Income test

This page explains what income is, and how the income test is applied when working out the rate of income support payments.

The rates on this page are effective from 20 March 2025.

What are income and assets tests?

The amount of income support payment you receive depends on your income and assets. Your rate of payment is calculated under either the income test or the asset test. The test paying the lower rate of payment is the one that is applied.

If you are a member of a couple, your payment is calculated on your combined income and assets, regardless of which one of you receive the income or owns the assets.

If you are considered to be blind, your payment is paid at the maximum rate. Your income and assets will not affect your rate of payment. Your partner’s payment will still be subject to the income and assets tests unless they are also considered to be blind. For further information please see Financial help if you are blind.

The income and assets tests only apply to means-tested income support payments:

• Service Pension
• Social Security Age Pension
• Income Support Supplement
• Veteran Payment

The tests do not apply to the Disability Compensation Payment, War Widow(er)’s Pension and equivalent payments under the Military Rehabilitation and Compensation Act 2004 (MRCA).

What is the income test?

To work out your correct rate of income support payment we need to know how much income you receive (before tax and charges), whether from within or outside Australia. This will include both deemed and actual income.

You can still receive the maximum rate of payment if you have income up to the income free area (the income limit before payment reduces), provided your assets do not exceed the assets value limit (the asset limit before pension reduces).

When your income exceeds the income free area, each one dollar of income over the limit reduces your pension by 50 cents per fortnight (25 cents each for couples). The pension continues to reduce at the rate of 50 cents in the dollar (or 25 cents each for couples) until your income reaches or exceeds the income cut-off limits. No pension is payable if your income is over these cut-off limits.

For information about the assets value limit and the assets test, please see our page on the Asset test.

The income free areas — Service Pension, Social Security Age Pension and Veteran Payment

There are 2 income free areas for Service Pension, Social Security Age Pension and Veteran Payment:

• the singles limit — currently $212.00 per fortnight
• the couples limit — currently $372.00 per fortnight, combined.

This means you can have income up to $212.00 per fortnight (singles) or $372.00 per fortnight (couples) and still get the maximum rate of Service Pension, Social Security Age Pension or Veteran Payment, provided your assets do not exceed the assets value limit.

• Example: A single person receives income of $95.00 per fortnight. Because their income is less than $212.00 per fortnight (the singles income free area), the maximum rate of pension or payment will be paid. Remember, your assets must be less than the assets value limit.
• Example: A couple receive income of $446.00 per fortnight. Because their income is more than $372.00 per fortnight (the couple's income free area), their pension or payment will be paid at a reduced rate. Their income exceeds the limit by $74.00, which means the pension or payment for each partner will be reduced from the maximum rate by $18.50 per fortnight ($74.00 X 0.25).

The income free areas, together with the assets value limits, are adjusted each July in line with movements in the cost of living.

The income free area — Income Support Supplement for War Widow(er)'s

There are 2 higher income limits for the Income Support Supplement (ISS):

• the singles limit — currently $1,786.60 per fortnight
• the couples limit — currently $2,403.60 per fortnight, combined.

The income limits for ISS include the War Widow(er)’s Pension, which is counted as income when working out the rate of ISS payable. Any Disability Pension paid by other governments is also counted as income.

This means you can have income up to $1,786.60 per fortnight (singles) or $2,403.60 per fortnight (couples) and still recieve the ceiling rate (generally $347.60 per fortnight) of ISS, provided your assets do not exceed the assets value limit for ISS.

• Example: A war widow(er) receives income of $649.00 per fortnight from sources other than their DVA pensions. For ISS purposes, their income per fortnight is $649.00 plus $1,155.80 (War widow(er)’s Pension), which totals $1,798.40 per fortnight. Because their income is more than $1,786.60 per fortnight (the singles income free area for ISS), their pension will be paid at a reduced rate. Their income exceeds the limit by $18.20, which means ISS will be reduced by $9.10 per fortnight, ($18.20 X 0.50).

The income free areas, together with the assets value limits, are adjusted each July in line with movements in the cost of living.

