Age Pension Work Bonus extended July 2019
The Age Pensioner Work Bonus in the Centrelink Income Test is to encourage Age Pensioners to continue their links to the paid workforce.
The Age Pension Work Bonus was extended in July 2019 to cover all types of income earned by ‘personal effort’.
Age Pensioner Work Bonus
The advantage of the Age Pensioner Work Bonus is that the first $300 per fortnight of income from ‘personal exertion’ work is not counted by Centrelink for the Age Pension Income Test. Any Age Pensioner Work Bonus that is not used this fortnight can be saved up for use later in the year.
Examples of personal exertion work for the Age Pensioner Work Bonus
1 Mary who works regular part time every week
Mary is entitled to an Age Pension. Mary works every Friday in a hair dressing salon earning wages of $125 per week. The $250 per fortnight Mary earns from employment is offset by the Age Pensioner Work Bonus.
Mary’s employer reports her employment earnings directly to the ATO immediately her wages are paid. The ATO pass on Mary’s employment earnings details to Centrelink. Centrelink note that Mary’s employment earnings are less than her accruing Work Bonus.
Hence her employment earnings are not counted for the Income Test for Mary’s Age Pension.
2 Joe who works as casual in peak periods only
Joe also receives an Age Pension. Joe prefers to work full time at a caravan park during peak school holiday periods. He earns $800 per week as a casual employee.
Every week, Joe’s employer reports his earnings to the ATO and thus to Centrelink, and his Age Pension Work Bonus is taken into account for the Income Test.
Joe usually has enough accrued Age Pensioner Work Bonus entitlement to offset his earnings so that his Age Pension is not impacted by his employment earnings.
If Joe has used all of his Age Pensioner Work Bonus when he worked for five weeks in the summer then his Age Pension could be reduced. But Joe would accrue more Age Pensioner Work Bonus before the Easter school holiday period. Joe takes his own holiday during the winter and does not work during the July school holiday period.
Over a full year, Joe works for nine weeks and earns about $7,600. Thus over a full year, Joe has enough Age Pensioner Work Bonus for his earnings from work to not reduce his Age Pension.
3 Bob starts his own business as a sole trader
Bob who had retired from full time employment before he was ready for full time ‘retirement’.
Bob starts mowing lawns to keep himself fit. But Bob finds that he is only fit enough to work a maximum of four hours mowing on five days in any week.
Bob’s customers pay him cash for each job. Bob does not expect to earn enough to need to register for GST. But Bob must keep basic accounts for reporting his ‘net income’ for income tax and Centrelink purposes.
Bob starts lawn mowing in early spring when the grass is growing fast. Bob decides to lease a heavy duty mower and other essential equipment together with a trailer to carry his work gear. He records the amounts that his clients pay for each visit together with his costs for fuel, advertising and leasing equipment.
Bob can show Centrelink the accounts for his lawn mowing business for any ‘reporting period’. Bob starts his Age Pension and shows Centrelink the accounts for his first six weeks as a self-employed worker. Centrelink then apply the Work Bonus to Bob’s net earnings from his lawn mowing business.
Bob is happy; he stays on the Age Pension whilst working in his own business. He can work hard when the grass is growing fast then ease off in the winter without losing the Work Bonus for the quiet period.
Income for Age Pensioner Work Bonus in the Centrelink Income Test
The Age Pensioner Work Bonus applies to income from work that requires ‘personal effort’. As from July 2019, the Work Bonus can apply to both your income from employment and your net income from work involving ‘personal effort’ in your own business.
Age Pensioner Work Bonus applies to income from work involving ‘personal effort’ including
– Wages paid in Australia or outside of Australia
– Fringe benefits such as mobile phones and subsidized rent, relating to eligible work
– Payments in respect of leave being utilised by an ongoing employee, such as, annual leave for an employee taking a holiday;
_ Earnings from self employment where you provide a service to clients who are not your close family
_ Salary for the actual work you do for a company owned by yourself and/or your close family
– Payments/drawings by sole traders and partnerships where you are a working principal in the business; and
– Directors’ fees.
Age Pensioner Work Bonus is not applied to income from
– Payments for unused leave when you terminate employment
– ‘Work’ that relates to managing your own investments, self-managed superannuation funds or family trusts
– Income generated from your investments; or
– Superannuation Pensions.
Your partner and the Age Pensioner Work Bonus in the Centrelink Income Test
Each Age Pensioner is eligible for the Age Pensioner Work Bonus in respect of their income from employment or ‘personal effort’ work.
If both members of an Age Pensioner couple are active in work then each one has the Age Pensioner Work Bonus applied to their earnings from work.
If only one member of an Age Pensioner couple is eligible for the Age Pensioner Work Bonus, both partners would benefit because the work earnings part of their combined income at Centrelink would be reduced by the Age Pensioner Work Bonus.
If you think that you, or your partner, satisfy the Age Pensioner Work Bonus work conditions then you could arrange a short consultation with Christine Hopper Financial Care Services to discuss your potential Age Pensioner Work Bonus.
Short personal financial factual information consultations with Christine Hopper at Financial Care Services cost $99 for 45 minutes.
Short consultations can be by telephone and /or email, or meeting at our Camberwell office.
Call Christine Hopper Financial Care Services on (03) 9808 0338 to arrange a short consultation.
Seek Independent Advice about Centrelink payments
Christine Hopper at Financial Care Services is an independent advisor specialising in aged care entrants and Centrelink Pensions.
Financial Care Services core values include claiming relevant Social Security Income Support Pension benefits and Health Cards.
Christine at Financial Care Services understands both the DVA and Centrelink Pensions systems and the Commonwealth aged care fee arrangements.
To book a consultation appointment for confidential, independent and professional advice about Centrelink, aged care costs or strategic lifestyle issues please contact Christine Hopper at Financial Care Services 03 9808 0338.
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Disclaimer:
The information contained in this website is of a general nature only and does not constitute “financial advice”.
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