10.1.9.70 Inside Australia rate - one of a couple paid under the direct deduction rate

One of a couple paid under an agreement

Sometimes one of a couple is entitled to an Australian pension autonomously and one is entitled to a pension under an agreement. When this happens the rate payable to the partner paid under the agreement may be zero.

Example: A couple both claim age pension. The husband qualifies under the Agreement with Italy and the wife qualifies autonomously. The husband receives Italian pension of $18,000 per annum and the wife receives an Italian pension of $14,000 per annum. They have other income of $3,000 per annum between them.

Note: Pension rate used is hypothetical and is for illustration purposes only.

Step Action
1 Apportion the Italian pension to each partner as follows:
Husband's Italian pension
Wife's Italian Pension
Total
Divide by 2
$18,000
$14,000
$32,000
$16,000
2 Calculate the agreement pension first by deducting $16,000 from the maximum married rate.
Maximum rate
Less share of Italian pension
Excess Italian pensions
$15,841
$16,000
-$159
The husband's rate is NIL.
3 Calculate the autonomous rate of pension disregarding (for the income test) the amount of deducted Italian pension in Step 2.

Income Calculation

Italian pension income

Other income

Total income

Less wife's ordinary income free area

Affecting income

Taper (50 cents in every $)

Rate Calculation

Maximum married rate

Less affecting income

Rate payable to wife

 

$16,000

$1,500

$17,500

$2,970

$14,530

$7,265

 

$15,841

$7,265

$8,576 per annum

4 Compare income test rate to assets test rate and pay whichever is the lesser.

2009 Pension Reform transitional provisions

As part of reforms to pensions from 20 September 2009, a person's pension may be paid under transitional arrangements where this provides a higher rate of payment.

Further information on the transitional arrangements is at 5.1.8.40.

Act reference: SSAct Schedule 1A Savings and transitional provisions

Policy reference: SS Guide 5.1.8.40 Pension Reform - transitional arrangements

Work bonus

From 20 September 2009 a work bonus applies to pensioners of age pension age (except PPS).

The work bonus allows for a certain amount of employment income that is earned, derived or received in an instalment period by a pensioner who is of age pension age (except PPS) to be disregarded for the purposes of the pension income test. From 1 July 2019, the work bonus was expanded to include income from self-employment from gainful work, as well as employment income.

Act reference: SSAct section 1073AA Work bonus

Policy reference: SS Guide 3.1.15 Work bonus

Last reviewed: 6 May 2019