by Terrence Playford

Are you a young person looking for work or undertaking study? Wondering how you are going to pay the bills while you are doing an apprenticeship or studying at university? Or maybe you have already applied for a Centrelink payment only to find you are not entitled? Whichever situation you are in the important thing to know is that when it comes to qualifying for an Australian Government payment, knowledge goes a long way.

Australia’s social security system is very complicated. For this reason it’s important to understand your rights and equip yourself with some basic facts before you set off down to your local Centrelink office. Hopefully this article will give you a brief understanding of the qualification rules for Youth Allowance. More importantly it provides a list of valuable links to other reference materials which will help you find the answer to a question you may have. And if you really get stuck you can always visit the centreblog helpdesk.

What is Youth Allowance?

Youth Allowance is an Australian Government payment which provides financial assistance to young Australians aged 16 to 25 who are either looking for work or undertaking study. To apply for the payment you will need to lodge a claim form. After you have lodged your claim Centrelink will make an assessment of your case and notify you of their decision. If you do qualify you can receive a cash payment in your bank account each fortnight, or in the case of a young person under the age of 18, into your parent’s bank account.

Before you start filling in the claim form, however, it’s a good idea to first familiarize yourself with how Australia’s social security system works. The first thing to know is that all the rules relating to Youth Allowance and other Centrelink payments are enacted by Federal Parliament. The body of law which contains most of these rules is the Social Security Act, 1991. If you are interested in finding out more about the law the best place to start is the Youth Allowance section of the Guide to Social Security Law. The Guide contains a lot of information, is very comprehensive and is used by Centrelink staff in their determinations. Both the Guide and the Social Security Act, 1991 are available online.

Payment rates

The rate of Youth Allowance you receive will depend on your personal circumstances. For example, the basic rate for a single person aged under 18 with no children and living at home is $220.40 per fortnight. A single person aged over 18 with no children who lives away from home will receive $402.70 per fortnight (January 2012). These rates are indexed in line with inflation. A person with children will get additional assistance. To find out the latest rates of payment you should check out the current version of the Guide to Australian Government Payments, which is available on the Centrelink website. You might also want to check out the other payments that you might be entitled to such as Rent Assistance, the Low income Health Care Card, student start up scholarship, student relocation scholarship etc.

• Tip 1 – You can download a copy of the Youth Allowance claim form on the Centrelink website. Alternatively you can lodge an online claim.

• Tip 2 – Because the rules relating to Youth Allowance are part of the social security law there is no scope for Centrelink to change the rules or make an exception in your case. You can however, appeal a decision if you think it’s wrong. More information about appealing a Centrelink decision can be found here.

The rules

Qualifying age
In general, to qualify for Youth Allowance you need to be between the Ages of 16 and 25. Like most parts of the law there are, however, some exceptions. If you are above school leaving age in your State or Territory, and considered to be ‘independent’ (see section below), then the minimum age for Youth Allowance is 15 years. The Government has also introduced new rules, which affects young people aged under 18. If you are under 18 you are not considered to have reached the minimum age for Youth Allowance unless you have completed Year 12 or its equivalent, are undertaking full-time study, training or apprenticeship, enter into an Employment Pathway Plan or are exempt from the requirement to be in full-time study or training because of a disability or sickness etc.

It should also be noted that changes were also made to the law on 1 January 2012. Under the new rules a person assessed as ‘dependant’ and undertaking full-time secondary study will not be able to apply for Youth Allowance until they turn 18, unless they:

• become independent (see below);
• are required to live away from home to study; or
• are determined by Centrelink to be not benefiting from Family Tax benefit that is being paid to the person’s parents.

Young people in receipt of Youth Allowance on 31 December 2011 can choose to remain on Youth Allowance  if they remain eligible or instead, relinquish their Youth Allowance  payment and have their parent(s) claim Family Tax Benefit for them.

Residency

Like most social security payments to qualify for Youth Allowance you also need to be an Australian resident. The term Australian resident simply means that you are either an Australian citizen or the holder of a permanent visa. You also need to live in Australia.

• Tip 3 – While you need to be living in Australia to be eligible for Youth Allowance, if you’re a student or doing an apprenticeship you can continue to be paid Youth Allowance while you travel overseas for a temporary holiday for up to 13 weeks. Much more restrictive rules apply to people who are looking for work. Youth Allowance can also continue to be paid for longer than 13-weeks if the purpose of your overseas trip is to study as part of your full time Australian course. So if you have the travel bug and want to spend a year overseas while receiving Youth Allowance it’s definitely worth checking out this aspect of the law more carefully!

