Working beyond Age Pension Age
Seniors are encouraged to remain active for the sake of their mental and physical health. Your preferred way of keeping mentally active could be working for payment. Continuing paid work beyond your Age Pension Age might not exclude you from the Age Pension.
The Age Pension is available for mature age seniors in financially constrained circumstances.
The Age Pension Age is set as the minimum chronological age at which a typical senior is considered to be no longer able to work enough hours to generate the income needed for a modest standard of living.
But a senior is free to keep on working.
If you choose to continue in the paid workforce after you attain your Age Pension Age then the Income Test could reduce the amount of your Age Pension payment but you might be eligible for a part Age Pension.
The extra income that you and/or your partner, generate from work counts for the Age Pension Income Test. But the Age Pension Work Bonus reduces the impact of your earning from real work on your Age Pension payment rate.
Work Bonus for working beyond Age Pension Age as an employee of an unrelated entity
The Age Pension ‘Work Bonus’ is available to Age Pensioners who work for unrelated businesses. Some seniors return to their previous employers and work as ‘casuals’ or short term contract employees to cover for busy spells and permanent employees taking leave. Other seniors find new jobs with different employers.
The Work Bonus allows for the first $300 per fortnight of income earned from ‘work’ to be excluded from your assessable income for the Age Pension Income Test. Age Pensioners can ‘save up’ some Work Bonus to use later in the year. You cannot have more than $7,800 of saved Work Bonus at any time.
If you keep on working then over a Centrelink year of 26 fortnights, you could accrue $7,800 of Work Bonus. You could use this accruing Work Bonus together with any Work Bonus ‘saved’ from last year to have some ‘work income’ excluded for Income Test purposes. You could be earning ‘work income’ from working a few days each fortnight and/or working several days per week for a short period.
Your Work Bonus cannot offset the ‘work income’ of your partner.
The Work Bonus can only be used to offset the ‘work income’ of that Age Pensioner. If you and your partner are both Age Pensioners you cannot have your partner’s Work Bonus to offset against your ‘work income’. You can only have your own Work Bonus offset against your ‘work income’.
If your partner is too young for an Age Pension then their work income counts in full for the Age Pension Income Test on your Age Pension.
Reporting your wages for working beyond Age Pension Age as an employee of an unrelated entity
If you or your partner, work for wages then Centrelink require you to lodge a ‘work income report’ every fortnight.
Centrelink will specify the exact fourteen day period that you must use for the purposes of preparing your ‘work income report’. These ‘reporting fortnights’ are unlikely to correspond with your employer’s pay periods.
Another challenge could be that ‘reporting fortnight’ includes some work days that you have not yet been paid for when your ‘work income report’ is due. Hence you must keep your own very detailed records.
Centrelink want you to lodge your Age Pensioner ‘work income reports’ via your Centrelink online account through myGov or the Express Plus Centrelink mobile app .
Centrelink will also specify the cut-off time and date for lodging your ‘work income report’. Your Age Pension payment cannot be processed until your ‘work income report’ is received. Hence late lodgement of a ‘work income report’ means a delayed Age Pension payment.
If you did not work or take paid leave, in that fortnight you must submit a ‘NIL work income report’ to allow the Centrelink system to process an Age Pension payment for that fortnight.
A busy period of paid work might generate such a big pay packet that you exceed the Income Test cut-off for the Age Pension this fortnight. That would mean a Nil Age Pension payment for this fortnight.
You may have five consecutive Nil Age Pension payment fortnights before Centrelink would cancel your Age Pension.
You must keep detailed records of exactly when you worked for wages or used paid leave from your employer.
You will be required to report exactly how many hours you worked at each pay rate on each day. You must also include any ‘loadings’ or ‘allowances’ in your ‘work income report’.
Centrelink will specify the start and end dates of each ‘reporting fortnight’.
The gross pay rates and amounts must be reported to Centrelink even though your employer is required to deduct income tax before paying you the net amount.
Consider Sally, who gets the Age Pension. Sally works a few days each week in a nursing home kitchen.
Sally is paid as a ‘part time’ employee. She earns $22 per hour for her normal shifts. If Sally works another two hours after her regular shift she gets $33 per hour for that ‘overtime’. But when her regular work day is a ‘public holiday’ she is paid $55 per hour.
When Sally reports to Centrelink at the end of her ‘Centrelink reporting period’ Sally must show how many hours she worked at each pay rate.
Sally’s regular work days are Tuesday and Thursday. Sally usually starts at 6.30 am and works until 3 pm with a half hour of unpaid break. When other staff are absent Sally works two hours of overtime on her regular days.
Occasionally Sally works an additional day shift or needs to take a day off.
