Age Pension and the Work Bonus: how does it work?

Ben asks Debbie how much he can earn before his Age Pension is reduced.

man at local bowls club

To help him make ends meet, Ben’s local bowls club has offered him a few hours’ work a week. Today, he’s asked Debbie how much he can earn before his Age Pension is reduced.

Q. Ben
I am on the Age Pension but I have been offered a job doing some work at the bowls club. It’s only a little bit of money but it will help me make ends meet. They’ve asked me what amount is best before my Age Pension gets cut off. Can you help me?

A. As you may be aware, your Age Pension payment is actually calculated by applying the asset and the income test – you are then paid the lower resulting amount.

Under the income test, all income is counted – that is income from investments, savings, superannuation and of course, work. Currently, under the income test, you can earn $168 per fortnight, if you are single, before your Age Pension is affected.

However, Centrelink will apply the Work Bonus to your reported work income. This means that the first $250 per fortnight of income will not be assessed under the income test. If your employment is seasonal or sporadic, you can ‘bank’ your Work Bonus allowance, to a maximum of $6500, which can then be applied when required. This also means that if you have not worked for the whole previous year, you can earn $6500 before your Age Pension is affected. 

Under the income test, your Age Pension is reduced by 50 cents for every $1 you exceed the income threshold, until your payment reaches zero.

You can find out more about the Work Bonus.

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    COMMENTS

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    Charlie
    28th Aug 2017
    11:29am
    The $6500 is not an amount of money they bank for you. Its an amount of money you are allowed to earn, before they apply the regular restrictions, of having an income and getting age pension at the same time. Sort of allowing you to quickly accumulate a reserve, if you have been unemployed for a long time.

    Why did they choose that amount? Strangely it is the cost of a basic funeral that the government would have to pay if you were destitute?

    But if a person is over 65 and can't get part time or casual employment, this may not apply.
    Old Man
    28th Aug 2017
    11:29am
    Take the job, the sense of worth will be more than the few dollars thrust into the hand on payday.
    Timbo
    28th Aug 2017
    11:37am
    I am over 65 and working for my own company that I fully own and control, paying myself a salary in the usual way. Is this salary subject to the Work Bonus? I suspect not as I own the Company and I further suspect that ALL the net income of teh company will be ascribed to me personally as income. Any thoughts?
    johninmelb
    28th Aug 2017
    7:32pm
    Work bonus does not apply to self employed.

    You have to be working for someone else.
    World Prophet
    29th Aug 2017
    8:29am
    The replies are not correct. My wife and I work for our own company and both draw a salary. in both cases the work bonus applies, because the company is a separate entity, irrespective of who owns or controls it. This has resulted in us receiving a higher part pension than we otherwise would have had. If you are a sole trader or a partnership, then the work bonus doesn't apply, because you are not working for a separate entity, but for yourself. However, there are costs associated with operating a company, and we are in the process of transferring the assets of the company to us personally and winding the company up. Our company originally owned our business, but when we sold the business, I hired myself to my old business through our company and paid ourselves a salary. It would be much simpler not to have it, but the transfer of assets can only be done by way of dividend and I'm in the process of getting Centrelink to agree that this should not be classed as income.
    Timbo
    28th Aug 2017
    11:38am
    I am over 65 and working for my own company that I fully own and control, paying myself a salary in the usual way. Is this salary subject to the Work Bonus? I suspect not as I own the Company and I further suspect that ALL the net income of teh company will be ascribed to me personally as income. Any thoughts?
    in2sunset
    28th Aug 2017
    11:51am
    The so called work bonus is a big lot of craps, no incentive what so ever to keep working. I know people who were earning $200,000 a year, but were still eligible for the scrapped Pensioner Bonus Scheme. On my small wage now, not eligible for work bonus but the PBS would have definitely kept me working longer. Now, no incentive, no help, just construction complaints from govt about how much of a burden us oldies are.
    Pass the Ductape
    28th Aug 2017
    11:47am
    As always - only half an answer!
    john
    28th Aug 2017
    12:29pm
    I have no idea what a work bonus is any way. Everything is too complicated and no answer is ever fully understood because of the complications.
    And........everyone asking is different whether by a cent or a 1000 cents, it is a confusing set up, and the Major parties both agreed to spend the pension fund.
    johninmelb
    28th Aug 2017
    7:34pm
    John,

    A simple google search would have given you the answer.

    It is all explained on the DHS website.
    https://www.humanservices.gov.au/individuals/services/centrelink/work-bonus
    Manchild
    28th Aug 2017
    2:36pm
    I am 67 and work casually one month on and one month off. I earn about $100,000 per year for the six months that I work and for the six months that I don't work I get the full pension. On this basis there is really no limit on how much you earn and still get the full pension on the months that you don't work.
    inextratime
    29th Aug 2017
    12:28am
    You sure ?
    Pass the Ductape
    30th Aug 2017
    3:17pm
    ? Yeah - I'm with you inextratime.
    Mez
    29th Aug 2017
    2:25pm
    I like Charlies' comment about $6500.00 figure being that of the cost of a basic funeral.
    Howver, a basic funeral for my father a few years ago was $7000.00 and probably more by now so the Work Bonus figures need to be increased now.
    I have had no issues with it as it keeps me exercised both physically and mentally and I don't need to pay to go to a fitness centre.
    Attended one over a year ago and I had pulled a shoulder muscle so I have given that up.
    My problem is that a day's work is worth more than $250.00 so my pension then gets decreasef.
    Casual employment has casual rates and this is the only way to earn anything on a sporadic basis so this needs to be amended as well.
    Reportings of earnings are done by using the Centrelink apps via my smartphone each fortnight as well as uploading the copy of my salary slip with an automated immediate response of the amount of pension expected next.
    Absolutely no issues so far except that rent assistance amount is way under than what it ought to be in light of the ever increasing HIGH RENTS!
    LEC
    10th Oct 2017
    11:24am
    If you are a Soletrader or Parnership and taking DRAWINGS you are not intitled to work bonus
    as I am a Soletrader and pass the assets test, however the profit from my business did lead to a battle with the Centerlink for almost a year before recieving any Part Pension while living of my savings as the business took a turn for the worst and convincing Centrelink via quartly profit and loss statements. Centrelink use my tax return to access my income so any change to my part pension is not in real time. I have been on the same amount for 18 months without revision.


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