Work Bonus

The Work Bonus lets you earn more income from working if you’re an eligible pensioner without reducing your pension.

Changes to the Work Bonus started 1 July.

What the Work Bonus is

The Work Bonus is an initiative to help older Australians access the benefits of working while getting a pension.

Who can get it

You can get the Work Bonus if all of these apply to you:

How to get it

You don’t need to apply for the Work Bonus.

If you get income from work, we’ll apply the Work Bonus to your income test automatically.

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

Don’t forget, you must tell us about changes to your income.

Which income it's applied to

You need to tell us how much you earn. We use this information to apply the Work Bonus and income test.

We apply the Work Bonus to employment income you get from:

  • working in and outside Australia
  • paid leave while still employed
  • director’s fees
  • self-employment, that involves active participation.

We don’t apply it to income you get from:

  • leave after you’ve ended your employment
  • self-employment, that doesn’t involve active participation
  • investments
  • superannuation.

We use your level of active participation to decide if we can use the Work Bonus for your income from:

  • sole traders
  • partnerships
  • private companies
  • private trusts.

Your partner and the Work Bonus

The Work Bonus only reduces your partner’s assessable income if both of these apply:

You can’t use your Work Bonus for your partner’s wages or self-employment income. However, applying the Work Bonus to your wages or self-employment income earned from active participation will affect your combined income. This means your partner may still benefit.

How it works

The Work Bonus reduces the amount of employment income or eligible self-employment income that we apply to the income test.

If you don’t work

We’ll add $300 to your Work Bonus balance each fortnight. We’ll stop adding the $300 to your Work Bonus balance once it reaches $7,800.

If you start work, we’ll use your Work Bonus eligible income to reduce your Work Bonus balance before we reduce your pension.

If you work

When you earn less than $300 a fortnight:

  • we’ll use some of your $300 Work Bonus to reduce your Work Bonus eligible income to zero
  • we’ll add the rest to your Work Bonus balance.

For example, if you earn $150 in a fortnight we’ll:

  • reduce your income by $150
  • increase your Work Bonus balance by $150.

When you earn $300 a fortnight:

  • we’ll use your $300 Work Bonus to reduce your employment income to zero
  • your Work Bonus balance won’t change.

When you earn more than $300 a fortnight:

  • we’ll use your Work Bonus to reduce your employment income by $300
  • we’ll reduce the remaining employment income by any Work Bonus balance you have.

How it applies to self-employment income

From 1 July 2019, we’ll apply the Work Bonus to self-employment income from active participation.

Active participation

Active participation means you’re doing work that involves effort. This is the opposite of income from passive involvement.

Examples of work involving active participation include:

  • bookkeeping
  • lawn mowing
  • plumbing.

Active participation doesn't include managing an investment portfolio or rental properties owned by:

  • a family trust
  • a family company.

Example

Alex runs a business and earns income from self-employment. From 1 July 2019 we’ll  apply the Work Bonus to this income.

Alex’s business income is $32,500 per year. This is $1,250 per fortnight. Alex hasn’t worked as an employee since getting Age Pension over 12 months ago. Because of this, Alex has a Work Bonus balance of $6,500.

We’ll apply the Work Bonus accrued to Alex’s self-employment income until the balance reaches $0. Once the balance reaches $0, we’ll apply the Work Bonus to Alex’s income up to the Work Bonus limit. The Work Bonus limit from 1 July 2019 is $300 per fortnight.

Fortnight Business income Work Bonus balance Fortnightly Work Bonus Work Bonus balance carried forward Income included in the income test
1 July 2019 to 14 July 2019 $1,250 $6,500 $300 $5,550 $0.00
15 July 2019 to 28 July 2019 $1,250 $5,550 $300 $4,600 $0.00
29 July 2019 to 11 August 2019 $1,250 $4,600 $300 $3,650 $0.00
12 August 2019 to 25 August 2019 $1,250 $3,650 $300 $2,700 $0.00
26 August 2019 to 08 September 2019 $1,250 $2,700 $300 $1,750 $0.00
9 September 2019 to 22 September 2019 $1,250 $1,750 $300 $800 $0.00
23 September 2019 to 06 October 2019 $1,250 $800 $300 $0 $150.00
07 October 2019 to 20 October 2019 $1,250 $0 $300 $0 $950.00

For the first 6 fortnights after 1 July 2019, Alex’s Age Pension rate will increase. This is because we won’t include business income in Alex’s income test until their Work Bonus balance is $0. Then Alex will have 1 fortnight when we’ll only include $150 in the income test. From 7 October 2019, once Alex’s balance is $0, we’ll include all income over $300 in Alex’s income test.

Page last updated: 2 July 2019

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