Is there a means test to apply for bankruptcy in Australia?

No, there is no formal means test required to apply for bankruptcy in Australia. You simply need to be insolvent and have an Australian connection.

What is the bankruptcy income means test?

After you become bankrupt, your after-tax income is tested annually to determine if you must pay compulsory income contributions to your trustee.

When does the means test apply during bankruptcy?

The income means test is assessed every year during your bankruptcy period, not at the time you apply.

What are the 2025 means test thresholds?

For 2025: no dependants: $72,117.50 (after tax); two dependants: $91,589.23 (after tax). The threshold increases with each dependent.

How are compulsory bankruptcy payments calculated?

If your after-tax income exceeds your threshold, you must pay half the excess each year as compulsory contributions to your trustee.

What counts as income for the means test?

Income includes wages, salary, bonuses, regular allowances, superannuation payments, business income, and most investment returns. Most Centrelink or family benefits are excluded.

Are my assets included in the means test?

No, assets, savings, gifts, or windfalls are not counted in the annual means test but are handled separately under bankruptcy asset rules.

What if my income changes during bankruptcy?

You are required to promptly inform your trustee of any change in income or employment. Your compulsory payment will be recalculated accordingly.

What happens if I have no or low income during bankruptcy?

If your income is below the relevant threshold for your family circumstances, you will not be required to make any compulsory payments.

Can the income threshold change?

Yes, thresholds are set and updated annually by AFSA and increase with each additional dependent.

How do dependants affect the means test threshold?

Having dependants increases your income threshold, reducing the likelihood that you will need to make compulsory payments.

Do I have to submit evidence of income during bankruptcy?

Yes, you must provide your trustee with full and accurate information about your income each year during bankruptcy.

What happens if I fail to report income changes?

Failing to report income changes can result in underpayment, overpayment, or breach of bankruptcy law.

Are one-off lump sums included in the income means test?

Most one-off lump sums are considered assets, not income for the purposes of the means test, but should be disclosed to your trustee.

Who sets the bankruptcy income means test thresholds?

The Australian Financial Security Authority (AFSA) sets and publishes the annual income thresholds for compulsory payments.

Is the bankruptcy means test the same for everyone?

No, the threshold varies depending on how many eligible dependants you support and is indexed annually.

Can my compulsory payments stop if my income falls?

Yes, if your income drops below the threshold, compulsory payments will stop for as long as you remain below the limit.

What professional help can I get for understanding compulsory payments?

Specialist advisers like The Insolvency Group can assess your specific situation and explain exactly what you will pay under the bankruptcy means test.

Will Centrelink benefits affect my compulsory payments?

Most Centrelink and family tax benefits are excluded from the income calculation for compulsory bankruptcy payments.

Why is it important to understand the bankruptcy means test?

Misunderstanding your income obligations can result in financial or legal problems. Getting clear advice ensures you pay the correct amount and stay compliant.

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How Does the Bankruptcy Means Test Work?

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The Bankruptcy Means Test: How It Works

Eligibility to Become Bankrupt

No formal “means test” applies to filing for bankruptcy in Australia. You qualify to apply if you meet the following conditions:
- You cannot pay your debts when due (you are insolvent).
- You are in Australia or have a residential/business connection here.
There is no minimum or maximum debt, asset, or income requirement to apply.

The Income Means Test: After You Become Bankrupt

What Is Tested?

Each year during bankruptcy, your after-tax income is assessed against a threshold set by the Australian Financial Security Authority (AFSA) and indexed annually.
Dependants increase your income threshold; these are people you financially support, usually children or a spouse with low or no income.

The 2025 Thresholds

No dependants: $72,117.50 (after tax)
Two dependants: $91,589.23 (after tax)
The Thresholds rise with each additional dependent.

How Are Payments Calculated?

If your after-tax income EXCEEDS your personal threshold, you must pay half of the amount above the limit as compulsory contributions to your trustee.
Example:
- After-tax income (no dependants): $85,000
- Threshold: $72,117.50
- Difference: $12,882.50
- Annual payment: $12,882.50 ÷ 2 = $6,441.25 in payable in instalments

What Income Is Included?

Wages, salary, commissions, regular bonuses, superannuation payments, investment income, business income, and fringe benefits.
Most Centrelink and family tax benefits are excluded.

What If My Income Changes?

You must notify your trustee about any changes in income or employment.
Payments are recalculated annually or when your circumstances change.

What If I Have No Income or Low Income?

If your income is below the relevant threshold, you pay nothing.

Other Factors

Assets, savings, or windfalls such as inheritances are NOT assessed in the means test for compulsory income payments. They are dealt with separately in bankruptcy asset rules.

Get Professional Advice

Misjudging your income or failing to declare changes can result in paying too much or too little or breaking the law.
The Insolvency Group explains how the means test works for YOUR situation—so you’re prepared, protected, and get the right outcome during and after bankruptcy.

Common Questions

Here you will find quick links to commonly asked bankruptcy questions. Our goal is to provide you with a clear pathway to financial freedom.

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Step By Step Process

When your bills start to pile up, the creditors keep calling for payment, and you don’t have a way to repay the debt, bankruptcy can be a way to a fresh start.

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Bankruptcy Without Assets

Your bankruptcy trustee will total your debts, advise your creditors, outline your financial commitments, and provide repayment options.

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Bankruptcy With Assets

Your bankruptcy trustee can help you navigate the process so you do not lose your home, your tools of trade, and your car.

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The Bankruptcy Means Test

Situation	What Happens
Your income ≤ threshold	No compulsory payments
Income > threshold	Pay half the excess over the threshold to the trustee
Dependants	Threshold rises for each dependent
Income drops later	Payments can be reduced or stopped
Assets/savings	Not counted in the annual income test

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Bankruptcy is a significant decision, but it can offer relief from unmanageable debt with the right advice and support. At the Bankruptcy Advisory Centre, we provide expert personal insolvency advice, guiding individuals through the complexities of insolvency law and offering tailored solutions for financial recovery.

We support our clients through the bankruptcy process, including help with a court-ordered bankruptcy and advice on personal insolvency law.

Our services answer common questions like “Can I keep my house and car in bankruptcy?” “Will bankruptcy affect my credit rating?” and “What debts are excluded from bankruptcy?” We also assist you with unpaid taxes and secured loan debts.

If you’re struggling with debt, we offer compassionate support and debt relief options to regain control of your finances and set you on the path to financial freedom.