The Work Bonus provides eligible pensioners who are of Age Pension age with an exemption on certain types of income earned.
It provides a “credit” against certain income earned by the pensioner to reduce the total amount that is assessable under the Income Test. After the Work Bonus is applied, any remaining income that is assessable is then added to income derived by the pensioner and applied to the ordinary income thresholds to determine entitlement under the income test.
Who is eligible?
The Work Bonus is available to eligible pensioners who receive “work bonus income”.
An eligible pensioner:
- has reached their age pension age and,
- is receiving a pension (excluding parenting payment)
What is work bonus income?
Work Bonus income includes both income from employment and self-employment. However, some income is excluded if it does not meet the “physical exertion test” (this can include managing or administering financial investments or real property of the pensioner or a relative, and payments in respect of domestic duties associated with a property owned by the pensioner).
How is it applied?
The Work Bonus is an “income-free area” in respect of eligible income and is automatically applied by Centrelink. The Work Bonus is $300 per fortnight and applied per individual against eligible Work Bonus income derived by that pensioner. It is applied on an individual basis and any amount of bonus unused by one member of a couple cannot be transferred to their spouse to offset any eligible income they may have.
Unused Work Bonus
If the pensioner does not fully utilise the available bonus in a particular fortnight, the unused Work Bonus is credited to an “employment income concession bank” (or income bank).
The income bank is not an account that can be withdrawn from, but instead the accrued credits can then be utilised in a future fortnightly period, which may enable the pensioner to have a greater amount of employment income exempt.
The income bank starts to accumulate from the time the person becomes an eligible pensioner. A maximum of one year’s worth of Work Bonus can be accrued (currently $7,800). Credits accrued do not expire (except on death) and accrue regardless of the pensioner’s future work intentions (i.e., they could not be intending to work at all).