Austudy payment gets a boost

Amidst all the excitement about 1 July and the carbon tax, new tax rates and household compensation one major change seems to have been overlooked.  From tomorrow, students getting Austudy payment (and some getting youth allowance) are going to have a more generous income test, courtesty of a significant increase in the income test free area.  This is the amount of income a person can have before their payment begins to reduce and it will increase from $236 a fortnight to $400 a fortnight.

Students with private income(typically earnings) of $236 a fortnight or less won't benefit from this (although they have had the clean energy advance payment).  Students with income above $236 should notice a change, and in some cases quite a significant one.

The chart below shows the theoretical variation in disposable income caused by the various 1 July 2012 tax-transfer system changes.  It's a vanilla case - a single person without children and without including accomodation cost related charges and entitlements (eg, rent assistance).

(click to enlarge)

The total change in disposable income is represented by the black line.  The coloured bits are there to show the components that make it up.  The increase in Austudy is entirely due to change in the income test free area and provides an increase of up to $2558 a year.  You can see that the tax cuts add a bit more to this. 

The increase in the income test free area means that there's a corresponding increase in the income that can be had before the payment cuts out completely.  People with incomes in this newly extended range can come onto Austudy payment so pick up the clean energy advance, and for many of them, acquire eligibility for the student startup scholarship.  The scholarship (for qualifying tertiary students) gives over $2,000 extra over the course of a year.

Partnered students might get some joy from this change too, provided they are working.  Their situation is complicated by the not-quite-right nature of the partnered income test, as I discussed in this earlier post

So, provided you're a student who has, or can get some work, the Austudy payment changes combined with the carbon tax related measures look like they will provide a welcome boost to incomes!