18.104.22.168 Employment Income for Pensioners Below Age Pension Age
This topic provides information about the following:
- income assessed for employees (1.1.E.87),
- income from independent contracting, and
- exempt income.
Income assessment for employees
The money (or other valuable consideration) earned, derived or received from remunerative work done by the person as an employee in an employer/employee relationship is assessed as the person's income without any reductions. This income is called employment income (1.1.E.102) and includes, but is not limited to, commissions, salary, wages, employment-related fringe benefits, or a combination of these.
Act reference: SSAct section 8(1) Income test definitions, section 8(1A) A reference in this Act to employment income, in relation to a person…, section 8(1B) For the avoidance of doubt…, section 8(1C) For the purposes of subsection (1A), a leave payment…, section 1073A(1) Employment income…, section 1073A(2) The person's employment income…
Employment income lump sums (including leave payments)
Employment income lump sums that represent a period greater than a fortnight are spread over the period to which the work relates.
Example: A contract-related employment income lump sum is spread over the period of the contract.
Employment income lump sums that do not represent a period at all but are paid for remunerative work are spread over 12 months from the date the pensioner became entitled to receive the lump sum. The date earned, derived or received is the date the pensioner becomes entitled to receive the amount.
Example 1: A commission employment income lump sum that does not relate to any particular period is spread over 12 months.
Example 2: A person takes 3 months long service leave and is paid a lump sum amount at the start of that leave period. Income from the lump sum leave payment is spread evenly over the 3 month period of leave.
Note: For disability support pensioners with a leave payment an IMP MAY apply.
Act reference: SSAct section 8(1) Income test definitions, section 8(1A) A reference in this Act to employment income, in relation to a person…, section 8(1C) For the purposes of subsection (1A), a leave payment…, section 1073A(1) Employment income…
Policy reference: SS Guide 22.214.171.124 Determining the Assessable Income for Pensioners Below Age Pension Age, 126.96.36.199 Application of the income maintenance period (IMP), 188.8.131.52 Definition of Leave for the IMP
Income from independent contracting
A contract OF service or labour indicates an employer/employee relationship. A contract FOR services to produce a result indicates self-employment.
Policy reference: SS Guide 184.108.40.206 Income from employment or independent contracting
Some income from employment is exempt from assessment.
Policy reference: SS Guide 4.3.2 Income Exempt from Assessment