Centrelink Q&A: Confused about the income test

Glenny is a little bit confused about how the income test applies to couples.

Centrelink Q&A: Confused about the income test

My husband and I are renting and we don’t have many assets. However, we are a bit confused about how the income test works. Are we both allowed to earn $308 per fortnight before our full pension rate is reduced, or are we only able to earn that much combined? I work on a casual basis, sometimes earning nothing and sometimes as much as $600 a fortnight. My husband is in the same boat. Is the reduced rate applied straightaway if we go over this threshold?

A. First, it is important to note that because you are both earning income from employment, you will both be eligible for the Work Bonus.

The Work Bonus provides a concession for employment income for all workers who earn money after turning Age Pension age. This means the first $300 of an individual's earnings will not count as income under the income test. 

This doubles for couples where both are working – both parties may have the first $300 per fortnight of their own employment income not counted.

If your employment is seasonal or sporadic, you can ‘bank’ your Work Bonus allowance, to a maximum of $7800, which can then be applied when required.

After the Work Bonus is applied to both your and your husband’s income, however, the income test thresholds that you quote are indeed the combined figure.

Exceeding the fortnightly income limit for a couple ($308) will see your pension reduced by 50 cents for every $1 over the limit.

Because your income fluctuates, you will need to report your income fortnightly and the reduced pension will be applied for the fortnights that you exceed the income test limit.

Are you eligible for an Age Pension? Do you know your rights? The RetirePlanner™ tool has all the information you need.

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    COMMENTS

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    Magic Touch
    29th Jul 2019
    11:09am
    There is a couple who live in 761 high-street road, glen waverley, vic.. who move to stay in her relative house collecting age pension...and use her house to rent out as AirB&B...so it is a in come or what ales..
    TREBOR
    29th Jul 2019
    11:54am
    Of course it's income.... after costs....
    older&wiser
    29th Jul 2019
    12:46pm
    How hard can it be - of course it is income!
    TREBOR
    29th Jul 2019
    1:10pm
    After rates and mortgage and repairs and power etc are all taken into account... loss of opportunity .... adds up to a pretty penny when done correctly (don't go to a wholesale tax agency)...
    Rae
    29th Jul 2019
    4:13pm
    Yes but if they only do this up to the $7800 a year after costs then it's okay. You shouldn't worry too much if they are making a bit of extra money.

    It would take a lot of weekends to make that income after all the costs involved including cleaning, insurance, rates, electricity, computers and time.

    The relative may also require fees to cover expenses.

    Seems like a great idea if you have the energy for all of it and can be bothered. Most of us are too lazy for that sort of effort.
    Magic Touch
    29th Jul 2019
    5:08pm
    If is an income than the house will be an investment property....so the asset test will be overshort the centre link amount and he should not receive any age pension...
    Is not her relative who do the Air b&b... if was rented out to a person who do the Air b&b...so the couple just pocket the money every month...it already going on sometime....
    Jem
    29th Jul 2019
    11:11am
    So if I earned a one off payment of $1000 in a week and my work bonus is worth $4000 does that mean because it hasn’t exceeded my bonus, my part pension won’t be penalised?
    TREBOR
    29th Jul 2019
    11:56am
    Should be right until your work bonus wears out...
    older&wiser
    29th Jul 2019
    12:47pm
    Jem - Trebor is correct. BUT - remember - you have to pay tax on both your pension and your income. So many people forget this, and get caught.
    Theo1943
    29th Jul 2019
    7:31pm
    Jem, Yes. When I last worked I had a work bonus of $7000 and was getting $3000 a fortnight. I was 6 weeks before my pension was docked. As O&W says you are required to pay tax on your total income, Pension, Wages, other income.

    Eventually in my job I figured out that on the last day of the fortnight I was getting $300 for the day's work but $150 went back to Centrelink and $60 went in Income Tax. So I got $90 out of the $300 for the day.

    This is called encouraging the elderly to work. :-)
    sunnyOz
    30th Jul 2019
    4:57pm
    Theo - yes, been in the same situation. I no longer work as like you - when you take into account the time and petrol to drive to the job, no thanks.
    Also, I would warn ANY pensioner doing this, to keep every single scrap of paper, pay slip, contact details, etc because I don't trust Centrelink to come back in X years and hit you with a Robo Debt. Not with the current disaster these Robo Debts are proving to be.
    Driving an hour each way to work, around $10 a day for petrol, after pension reduction and tax getting around $90. So that worked out around $80 for a nearly 10 hour day... so chucked it in. As you say - great way to encourage seniors to work. Not me.
    Hairy
    29th Jul 2019
    11:27am
    we Pay individual tax when working it should be single universal pension for everyone. Anything earned over a certain amount should have tax paid on it. Simple .Centrelink is archaic and needs to be refined for welfare and jobs get rid of the contract labour providers they are nothing but MODERN SLAVE traders .charge employers $80 an hour and pay $20 to the actual worker.these people can and do use blackmail to get you to work where they want you not where you want to work or when you want to work. It’s do it now or you will be replaced.
    TREBOR
    29th Jul 2019
    11:54am
    Don't lose a pay slip - they'll go back twenty years now to get you for something on a wild guesstimate ....

