Farm household allowance is payable to certain farmers and their partners. A person must qualify for farm household allowance for the allowance to be payable. The allowance is payable for a cumulative period of up to 4 years in each specified 10 year period.

To qualify for the allowance as a farmer, a person must contribute significant labour and capital to a farm enterprise that has a significant commercial purpose or character. The partner of such a person may also qualify for the allowance.

Another requirement for a person to qualify for the allowance is that the person is willing to enter into a financial improvement agreement. A financial improvement agreement sets out the activities that the person must do for the purposes of the activity test (which is a test that a person to whom the allowance is payable is generally required to satisfy). The kinds of activities that may be set out in a financial improvement agreement include receiving training or advice from an appropriately qualified person, or undertaking study.

In certain circumstances, a person may be exempt from the activity test (for example, during periods that are essential to the operation of the farm or if a person is temporarily incapacitated).

Even if a person qualifies for farm household allowance, the allowance may not be payable (such as where the value of the person's assets exceeds a certain limit, where the person receives other support under the Social Security Act or where the person is subject to a waiting period).

Farm household allowance may continue to be payable during a person's period of absence from Australia. (The period is generally no longer than 6 weeks.)

A person's rate of farm household allowance depends on the age of the person. For a person who has not turned 22, the rate is worked out using the Youth Allowance Rate Calculator in the Social Security Act. Otherwise, the rate is worked out using the Benefit Rate Calculator B in that Act (which is also used to work out jobseeker payment). Some modifications are made to the Calculators for the purposes of farm household allowance.

There are certain obligations imposed on a person to whom farm household allowance is payable. Farm household allowance may cease to be payable to a person who fails to comply with these obligations.

The rules dealing with how to make claims, how payments are made and review of decisions relating to farm household allowance are found in the Social Security Act and the Social Security Administration Act. (This is because Part   5 of this Act applies and modifies the Social Security Act and the Social Security Administration Act in relation to farm household allowance.)