Work bonus

Last updated: 
26 March 2019

This page explains what the work bonus is, who is eligible for it and how it is calculated.

This page is current from 1 January 2020 to 19 March 2020.

What is the work bonus?

The work bonus is an incentive to encourage people who are able, to continue working after they reach qualifying/pension age. Under the work bonus rules, the first $300.00 of wages earned per fortnight will be excluded from the income test.

What is work bonus income?

The following are all considered to be work bonus income if they are earned or received as a result of your work:

  • salary
  • wages
  • commissions
  • employment related fringe benefits

If you own your own business and draw wages from the company, your wages are work bonus income.

From 1 July 2019 self-employment income will be eligible for the work bonus if the work involves active participation. This is work that involves effort, such as book keeping or plumbing. Active participation does not include managing an investment portfolio or an investment property.

If you are unsure whether your income is classed as wok bonus income, contact DVA.

Who is eligible for the work bonus?

For a service pensioner or income support supplement (ISS) recipient to be eligible for the work bonus, all of the following must apply:

  • be over qualifying age
  • receive work bonus income
  • rate of pension must be assessed under the rules that came into force on 20 September 2009.

For an age pensioner to be eligible for the work bonus, all of the following must apply:

  • be over age pension age
  • receive work bonus income
  • rate of pension must be assessed under the rules that came into force on 20 September 2009.

If you receive an income support payment from Centrelink, they have a similar scheme.

How does the work bonus apply to couples?

For members of a couple, your combined assessable income affects both of you. Therefore, if one person is eligible for the Work Bonus, you will both benefit from the reduced assessable income.

If both members of a couple receive work bonus income and you are both eligible for the bonus, you will both receive the bonus.

However, if the working partner is under the required age, the work bonus does not apply and the earnings will be treated as ordinary income.

What is the required age for the work bonus for service pensioners and ISS recipients?

For a service pensioner or ISS recipient to be eligible for the work bonus, you must be over qualifying age. Qualifying age is the pension age which would apply to you if you were a veteran. Veteran pension age (qualifying age) is earlier than age pension age. Qualifying age is currently 60 years.

What is the required age for the work bonus for age pensioners?

For an age pensioner to be eligible for the work bonus, you must be over age pension age. Age pension age is as per the table set out below:

Male and Female Non-Veterans
If your date of birth is on or between: Then your pension age is:
Before 1 July 1952 65 years
1 July 1952 to 31 December 1953 65 years and 6 months
1 January 1952 to 30 June 1955 66 years
1 July 1955 to 31 December 1956 66 years and 6 months
On or after 1 January 1957 67 years

How is the work bonus calculated?

If you qualify for the work bonus, the first $300 of eligible fortnightly work bonus income will be excluded from your income test. If your pension is currently income tested this will increase the rate of pension payable to you.

Example 1: Harry receives age pension and works for 10 hours per fortnight, earning $350.00. When his income is assessed only $50.00 ($350.00 - $300.00) will be counted as income.

Example 2: Beryl receives partner service pension and is over qualifying age. She works 40 hours per fortnight, earning $1000.00. When her income is assessed only $700.00 will be counted. The way her income is assessed is:

$1000 - $300.00 = $700.00

Example 3: David& Margaret receive a service pension and are both over qualifying age. David works 30 hours per fortnight, earning $700. Margaret works 5 hours a fortnight and earns $100. The way their income is assessed is:

David $700 - $300.00 = $400.00
Margaret $100.00 - $100.00 = $0.00
Combined $400.00 + $0.00 = $400.00

Their combined assessable employment income is $400.00.

What is the work bonus bank?

If you have no earnings, or up to $300 work bonus income per fortnight, you can accrue the unused amount of the work bonus income concession in a work bonus bank. The difference between $300 and the gross work bonus income each fortnight is credited to your work bonus bank to a maximum of $7,800. The balance in your work bonus bank can then offset your employment income that would otherwise be assessable in the future.

Example 1: Accrual

Harry receives age pension and works for 10 hours per fortnight, earning $200.00. When his income is assessed only $200.00 of his work bonus will be used to discount income. The remaining work bonus of $100.00 will be credited to the work bonus bank up to a maximum of $7800.00.

Example 2: Accrual

David & Margaret receive a service pension and are both over qualifying age. David works 20 hours per fortnight, earning $700. Margaret works 5 hours a fortnight and earns $100.

David $700.00 - $300.00 = $400.00; Assessable income is $400.00; Work Bonus accrual = $0.00; ($300.00 - $300.00 = $0.00)
Margaret $100.00 - $100.00 = $0.00; Assessable income is $0.00; Work bonus accrual = $200.00; ($300.00 - $100.00 = $200.00)

Example 3: Depletion

John has accrued $1,500 in his work bonus bank. He starts part-time work earning employment income of $400 per fortnight.

Step 1 $400.00 - $300.00 = $100.00 (work bonus discount)
Step 2 $100.00 - $100.00 = $0.00 (work bonus bank depletion)
  Assessable income is $0.00 remaining work bonus bank = $1400.00 ($1,500 - $100.00)

As John continues with this employment and his income remains at the same level, his work bonus bank credit will gradually reduce. Once his work bonus bank credit runs out after 15 fortnights ($1,500 depleting at $100 per fortnight), John will still have access to the $300 work bonus income concession amount. His assessable employment income will then be $100 per fortnight ($400 less $300 income concession amount).

How do I apply for the work bonus?

You do not need to apply for the work bonus. It will be calculated automatically when your pension is assessed. You do need to make sure that if you have employment earnings they are correctly recorded with DVA.

If you receive income from self-employment, you will need to tell us the percentage of income earned from your active participation.

If you want to check how your income is recorded or that you have received a work bonus in your assessment contact DVA to discuss your case.

Obligations

You have a responsibility to keep us informed of changes that may affect the amount of pension and pension supplement you receive. These responsibilities are described in our letters to you as ‘obligations’, and apply equally to trustees.

In order to meet your obligations, you need to tell DVA within 14 days (28 days if you live overseas or receive remote area allowance) if:

  • your residential situation changes
  • your relationship status changes
  • you receive the maximum rate pension and your income exceeds the ordinary income free area and/or your assets exceed the assets value limit
  • you receive a reduced rate pension and your income and/or assets exceed the limits stated in our most recent letter to you about your income support payment
  • you move or travel overseas
  • there is any other change that would affect the rate of your income support payment.

Fulfilling your obligations within the specified time period assists us in maintaining your correct rate of income support payment.