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The Australian Government is assisting older Australians to work, if they are able and wish to do so, by allowing them to keep more of their pension when they have income from work.
Seniors may have substantial work income from and still receive a pension (Age Pension, Disability Support Pension, or Carer Payment). For those over Age Pension age, the application of the pension income test and the Work Bonus provide an incentive to work.
A pensioner can receive an amount of private income before their pension rate starts to reduce. This is the income free area which, from 1 July 2023, is $204 for single-rate pensioners and $360 for couples (combined). For each dollar of income above the income free area, the single pension is reduced by 50 cents.
What are the standard rules?
These are the income rules for most pensioners. Read about the Work Bonus below, and how it can help you earn more income from working without reducing your pension.
Single person
Income per fortnight | Amount your pension will reduce by |
|---|---|
Up to $204 | $0 |
Over $204 | 50 cents for each dollar over $204 |
Couple living together or apart due to ill health
Combined income per fortnight | Amount your combined pension will reduce by |
|---|---|
Up to $360 | $0 |
Over $360 | 50 cents for each dollar over $360 |
Work Bonus
Under the Work Bonus, the first $300 of fortnightly income from work is not assessed as income under the pension income test. Any unused amount of the fortnightly $300 Work Bonus will accumulate in a Work Bonus income bank, up to a maximum amount.
The amount accumulated in the income bank can be used to offset future income from work that would otherwise be assessable under the pension income test. The income bank amount is not time limited; if unused it carries forward, even across years.
Note: from 1 December 2022 to 31 December 2023, a one-off, temporary credit of $4,000 applies to Work Bonus income bank balances. The maximum income bank balance also increases to $11,800 over this period. Subject to the passage of legislation, from 1 January 2024 this temporary measure will be made permanent, resulting in all new pensioners over Age Pension age receiving a one-off $4,000 credit to their Work Bonus income bank. The maximum income bank balance will also be permanently increased to $11,800.
For more information go to the Work Bonus factsheet.
ATO
There are a number of situations that will vary the above and information on these can be found using the following links, or similar.
https://www.servicesaustralia.gov.au/income-test-for-age-pension?context=22526
https://www.servicesaustralia.gov.au/income?context=22526
Working after pension age | Department of Social Services, Australian Government (dss.gov.au)
