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10.1.8 Work Bonus
In this section
Intention of Work Bonus
The Work Bonus was introduced on 20 September 2009 and replaces the former Pension Bonus Scheme, as a scheme to encourage and reward older Australians who remain in the paid workforce past their normal retirement age. In addition to an age requirement, the income must be received by the person in an employee capacity or generated as gainful work income such as as business earnings from self-employment that meet the personal exertion test.
Income test concession applies to work bonus income
Where a person who receives service pension or income support supplement has reached qualifying age and they receive employment income arising from remunerative work undertaken as an employee in an employer/employee relationship, an income test concession (known as Work Bonus) applies.
Under this income test concession, the first $300 of the person's fortnightly work bonus income is excluded from the income test. The income concession amount is not subject to indexation. Where the fortnightly employment income is less than $300 per fortnight, the unused portion of the $300 per fortnight income concession to a work bonus bank to offset their work bonus income in the future.
Note: From 20 September 2009 to 27 June 2011, only half of the first $500 of the person's fortnightly employment income was disregarded. From 28 June 2011 to 30 June 2019 the work bonus was $250 per fortnight. The work bonus bank was also introduced on 28 June 2011.
Effect on transitional cases
To receive the benefit of the Work Bonus a person's income support pension must be assessed under the Rate Calculator using the 50c income test taper rate, i.e. they must not be in a transitional assessment continuing to be calculated under pre September 2009 Secure and Sustainable Pension Reform rules, with the 40c income test taper rate. While transitional assessments do not attract the work bonus discount, a pension rate calculation under the post September 2009 rules including the work bonus is carried out for comparison purposes, to work out when the pension rate payable is higher under the post September 2009 rules. A work bonus bank is maintained for transitional pensioners for the purpose of the comparative calculation.
Income of couples
Where a working pensioner is a member of a couple, the reduction in his/her income under the income test concession is calculated before combining and then halving the couple's joint income.
The unused portion of the fortnightly $300 work bonus income concession can be accrued to a maximum of $7,800 (increased to $11,800 between 1 December 2022 and 31 December 2023). Any amount of work bonus bank credit can be used to offset future assessable work bonus income.