In December 2022, the government changed the maximum amount that you can build up in your Work Bonus balance from $7800 to $11,800.
It was introduced as a temporary measure, but on 1 January it became permanent. That means anyone eligible is able to earn an additional $4000 from work without it affecting their rate of pension.
So, who can get the Work Bonus, and how does it work?
If you receive the Age Pension, or you’re getting a Carer Payment or Disability Support Pension and you’re over Age Pension age, you can take advantage of the Work Bonus for employment income.
Work Bonus automatically exempts the first $300 per fortnight you earn from work – either wages or self-employment. It doesn’t apply to other sources of income like investment income.
Every fortnight you aren’t working, or have been paid less than $300 from work, you are contributing to your Work Bonus balance. This balance can grow until it reaches the maximum of $11,800. So if your Work Bonus balance is $0, it will take 40 fortnights with no employment income until your bonus reaches the new permanent maximum of $11,800.
If you are working, any Work Bonus eligible income over $300 in a fortnight will reduce any Work Bonus balance you may have before the income starts to reduce your pension. The excess income won’t affect your pension rate until your Work Bonus balance is used up.
What does the 1 January change mean for pensioners over Age Pension age?
If you’re already on a pension, you won’t see any changes. Everyone already on a pension received the benefit of the $4000 one-off top-up from December 2022, either by an increase in their Work Bonus balance, or an increase in their rate of pension as their employment income used up the bonus balance top-up.
If you’re applying for a pension now, you will start with a Work Bonus balance of $4000 straight away. You used to start with a balance of $0 and would start accruing from there. If you start with a Work Bonus balance of $4000 that means you could start work straight away if you wanted to and you’d have to use up your bonus balance before your employment income affected your rate.
The nice thing about the Work Bonus and Work Bonus balance is that it’s all worked out automatically. You don’t need to do anything to take advantage of it, except report your income, as you are required to do. You can look at your existing Work Bonus balance by going online. Sign into your Centrelink online account, select Menu, then Payments and Claims. Select Manage payments, then My payments. You can then view your Work Bonus balance.
Do you claim the Work Bonus? Why not share your experience in the comments section below?
Also read: Explained: Centrelink advance payment
I’m still trying to work it out. Maybe my age but every advice article varies. I think I can earn up to $11,800 a year before my pension is affected. Is that right ? Also is it every financial year or calendar year ?
Unless you want to pay extra tax on your income, it might look really good that the gov lets you earn up to that much; but don’t forget, your age pension will now be included as income as well, therefore part of your taxable income.
The taxes you have to pay are as followed, according to an accountant:
Net income after deductions and SAPTO and LITO: $37368.38 – Tax to pay: $2631.63
$34397.88 $602.13
$33712.88 $287.13
$33000 $0.00
From personal experience, a taxable income of $40617, tax was $4259.23 + $225.20 for medicare levy, minus SAPTO $1187.75 + LITO $544.15 = total tax to pay was $2752.40.
So the question is whether it’s worth paying $2752.40 in tax for earning an extra $7617 ? net gain about $4864.60 ? about $100/wk, considering stress and expense with car, parking …
Before retiring I was a professional share trader and registered as such with the ATO.
I’m now retired but am I correct in saying any share trading I do now will be considered an investment rather than work?
I think the proposal is good, but it should go further. The assets test also needs to be abolished or changed substantially so that people who accrued modest savings and cannot earn substantially more than the pension are not penalized for having lived responsibly. Currently, there is a huge disincentive to responsible living, and that’s stupid. By all means, tax income on assets so that those earning significant income from assets don’t benefit from pension income. But punishing people for saving is not economically sustainable. And the system should not disadvantage people who, for genuine reasons, cannot earn a healthy income from their assets. We shouldn’t have to be investment gurus! And we shouldn’t suffer for having acquired non-returning assets that we cannot readily sell or that there are legitimate reasons for holding. There is no incentive for people to live responsibly if they are deprived of the pension and forced to just drain their savings so they qualify for a pension and have a decent secure income stream. All that does is incentivize heavy spending or gifting before retirement or investing in an expensive family home to reduce assessed assets.