For her Centrelink report, Sally compiles a table that show the data that Centrelink want for her ‘reporting period’ that always starts on a Thursday.
| Day of Sally’s reporting period | Normal Hours
At $22 per hour |
Overtime hours
At $33 per hour |
Public holiday hours
At $55 per hour |
Total paid hours |
| Day 1 Thursday | 8.00 | 2.00 | 0 | 10.00 |
| Day 6 Tuesday | 0 | 0 | 8.00 | 8.00 |
| Day 8 Thursdays | 8.00 of paid sick leave | 0 | 8.00 | |
| Day 13 Tuesday | 8.00 | 8.00 | ||
| Total hours | 16.00 worked plus
8.00 of paid sick leave |
2.00 | 8.00 | 34.00 |
| Gross wages | $528 | $66 | $440 | $1,034 |
Sally’s Centrelink ‘reporting period’ is not the same as two weeks of her employer’s pay cycle. Sally must report her earnings for the last day of her Centrelink ‘reporting period’ before her employer pays her for that day of work.
Sally is not happy that she must report her potential gross pay to Centrelink.
Working beyond Age Pension Age in your own business or as a ‘sole trader’
Many seniors choose to keep on working in their own businesses well beyond the formal Age Pension Age. You might be operating a business as a ‘sole trader’ where the customers’ payments are credited to your personal bank accounts. But others choose to incorporate their businesses, the business owner could be both a director and employee.
At Centrelink, any profits that you generate from your own business count as ‘income’ for the Age Pension Income Test.
Work Bonus for your earnings as a sole trader.
The Work Bonus is available to Age Pensioners who actively participate in their own business. You must be able to demonstrate to Centrelink that you contributed ‘personal exertion and effort’ into earning your business income.
For example, Joe works as a ‘sole trader’ mowing lawns and trimming hedges. Centrelink accept that Joe uses personal exertion and effort to earn the fees that his client pay him for his services.
Tom keeps himself busy managing his investments. Tom enjoys trading parts of his extensive share portfolio. Centrelink do not allow Tom to claim any ‘work bonus’ for his personal exertion in managing his own assets.
Reporting your business work income to Centrelink
If you operate your business through a private company then your incorporated business, will have annual accounts for Income Tax purposes. Your private company would then have an income and expenditure statement for the financial year and a statement of assets and liabilities as at the end of the financial year for you to show to Centrelink.
Be careful not to double count any salary or director’s fees that you take from your private company when you report your income to Centrelink.
If you are a sole trader, you can also have an accountant prepare your income and expenditure statement for the financial year and a statement of assets and liabilities as at the end of the financial year.
You would need the data from your income and expenditure statement to complete your personal income tax return.
These annual accounting statements show you where your business is going financially.
Centrelink usually accept the information in your annual statement of income and expenditure as your ‘net business income’ when applying the Income Test to assess your Age Pension rate for the following year.
Your net business assets as shown in your your ‘statement of assets and liabilities’ would count for the Asset Test of your Age Pension rate for the following year.
Thus if you have your own business then your ‘net business income’ will count in full for your Age Pension Income Test. The ‘net business income’ amount used by Centrelink is the ‘profit’ or ‘net income of your business’ that is, income of the business minus the expenses the business incurred to earn that income.
For the Age Pension Income Test, your ‘net business income’ could be assumed to be earned evenly throughout the year. Centrelink could continue to use the ‘net business income’ that you reported for last financial year as your annual rate of ‘net business income’ until you report a new rate.
Beware if you close or significantly reduce your business operations or close your business then you need to inform Centrelink that your ‘net business income’ has dropped.
For example, Joe’s clients paid him $26,000 over a full year. Then Joe claims business expenses of $5,200 in his income tax return. Centrelink could accept that Joe earned $20,800 of net business income for the last financial year.
Centrelink assume that Joe earned his net business income at a steady $800 per fortnight evenly throughout the year.
Joe does not try to tell Centrelink that he earns more money in some months than in others because there is more grass for him to cut in the autumn and spring than in the summer and winter.
Centrelink could offset the Work Bonus against your business income provided that you could show your active participation in generating your business income. Thus, you must demonstrate to Centrelink that you put in ‘personal exertion and effort’ into earning that business income.
In our example, Centrelink could treat Joe as having $800 per fortnight of ‘net business income’ earned by his ‘personal exertion and effort’. Thus Joe could have the ‘work bonus’ of $300 per fortnight deducted from his income for the purposes of the Age Pension Income Test.
If your business made a loss you could have a ‘nil’ amount of ‘business income’. But Centrelink would not allow you to claim a negative amount of ‘business income’ or to offset the business loss against your other income.
Similarly, your ‘business assets’ are included in your Assets Test assessable asset amounts. Centrelink have tight rules about offsetting your personal loans to your business for Asset Test purposes.
Working beyond Age Pension Age generating profits from your hobbies
In general, any financial reward from your hobby activities is not counted as ‘income’ for the Age Pension Income Test.