Waiting Periods
Like most social security payment there are a number of waiting periods that apply to Youth Allowance. What this means is that even if you qualify for the payment you will be made to wait before you start receiving your first payment. Whether you will need to serve a waiting period will depend on your specific circumstances. Some of the main waiting periods that apply to Youth Allowance are shown below.

- Newly Arrived Resident’s Waiting Period (NARWP)
Generally if you are a newly arrived migrant you will need to have been in Australia for at least 2 years or 104 weeks before you can qualify for Youth Allowance. Time spend outside Australia does not count towards the 104 week period.

• Tip 4 – While the 104 week waiting period applies to most newly arrived migrants there are a number of exceptions. For example, this waiting period does not apply to refugees, Australian citizens by descent or people who have a family member that has resided in Australia for at least 2 years. You should check out the Guide to Social Security Law for more information.

- Liquid Assets Test
The Liquid Assets test basically means that if you have any money on hand you may have to wait up to 13 weeks before you start receiving Youth Allowance. Whether or not you have to serve the waiting period depends on how much liquid assets (things such as cash on hand, term deposits, shares etc) you have. People who are on a social security payment before being transferred to Youth Allowance generally won’t be affected.

• Tip 5 - You can have up to $3000 (single person) of $6000 (couple or single with dependent child) in liquid assets and not serve this waiting period. Any amounts over this will mean you will probably have to serve a waiting period before you first payment. The odd thing about this waiting period is that non liquid assets are not included. So if you are considering buying that car or computer for study, why not do it, before you put in your claim form? Also if you have any debts on your credit card it’s a good idea to pay them off, which again will reduce the time you have to wait before you first payment is made.

-  Seasonal Work Preclusion Period
This is probably one of the most stupid polices you will ever come across. For some reason a person who has dome some seasonal work and is helping out a local community in regional Australia can be penalized by waiting up to 6 months from the date they finished their seasonal employment to receive their Youth Allowance. The length of the waiting period depends on the amount of your earnings. Only seasonal workers are affected by this policy. Seasonal work is work that is available for part or parts of the year at approximately the same time each year such as shearing or fruit picking. Apparently it’s ok to wash dishes but not pick fruit. Dumb hey?

Activity Test
A young person must satisfy the YA activity test by undertaking full-time study, job search, or a combination of activities. Full-time Australian apprentices do not have activity test requirements but must be undertaking a full-time Australian apprenticeship for payment to continue. A person who leaves school before completing Year 12 will need to satisfy the activity test and also sign up and comply to an Employment Pathway Plan which is basically an agreement with Centrelink about undertaking an approved activity such as a course of education.

• Tip 6 – Students are generally required to study full-time to qualify for Youth Allowance. The word full-time study has a different meaning depending whether you are in secondary or tertiary education. For example in University it means doing at least a 75% full-time study load. You also can qualify for Youth Allowance during the holiday periods as long as you remain enrolled in your course and intend to go back to study after the semester break.

• Tip 7 – There are different activity test rules if you have a dependent child or a disability. In these situations more lenient rules may apply. You may also be granted an exemption from the activity test in certain circumstances such as being sick, pregnant, live in a remote area or are undertaking unpaid voluntary work etc. If you think you may be entitled to an exemption you should check out the Guide to Social Security Law.

Income and assets
Like nearly all Centrelink payments to qualify for Youth Allowance you will need to meet an income and assets test. The assessment will take account of your own personal finances and if you’re not assessed as ‘independent’ (see section below) the income and assets of your parents. A number of different tests are used depending on your circumstances. These include the Family Actual Means Test, Parental Income Test, the Personal Income Test and Assets Test. The rate of Youth Allowance that will apply to you will be the lowest of that produced by the Family Actual Means Test, Parental Income Test or the Personal Income test.

- Parental Income Test
For those assessed as being NOT independent a Parental Income Test applies. Your Youth Allowance will reduce by 20 cents for every dollar your parent’s income exceeds the threshold of $45 114 (January 2012). The parental income test does not apply if you are classed as Independent (see below), or your parents hold a current Low-income Health Care Card or they receive a designated income support payment through either Centrelink or the Department of Veterans’ Affairs. This is because Centrelink already knows their income will be under the income limit.

