10.1.8.2 Work Bonus Bank

Work Bonus Bank

Where a work bonus eligible person has nil or less than $300 work bonus income per fortnight, they will accrue the unused amount of the work bonus income concession in a work bonus bank.  The difference between $300 and the gross work bonus income each fortnight is credited to their work bonus bank. The starting balance of a person’s work bonus bank is set to $4,000, and individuals are able to accrue up to a maximum balance of $11,800.  The balance in a person's work bonus bank will then reduce their work bonus income that would otherwise be assessable in the future.

Work bonus bank accrual examples

1. If a person has fortnightly work bonus income of $200, their work bonus income is discounted by $200 of the $300 income concession amount and there is no assessable work bonus income.  The person will also accrue $100 credit per fortnight in their work bonus bank (up to a maximum of $11,800), being the unused amount of the income concession.
2. If a person has fortnightly work bonus income of $700, the $300 income concession applies and $400 per fortnight income will be assessable work bonus income.  As the full income concession amount has been used, there is no work bonus bank accrual.  The $400 assessable work bonus income may be reduced by any available work bonus bank balance.

Work Bonus Bank depletion

When a person's work bonus bank credit is applied to reduce their assessable work bonus income, their work bonus bank balance will deplete. This depletion will occur when a person has work bonus income greater than the $300 per fortnight income concession amount and they have a work bonus bank credit balance.

Depletion from the work bonus bank will continue to offset work bonus income over the $300 per fortnight income concession until the work bonus bank balance is depleted to nil.

In most cases the daily rate of depletion from the work bonus bank will not divide evenly into the work bonus bank balance. This means that on the final day of depletion a balance smaller than the daily rate of depletion will remain in the work bonus bank and will only partially offset work bonus income over $300 per fortnight. This will often result in pensioners receiving two pension reductions on consecutive days when depletion from the work bonus bank ends. The first reduction will occur when the work bonus bank balance has reduced to less than the daily rate of depletion and only part of work bonus income over $300 per fortnight is offset. The second reduction will occur on the following day when the work bonus is reduced to nil and all work bonus income over $300 per fortnight is assessed under the income test.

Work bonus bank depletion example - simple fortnightly

John has accrued $1,500 in his work bonus bank.  He starts part-time work earning work bonus income of $400 per fortnight.  In working out John's pension, his fortnightly assessable work bonus income is first discounted by the $300 work bonus income concession amount.  The remaining $100 per fortnight employment income is offset by his work bonus bank credit.  His work bonus bank credit is reduced at a rate of $100 per fortnight, being the amount used to offset his work bonus income. This means John has no assessable work bonus income at this point.

As John continues with this employment and his income remains at the level of $400 per fortnight, his work bonus bank credit will continue to reduce. Once his work bonus bank credit runs out after 15 fortnights ($1,500 depleting at $100 per fortnight), John will still have access to the $300 work bonus income concession amount, but employment income above $300  per fortnight will no longer be offset. His assessable employment income will then be $100 per fortnight ($400 less $300 income concession amount).

Work bonus bank depletion example - complex daily

Ian is eligible for the work bonus and has work bonus income of $110 per fortnight from 19 June 2021.  He therefore accrues a work bonus bank credit at a rate of $190 per fortnight ($300 - $110).  By 13 August 2021 he has accrued a balance of $760. 

His fortnightly work bonus income increases on 14 August 2021 to $350 per fortnight. 

After the $300 per fortnight work bonus income concession, Ian's work bonus bank credit is applied to fully offset the remaining $50 per fortnight of employment income ($350 - $300) and Ian has nil assessable work bonus income.  The work bonus bank balance is depleted by $50 per fortnight ($3.57 per day), so there is sufficient work bonus bank credit to discount the work bonus income to nil for $760.00 / $3.57 = 212 days to 12 March 2022.

As at 13 March 2022, Ian's work bonus bank balance will have depleted to $3.16.   On this day part of Ian's work bonus income over $300 per fortnight will be assessed as there is insufficient balance in work bonus bank to offset all employment income over $300 per fortnight.  Ian's income support pension may reduce.

On 14 March 2022, the work bonus bank balance will be fully depleted and all employment income over $300 per fortnight will be assessed.  Ian's income support pension may reduce again under the income test.

Transitional assessments

A person is not entitled to the work bonus discounts if their pension rate is calculated under the transitional rules. However, a work bonus bank is maintained for all transitional pensioners who are eligible for the work bonus to allow comparative calculations under the post September 2009 rules to be carried out.

Veterans Vocational Rehabilitation Scheme (VVRS)

VVRS participants who are also eligible for the work bonus are entitled to the more beneficial of the work bonus income concession or the VVRS excluded income amount.  Where the VVRS excluded income amount is applied, the VVRS participant may still accrue a balance to their work bonus bank if their work bonus income is under $300 per fortnight. In practice a VVRS participant with work bonus income under $300 per fortnight will always be advantaged by the work bonus which will disregard all of the work bonus income.