1.1.S.125 Severe financial hardship - OWP, SWPP, LAWP, IMP

Summary

This severe financial hardship test is applied when establishing whether recipients serving a LAWP, SWPP, IMP or OWP are in severe financial hardship.

Not a member of a couple

Recipients who are not a member of a couple are considered to be in severe financial hardship when the total value of their liquid assets (1.1.L.50) is less than their fortnightly maximum payment rate.

Member of a couple

Members of a couple are considered to be in severe financial hardship when the total value of their joint liquid assets is less than twice the recipient's fortnightly maximum payment rate. In this test it is important to double the maximum payment rate of the recipient who is seeking to rely on the severe financial hardship test, NOT to add together the separate maximum payment rates of both members of the couple.

Example:

• A married NSA recipient has $620 in joint liquid assets. The recipient's fortnightly entitlement is comprised of $293.80 NSA, and $25.00 RA. The recipient's partner is working casually, and as a result receives only $250.00 NSA and $25.00 RA.
• Twice the recipient's maximum payment rate is 2 x (293.80 +25.00) = $637.60.
• It is NOT 293.80 + 250.00 +50.00 = $593.80.
• This recipient satisfies the severe financial hardship test, as the joint liquid assets ($620) are less than twice the recipient's maximum payment rate ($637.60).

Unavoidable or reasonable expenditure

Unavoidable or reasonable expenditure by a recipient serving a waiting period includes the day-to-day cost of living, (referred to as the reasonable cost of living) for that part of the waiting period already served, plus other unavoidable or reasonable expenditure.

Act reference: SSAct section 19C(4) Meaning of unavoidable or reasonable expenditure

Maximum payment rate

The maximum payment rate includes RA and PhA. It does not include family assistance or add-ons such as RAA.

Act reference: SSAct section 19C Severe financial hardship (ordinary waiting periods and liquid assets test waiting periods) definitions

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Last reviewed: 3 December 2007