For all income support payment recipients

The following rules apply whether you receive the Service Pension, Social Security Age Pension, Income Support Supplement or Veteran Payment:

• The singles limit applies to income received by single pensioners
• The couples limit applies to income received by pensioners who are members of a couple, including couples separated because of ill health, and couples where only one partner receives an income support pension or Veteran Payment
• If a couple needs to live apart due to ill health, both partners are paid pension at the single rate, but their pension is assessed using the couple's limit.

If a couple separates for reasons other than ill health, and both partners remain eligible for an income support pension, they are then considered single pensioners, and the singles limit applies to each of them. Their rate of pension is based on the income and assets they each keep after the separation. Note that this does not apply for Veteran Payment.

What is income?

Income means any payment amount earned, derived or received by a person for their own use or benefit, from any means or source, whether within or outside Australia. This includes money deemed to be earned from interest on investments, loans, bullion or deprived assets. 

The amount that is used in the assessment is the gross amount, i.e. the amount before any tax or charges.

Income from paid employment also includes the monetary value of any non-cash benefits (such as superannuation, vehicles, accommodation etc.) which are provided in lieu of salary or wages (commonly known as “salary sacrifice” arrangements).

Where income is one-off or received irregularly, each time it is received, it may be assessed under the income test over a 12-month period.

What does DVA count as income?

The following are common types of income counted for pension purposes:

• salaries and wages
• deemed income from financial assets
• the monetary value of non-income benefits paid in lieu of salary and wages, including salary sacrifice amounts
• pension or disability payments paid from a defined benefit superannuation fund
• income from purchased superannuation pensions, annuities, allocated pensions, account-based pensions, transition to retirement pensions, market linked pensions and term allocated pensions
• income from purchased non-superannuation annuities
• income from overseas pensions and annuities
• payments in the form of cheques, cash or direct deposits into a bank account for energy from solar power generation fed back into the electricity grid
• profits from farms, private trusts, private companies and other businesses such as partnerships
• income from estates and life interests
• payments from the surrender, withdrawal or maturity of a conventional life insurance policy which exceed the total premiums paid towards the policy
• distributions from private trusts and private companies.

If a person entered residential aged care before 1 January 2017 and receives rental income from their principal home, the income is not counted provided the person is either paying a daily accommodation payment, a daily accommodation contribution, an accommodation charge, or an accommodation bond wholly or partly by periodic payments. For information about how rental income from your home is assessed for aged care means testing purposes, please see to Aged Care Costs.

If you receive income from a source other than those mentioned above, contact your nearest DVA office for information about how it is counted as income for payment purposes.

Does superannuation count as income?

Money in a superannuation fund which is in the accumulation phase and not paying a pension is not counted under the income or assets tests until one of the following occur:

• the owner reaches pension age (qualifying age for a war widow(er))
• money is withdrawn from the superannuation fund
• a pension commences to be paid from the superannuation fund.

For more information about the assessment of superannuation, please see Managed Investments and Income Streams.

Are the Disability Compensation Payment and War Widow(er)’s Pension counted as income?

If you receive a Service Pension or Veteran Payment, the Disability Compensation Payment and War Widow(er)’s Pension are not counted as income when working out your rate of pension or payment.

If you receive a Social Security Age Pension, any War Widow(er)'s Pension or Wholly Dependent Partner Payment paid may be treated as income.

If you receive an Income Support Supplement, disability pensions from other governments and the War Widow(er)'s Pension are counted as income when working out your rate of pension.

Veteran Payment recipients are not able to also receive War Widow(er)'s Pension. For further information please see our page on the Veteran Payment.

What is deemed income?

Deemed rates of interest are used to work out how much income you receive from your financial assets. Financial assets include:

• money in accounts with banks, building societies and credit unions
• loans to third parties
• bonds
• debentures
• shares
• managed investments
• bullion
• gift amounts you (or your partner) have made in excess of $10,000 in a financial year or in excess of $30,000 over a rolling 5-year period.