If you make serious money from your hobbies then you need to think hard. You must consider if you are just having fun making things for which your friends and family give you cash. In contrast, if you are generating significant ‘profits’ from your hobbies then you could actually be classed as operating a business.
Also if your hobby activity is big enough to need to register for GST then Centrelink are unlikely to ignore the net income generated by your hobbies.
When in doubt, it is easier to declare your net income from your self-employment in your ‘hobby business’ and claim the Work Bonus.
Working beyond Age Pension Age in the family business
The Age Pension Income Test includes both your own income and the income of your domestic partner or spouse. Centrelink will count all of the net income of your spouse’s business in your assessable income for the Age Pension Income Test.
To justify a claim for ‘work bonus’ for ‘helping out’ in your spouse’s business you would need to demonstrate to Centrelink that you actually applied personal exertion and effort to earn any payment that you receive.
Centrelink might be satisfied if you keep a detailed record for a typical eight week period. You would need to record your hours of work and what ‘work’ you actually did.
For example, Joan did the ‘bookkeeping’ for her partner’s plumbing business. Joan held the access codes to their business bank account; she made the payments as well as monitoring the deposits from customers.
Joan prepared and issued the invoices for the client jobs, recorded the payments from clients and followed up any unpaid accounts.
She completed the quarterly BAS then paid the ATO, the trade suppliers’ monthly accounts and any other bills for the business .
Thus Joan could show that she actually put personal effort and exertion into the business.
Your wages for working in a business operated by another family member count as assessable income.
If the family business treats your ‘wages’ as real employee pay then Centrelink also treat those amounts as real income for the Age Pension Income Test.
But Centrelink could allow you to claim the Work Bonus against your wages for real work that involved ‘active participation’ in a real business that services external customers.
You would need to demonstrate how you contributed personal effort and exertion into the business in order to claim Work Bonus. Centrelink could require you to report your Age Pensioner ‘work income’ as for any ordinary wage earner.
Working to manage your family’s investments
You cannot claim Work Bonus for ‘work’ in managing the investments including property rentals, of a family business or family trust.
Just completing the BAS for your self-managed superannuation fund and family trust would not qualify as ‘work’ for the Work Bonus.
Actively managing your rental properties would not qualify as ‘work’ for the Work Bonus.
Caring for your grandchildren whilst their parents work is unlikely ot qualify as ‘work’ for the Work Bonus
Working beyond Age Pension Age in the family business
The Age Pension Income Test includes both your own income and the income of your domestic partner or spouse. Therefore any payment that you receive for ‘helping out’ in your spouse’s business is ignored; Centrelink have already counted all of the net income of the business in your assessable income for the Income Test.
Your wages for working in a business operated by another family member counts as assessable income. If the family business treats your ‘wages’ as real employee pay then Centrelink also treat those amounts as real income for the Age Pension Income Test.
Working beyond Age Pension Age means reporting your work earnings for the Age Pension Income Test
Age Pensioners must inform Centrelink of any changes in their income. This means updating Centrelink of all changes in your wages or your partner’s income.
You might need to report your work income every fortnight if you or your partner, have flexible work arrangements so that your wages vary.
You must inform Centrelink when you start or stop working.
An annual update is usually adequate for self-employed Age Pensioners and their domestic partners.
Help to understand how your situation fits in the Age Pension system.
Christine at Financial Care Services writes this Age Pension Guide. She can help you to understand your Age Pension situation.
Ask Christine to help you navigate your Age Pension challenge.
Contact Christine at Christine@financialcareservices.com.au or call 03 9808 0338 to book a consultation.
Christine at Financial Care Services is experienced with Pension Applications and the many Centrelink financial means tests.
Financial Care Services helps seniors with Centrelink Pension issues. Christine at Financial Care Services could help you check if you are eligible for an Age Pension.
An estimate of your potential Age Pension amount before you apply could spare you a rejection letter from Centrelink.
Financial Care Services offers ‘personal financial factual information’ consultations to help you check your asset and income position against the Centrelink Pension means tests.
Christine is also able to assist with filling in your Centrelink forms ready for you to sign. She will accompany you to a Centrelink office to lodge your Pension claim form and show your proof of identity documents.
Financial Care Services charges hourly rate fees for ‘personal financial factual information’ consultations, assistance with personal data collation, completing Centrelink forms and attendance at a Centrelink office with you. Email Christine@financialcareservices.com.au now for the Financial Care Services Client Services Guide and Financial Care Services Age Pension Personal Data Checklist.
Disclaimer This Age Pension Guide is based on our understanding of the current Social Security provisions. Your claim for a Social Security Pension will be based on your personal situation as documented to Centrelink and the Social Security legislation and Regulations in force at that date.
Updated October 2020
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