Seniors may have substantial income from work 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.

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 (refer to the box below). 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.

Pension Income Test

The pension income test is designed to encourage pensioners to supplement their pension with additional private income. 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. For further information about the income free area and the amount of private income a pensioner may receive before their pension rate reduces to zero, please refer to Services Australia(link is external).