Single Period or One-off Earnings Income

Last amended: 10 May 2012

Single period or one-off employment

Single period (short term or one-off) earnings are not limited to income from employment for one day, but arise where the employment is not likely to be repeated in the short to medium term (generally, within three months). Short term or single period earnings are generally for periods of several days to several weeks. The knowledge that isolated, one-off periods of employment are limited and not likely to be repeated allows for these earnings to be annualised. That is, the known income amount for the limited period of employment becomes the annual rate of income.

Examples of single period or one-off employment

Examples of single period (short-term or one-off) employment include:

• contract work (short-term) where it is expected there will be only one contractual engagement in the year,
• census worker,
• Christmas Santa, and
• three-day Royal Show worker.

Annualisation of the rate of income for single period earnings

Pension entitlements are calculated with reference to an annual rate of income. In circumstances of one-off or very short-term periods of employment, the amount earned should be taken to be the annual rate. This is because further earnings over the course of the year are not expected. Delegates should use discretion to annualise short-term periods of irregular or casual income over the entire year. This will be appropriate where it is known that further periods of one-off employment are unlikely to recur within three months. The decision to annualise earnings should be considered carefully, with regard to the characteristics of the employment undertaken and the impact that annualising the earnings will have on the pensioner's assessment. The policy intent is for annualisation of earnings to not disadvantage pensioners where a more appropriate assessment of earnings could be applied.

Circumstances applying to one-off earnings

Before treating one-off earnings as the annual rate of income, delegates should be satisfied that the following circumstances exist:

• the earnings are isolated in nature, discrete, for a short-term or for a closed period,
• have not occurred before (within the preceding three months), and
• are not likely to continue or be repeated (within three months).

In considering these factors, the person's recent employment history and the likelihood of future paid employment should be taken into account.

The test is whether the employment can be accurately defined as ordinary income for remunerative work undertaken by the person. If start and end dates are known, and the period of employment is for a substantial number of weeks, then it may be more appropriate to hold the earnings over the actual period for which the person was employed, rather than treating these on-off earnings as the annual rate of income.

Example of one-off earnings

A pensioner receives a one-off earnings amount of $1,000 during a single fortnight, as a result of completing a contract that is not expected to be repeated. This income amount reflects the total income likely to be received by the pensioner, and an annual rate of $1,000 is held for 12 months (annualisation). It is not correct to hold an annual rate of $26,000 for the fortnight concerned, and to hold nil income for the rest of the year, as the assessment for the affected fortnight wrongly concludes that the earnings are to continue.

Example where one-off earnings should not be annualised

A pensioner undertakes full time work for a continuous seven week period, earning the same amount each week. The period of employment has a defined beginning and end date. The pensioner does not intend to undertake a further period of work. The income earned over this period should be held over the seven weeks in which it was earned, rather than annualised. This is because the earnings more accurately fit the definition of ordinary income from remunerative work undertaken by the pensioner.

Where one-off employment is repeated

Where a person has multiple one-off earnings events, each of those earnings events results, after annualisation, in a rate of income to be held for 12 months. Where a second period of one-off employment occurs within the 12 month assessment period applying to the first period of employment, both annualized amounts will be held in the pension assessment independently during the interval where the 12 month periods corresponding to the two earnings amounts overlap.

DRS should be used to set reviews to delete each annualized amount at the end of the 12 month assessment period and VIEW Electronic Minutes can be used to assist in explaining the current assessment of earnings in the assessment.

Frequent repeat episodes of 'one-off' employment should result in the pensioner's earnings being assessed as variable earnings.

The intent behind the annualisation of a period of one-off earnings is to allow a pensioner to utilize their annual Income Free Area, so as to minimize the impact of a genuine isolated period of employment on their pension payability. This approach, for smaller earnings amounts, results in a favourable assessment and is consistent with the requirement to assess the person's annual rate of income.

One-off earnings that cancel pension payability

A large, one-off  amount of earnings, annualised over the year, may be sufficient to reduce pension payability to nil. The annualised income amount should be held in the assessment for 26 fortnights. After this period the annualised amount is removed, and payability is determined anew. As the income assessment only affects payability, the reinstatement of pension does not require a new claim.

Requests by pensioners that a large, one-off receipt of earnings be held within the fortnight that the earnings are received, limiting the loss of payability to that fortnight only, cannot be agreed. Where the circumstances of the case establish that it is reasonable to hold the one-off payment as an annualised rate of income, the period of assessment cannot be reduced below the one year period.

Recognising excess income that is assessable over the following year conforms with the intent of the income test, that excess income reduces payability. This outcome should not be avoided by agreeing to assess a large one-off payment as only representing the “annual rate of income” for the fortnight in which it is received.

Small earnings amounts

There is no discretion in the VEA to ignore small, one-off earnings amounts. For example, a one-off earnings amount of $100 which is not expected to be repeated must be held in the assessment, at a fortnightly rate of $3.84. Not recording small earnings amounts will result in an incorrect income amount being held if future earnings do arise, or if deemed income amounts are already held in the assessment.    

Single period or one-off employment – example

A pensioner is employed as a Christmas Santa and earns $1000 over the Christmas period. Annual rate of $1000 divided by 26 = $38.46 per fortnight.

Obligations and date of effect

The pensioner is obliged to advise of any event or change in circumstances in relation to earnings. As with regular and variable earnings, the options for determining the date of effect will depend on whether the review process is initiated by DVA or whether the pensioner's notified changes are immediately acted on.