Centrelink Work Bonus – to work or not to work.

That is indeed the question! It is not uncommon for retirees who receive the Centrelink Age Pension to take on a little extra work. The most common question that comes up in this situation is “will this impact how much I receive from Centrelink”? You want to supplement your income, but you’re worried about it impacting your payment or worse, stopping your payment altogether. This is where the Centrelink Work Bonus comes into play.

So, what exactly is the Work Bonus?

Basically, it’s a “bucket” of work credit dollars that you can use to offset the amount you actually earn. Each fortnight, your “bucket” is topped up with a $300 credit. This happens whether you work or not and builds up over time to a maximum “bucket” of $11,800.

Starting from July 2023, new pensioners get a $4,000 top-up in their Work Bonus “bucket” from day one, a nice welcome boost. The Work Bonus works with Age Pension, Disability Support Pension, and the Carer Payment.

When you start earning money from paid employment or self-employed income, the bonus can reduce the assessable amount before impacting your pension income test. Below are a few examples of what this might look like:

Centrelink Work Bonus Example 1

Eligible income** is less than $300/fortnight

After becoming eligible for the Centrelink Age Pension, Sandra has decided to continue working with her employer on a casual basis, earning an income of $200/fortnight. Sandra’s income is less than the available Work Bonus of $300/fortnight. Centrelink will offset $200 from her Work Bonus towards her eligible income. This means that Sandra’s employment income won’t reduce her Centrelink payment in that fortnight and her Work Bonus “bucket” will be increased by $100.

Centrelink Work Bonus Example 2

Eligible income** is $300/fortnight

Sebastian has recently started to receive the Centrelink Age Pension. Sebastian continues to work for his employer on a casual basis, earning $300/fortnight. Centrelink will offset $300 from his Work Bonus towards his eligible income. Sebastian won’t accrue anything into his Work Bonus “bucket” but his Centrelink payment will also not be impacted.

Centrelink Work Bonus Example 3

Eligible income** is more than $300/fortnight

Tracey has recently started to receive the Centrelink Age Pension. She received the $4,000 top-up to her Work Bonus “bucket”. For the first 26 weeks (13 fortnights), Jane doesn’t participate in any paid work, so over this time, she accrues $300/fortnight into her Work Bonus “bucket”, it now has a balance of $7,900 ($4,000 starting balance plus $3,900 from her unused fortnightly work bonus).

Tracy is then offered 12 weeks of seasonal paid work from her old employer and will earn $1,500/fortnight. Centrelink will offset $300 from her fortnightly Work Bonus towards her eligible income, leaving an assessable amount of $1,200/fortnight.

Because Tracey has $7,900 in her Work Bonus “bucket”, this can be used to further offset her assessable income – $1,200 x 6 fortnights = $7,200. At the end of the 12 weeks, Tracey will still have $700 in her Work Bonus “bucket” and her Age Pension payment will not have been impacted by her employment income.

In summary

So if you want to participate in regular paid work or short-term seasonal/contract work, the Work Bonus is a great feature that allows you to enhance your cash flow position.

DISCLAIMER **Income stated in this blog/article refers to gross income (before tax)

Amy Nightingale

Goldsworthy Private Wealth

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