The components of parental income are: taxable income plus adjusted employer provided benefits, plus target foreign income, plus total net investment losses or net passive business losses, plus reportable superannuation contributions for the appropriate tax year plus any child support payments received by either parent for the upkeep of a child in care, and spousal maintenance, less child support amounts paid out.

To see if you qualify you will need to do the math – see payments rates in the Guide to Australian Government Payments. But it is very likely you will NOT qualify for Youth Allowance if your parents are employed and earn at least an average wage and you have not been assessed as independent.

• Tip 8 – It’s important to understand that you can’t just move out of home and avoid the parental income test. Centrelink will assess your parent’s income regardless. The only way you avoid this assessment is if you are classified as Independent (see section below). There are however a few things worth knowing. Under the legislation the parental income test is applied to the combined income of the parent/s that you normally live with. If your parents are divorced or separated you will therefore benefit from living with the parent who has the lower income. Bit silly hey? Also beware that if your parent is single and then re-establishes a new relationship the partner’s income will be included in the combined parental income. If you do NOT normally live with either parent and the parents are separated, the income of the parent with whom you last lived will be assessed for the purpose of the parental income test.

- Family Actual Means Test
A Family Actual Means Test, which measures family spending and savings is sometimes used if Centrelink believes your parents reportable income does not give a true representation of their financial situation. For example, it can be used in those cases where one or both parents had an interest in a trust, private company or unlisted public company, was self-employed, or a wage or salary earner who claimed a tax deduction for a business loss.

The calculation of this test is very complicated. Essentially the spending and savings of all family members are taken into account to determine a family’s actual means. All spending and savings must be reported from ALL sources including related entities, third parties and financial institutions. If you want to find out about the details of this test it’s best to check the Guide to Social Security Law.

Your Youth Allowance will reduce by 20 cents for every dollar your parent’s actual means exceeds the threshold of $45 114 (January 2012).

- Personal income test
Centrelink will also take into account any amounts that you earn. To work out the personal income test Centrelink uses gross taxable income. The amount which you can earn before your Youth Allowance begins to be reduced depends on your situation such as whether you are aged under 18, a student, jobseeker or apprentice, are a member of a couple or have dependents. Income over these amounts generally reduces your Youth Allowance by 50 cents in the dollar (lower threshold) or 60 cents in the dollar (upper threshold). To see how the personal income test will affect the rate of Youth Allowance you receive you should refer to Chart D in the Guide to Australian Government Payments.

• Tip 9 - Under the personal income test there is a provision called an income bank which provides assistance to students who work part time while they study. Essentially what this means is that if you’re a student it is possible to earn up to $6,000 per year and still get the full amount of Youth Allowance.

- Family Asset test
If you’re not assessed as independent a family assets test applies. It is fairly generous. No payment can be made if the family assets exceed $619,500. Most family’s assets are included, except the principal home, the assets of independent children, the assets of the partner of dependent youth allowance recipients, and farm assets, if a current drought relief exceptional circumstances certificate has been issued. Seventy-five per cent of a person’s interest in the value of a business, including farms, is disregarded if the person owns the business and is wholly or mainly engaged in that business.

- Personal Assets Test
This only applies to you if you’re assessed as independent. Most young people would meet this test. For example, if you are single and do not own your own home you can have $321,750 (January 2012) in assets and still qualify for the maximum rate of Youth Allowance. For more details see Chart A Guide to Australian Government Payments.

What does it mean to be independent?
Unless you are considered to be ‘independent’ Centrelink will assess how much your parents earn. For most people, this is the biggest obstacle in qualifying for Youth Allowance. A young person is assessed as being independent if they:

• are aged 22 years or over,
• have been a member of a Youth Allowance couple (generally this means been married or in a defacto relationship for at least 12 months),
• have a dependant YA child,
• are an orphan, refugee or in state care,
• have parents that cannot exercise their responsibilities because they are in prison, are mentally incapacitated, living in a nursing home or missing
• could not be expected to live at home because of extreme family breakdown
• are, or have been, self-supporting through employment
• are aged 18 and over, and have a work history but who experience education or employment disadvantage
• are assessed as having a partial capacity to work (Youth Allowance job seekers only).

For further information about these categories you should refer to the Guide to Social Security Law.

• Tip 10 – If you are about to complete Year 12 you might want to consider having a gap year. Not only would this give you some relevant experience but you could also qualify as being independent under the Youth Allowance rules when you go back to further study. To qualify as self-supporting you will need to have supported yourself through paid work consisting of full-time employment averaging at least 30 hours per week, in one or more jobs, for at least 18 months during any period of 2 years.