Several recent queries have suggested we update our knowledge base on the Work Bonus Scheme (WBS).
The WBS provides a facility whereby the first $6,500 of age pensioners 'wages' is exempt from the income test. The WBS can apply to both you and your partner thereby providing a total of $13,000 of exemptions.
In a previous blog entry we discussed how a couple on the full pension was ‘earning’ more than $20,000 on top of the full pension. Each were employed on $6,500 pa and had a $250,000 bank account earning a deemed income less than the 'other' income threshold. This is because the WBS is in addition to the the income test threshold allowance of just over $7,000. So a total of more than $20,000 can be exempted from all classes of income test.
Now it should be noted the WBS only applies to only certain classes of employment - refer below.
What happens if the age pensioner does not earn a consistent wage - i.e. not a steady amount over the year - yet still earns less than the allowable $6,500 pa? Say working during school holidays.
The WBS has a ‘bank’ or balance that accumulates over time - to a maximum of $6,500.
If you earn less than $250 in a fortnight then your employment income will be assessed as $0 and the difference between what you earn and $250 will be added to your WBS balance. So if you earn $200 in a fortnight then $50 will be added to your WBS balance.
If you do not work then $250 will be added to your WBS balance.
If you earn $350 in a fortnight and have more than $100 in your WBS balance then you will be assessed as $0 employment income for that period.
Now let’s look at a more sporadic employment situation. Lets say you do not work for 10 fortnights and then earn $2,000 in a fortnight. You will have accumulated $2,500 in your WBS balance over the first 10 periods. So for the 11th period you will be assessed as having $0 employment income and your WBS balance will drop down to $750.
Then say you don’t work for 4 periods and then earn $4,000 in the fortnight. In the period of earning that $4,000 you will then have accumulated $2,000 in your WBS balance; so your income will be assessed as $2,000 and your pension will be reduced, and your WBS balance will be back to 0.
So in this situation your annual earnings may not be the full $6,500 pa yet you have not received your full entitlement.
NOTE: Centrelink states:
“The Work Bonus applies to income from employment, including wages paid in Australia and outside Australia.
The Work Bonus applies to income from employment, including:
- wages paid in Australia and outside Australia
- leave, where you remain an employee of the same employer and
- director’s fees
We will apply the Work Bonus to your assessable employment income before your pension is paid each fortnight.
The Work Bonus is not applied to income from:
- leave payments if you have terminated your employment
- self-employed income
- payments to you as a principal from sole traders or partnerships
- investments or
- superannuation income”
In the case where a couple are individually getting paid part age pension-- where the husband earns $4,000 in the fortnight. In the period of earning that $4,000 the husband will then have accumulated $2,000 in his WBS balance; so his income will be assessed as $2,000 and your pension will be reduced, and your WBS balance will be back to 0. Will this affect the wife's age pension?
ReplyDeleteWhere the husband's (who is on aged pension) wages exceeds $6500, say he earned $10,000 in wages and this affects his pension, will this also affect the wife's aged pension?
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ReplyDelete