner moves onto or off a pension, tell Services Australia promptly, because the test that applies to you changes with it.
What counts as income, and what to watch
Wages, salaries, self-employed earnings, rental income, interest, dividends and deemed income from financial assets can all count, although each is calculated in its own way. Leave payments and redundancy payments can create an income maintenance period that delays or reduces payment, which is covered on the claiming page. Irregular income, such as casual shifts that vary week to week, is assessed on what you are actually paid in each fortnight, which is why fortnightly reporting matters so much. If your income jumps in one fortnight and falls in the next, your payment should move with it, provided you report accurately and on time. Estimating an average and reporting that average every fortnight is not the same thing, and it is a common cause of debts.