Actual income from certain financial assets can be complex to calculate. Deeming is a simple and fair way of assessing the amount of income from these assets.

To work out the deemed income, we look at the total balance of your financial assets. There are 2 deeming interest rates, a low deeming rate and a high deeming rate. The deeming rates that apply depends upon the amount of financial assets you have:

• The low deeming rate applies up to the value of what is called the deeming threshold. 
• Everything above this threshold is deemed to earn the high deeming rate. 

The deeming thresholds are different for singles and couples.

The current deeming interest rates and thresholds are as follows:

Deeming rates of interest are set by the Minister for Social Services in line with market trends and are monitored on an on-going basis. Any future change in the rates will be timed to coincide with the March and September pension indexation increases and any other time where the financial market fluctuates significantly. The deeming thresholds are adjusted each July in line with movements in the cost of living.

For more information about deeming and financial assets, please see our page on Deeming and Financial Assets.

What is deprived income?

If you choose not to receive income or deprive yourself of income to keep your payment or get more payment, the amount of forgone income will be counted as income for payment purposes. This income will be counted under the income test for an indefinite period. For example, if you elect not to receive income from superannuation that you are entitled to receive, this income would be counted for payment purposes as if you were actually receiving it. If you receive income but give it away to someone else, this will also be counted as income for payment purposes.

What is the work bonus?

The work bonus is an incentive to encourage older pensioners who are able, to continue working. Under the work bonus rules, the first $300 of employment income earned per fortnight is excluded from the income test.

• Example: A work bonus eligible pensioner receives wages of $600 per fortnight. When their income is calculated for the income test, the first $300 is disregarded, so the assessable wages income is $300.

Additionally, a work bonus bank has been introduced to enable eligible pensioners to accrue any unused amounts of the $300 fortnightly exemption to a maximum of $11,800. Any credit in this ‘bank’ can then be used to offset employment income that would otherwise be assessable in the future.

To be eligible you must be over qualifying age/pension age. For more information on work bonus please see Work Bonus.

Those receiving Veteran Payment are not eligible for the work bonus.

Are there any income exemptions?

Certain sources of income may not be counted when working out your rate of income support payment. Some examples include:

• rent or board payments received from members of your immediate family
• allowance payments from an employer to meet expenses
• payments received from serving on a jury, or to meet the expenses incurred as a witness (other than as an expert witness) before a court or tribunal
• discounts or credits on power bills due to energy from solar power generation being fed back into the electricity grid
• financial support provided by the government for household installation of solar panels

You should provide sufficient detail of all payments received so that DVA can properly recognise excludable payments. If a payment does not count as income, DVA will exclude it automatically.

Transitional arrangements

If you received pension before 20 September 2009 at less than the maximum rate, your pension may be paid under transitional rules.

If you are paid under transitional rules, you will remain under the pre 20 September 2009 rules, until you are better off under the new rules. This means your pension will reduce at the rate of 40 cents in the dollar (or 20 cents each for couples). Please see The transitional rules.

Transitional arrangements do not apply to Veteran Payment.

What are my obligations?

When you are granted an income support payment and periodically after that, you will be notified of your obligations. You will be required to tell us within 14 days (28 days if you live overseas or receive remote area allowance) of changes to your circumstances that might affect the rate of income support payment you receive or your eligibility to receive that payment. These obligations apply equally to trustees.

You are required to notify DVA of changes to your financial circumstances, if:

• you are receiving a reduced rate of pension and your total income from all sources increases by more than $2.00 for singles or $4.00 for couples per fortnight
• you are receiving a maximum rate of pension and your total income from all sources exceeds the income free area by more than $2.00 for singles or $4.00 for couples per fortnight.

Usually, an overpayment of pension will not occur when you have met your obligations. However, sometimes even if you have met your obligations, an overpayment can occur because we have not been able to process the change before the next payday. We do our best to prevent this occurring, but it is not always possible. To provide you with your exact entitlement we are obliged to recover overpayments of pension where they do occur.