    My last casual job I would declare income on Tuesday and sometimes get the call to work Tuesday night... always made it up next pay by adding on - but when they demand estimates in advance, you can always make a mistake and be labeled a criminal by those bastards.

    Got all my pay slips..... trust nobody these days, especially from 'government'... they have only one agenda - THEIR benefit and not that of those they 'serve'.
    older&wiser
    29th Jul 2019
    12:53pm
    Totally agree. One reason why I am very reluctant to take on any casual/part time work. I simply do not trust the govt to come back to me in X number of years and demand some so-called overpaid amount.
    Even with every bit of paperwork, they STILL come up with some totally 'fairy amount' - which they don't have to justify, or give a break down for.
    I was on part pension and part working for a month - the absolute disaster and shimozzle Centrelink put me through was unbelievable. They 'accidentally' cancelled my pension (due to their stupid estimate in advance - I had to do a full week at start only for training). Took weeks to sort it out, their back payment was totally underpaid but their word was final. The stress and worry they put me under began to affect the job I was doing, so gave it up. You are guilty until you have to prove yourself innocent, and Centrelink will fight like tooth and nail to not pay you correctly. In the end, I had a solicitor, and an MP fighting for my case, even they agreed it was like facing a brick wall. Never again.
    TREBOR
    29th Jul 2019
    1:11pm
    I keep looking around for a bit of sustenance money - gotta get me those batteries for the solar system ..... but have to be wary all the time of this government approach ....
    Theo1943
    29th Jul 2019
    7:35pm
    Trebor, the ATO is now requiring paymentl details for each employee to be sent to them each payday. They now have all your payslips.

    But yes, I have all mine for the last ten years. :-)
    TREBOR
    30th Jul 2019
    5:54am
    I don't mind that, Theo - happy to provide current information and keep things on track, as long as they don't turn nasty and demanding like the children we all know them to be.

    I've said before - my last few tax returns were auto-filled by them anyway... all I had to add were deductions like uniforms etc... they already had even my bank interest details.
    Triss
    29th Jul 2019
    1:32pm
    Why should Centrelink employees care, their pensions are secured.
    McDaddy
    29th Jul 2019
    7:13pm
    Why will they be secure?
    TREBOR
    30th Jul 2019
    5:55am
    Paid out of the $130Bn stolen from El Treasuria Nacional and sent to a tax haven ... government 'pensions' will never disappear even if all yours go down the gurgler...
    McDaddy
    30th Jul 2019
    9:48am
    Those super pensions will stop eventually, haven't been available to Public Servants who started post-2005 and pollies post-2010
    Thoughtful
    29th Jul 2019
    1:42pm
    Note that Work Bonus is only available if you are of OAP age. If your spouse is not they are not eligible. Also, I believe it only applies to "hands on " work ie performing a job and not from investments.
    On the Ball
    29th Jul 2019
    3:04pm
    Yes, and they also know that you will do that work for less money than a below-retirement age person (as it is assumed by the employer that you can supplement the low wage with your pension), so saving them employing a younger, more highly paid person.
    sunnyOz
    30th Jul 2019
    5:27pm
    Thoughtful - yes, correct. Work Bonus is only on actual working for an employer. A single can earn $172 from investments per f/n, and still get full pension. They can then earn $300 from a job per f/n and still get full pension.
    Why can't the amount be combined? Just make it $472. Whether it be investment income, or work income. Some people have little to no investments but do some work: some people have investment income, but no work.
    The whole system is so complicated, and I believe, deliberately made so.
    On the ball - I recently applied for a casual position in the area I specialised in. They wanted someone someone 'mature, experienced and committed'. But the pay rate - I nearly passed out. I actually rang them up to confirm. They were offering LESS than the award rate! I asked - but you want a mature, experienced person? The rate they were offering - was HALF the rate I would normally get paid for that type of work. She replied, saying they were perfectly happy to consider a senior person as they would appreciate the opportunity to earn a little bit of extra income. Yeah - well it wasn't going to be me.


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