3.1.15.40 Work bonus - examples of calculation of income eligible for the work bonus & work bonus income concession bank balance

Introduction

This topic contains examples of the calculation of assessable income eligible for the work bonus and the work bonus income concession bank balance under the work bonus arrangements that apply from 1 July 2019.

From 1 July 2019, the work bonus was expanded to include self-employment income from gainful work (1.1.G.25), as well as employment income. The work bonus amount was also increased from $250 to $300 for each 14 day instalment period and the maximum work bonus income concession bank balance was increased from $6,500 to $7,800.

From 1 December 2022 to 31 December 2023, a one-off upfront credit of $4,000 was applied to the work bonus balance of all pension recipients of age pension age, up to a maximum total work bonus balance of $11,800. From 1 January 2024, the increased maximum work bonus income bank balance of $11,800 was made permanent. In addition, from 1 January 2024, all people commencing on an eligible payment receive an upfront $4,000 starting credit in their work bonus income bank.

Information about calculating pension rates is at 5.5.1.

Act reference: SSAct section 8(1)-'employment income', section 1073AA Work bonus, section 1073AAA Meaning of gainful work

Policy reference: SS Guide 3.1.15.30 Work bonus - application

Example 1: Age pensioner with no income eligible for the work bonus

An age pensioner commences receiving payment on 2 January 2024 and has no income that is eligible for the work bonus. This pensioner commences with a $4,000 upfront starting balance and has $300 a fortnight credited to their work bonus income concession bank for each following fortnight.

Step	Action	Amount ($)
1	Fortnight 1: Apply the work bonus	4,000
2	Fortnight 2: Apply the work bonus $4,000 + $300 = $4,300	4,300
3	Fortnight 3: Apply the work bonus $4,300 + $300 = $4,600	4,600
4	Fortnight 4: Apply the work bonus $4,600 + $300 = $4,900	4,900

Note: More information about calculating pension rates is at 5.5.1.

Example 2: Single age pensioner with employment income under $300 a fortnight

An age pensioner has employment income of $200 in a given fortnight. The pensioner has a nil balance in their work bonus income concession bank.

Step	Action	Amount ($)
1	Work out the person's work bonus income concession bank balance at the end of the previous fortnight entitlement period. The balance is $0.	0
2	Add the person's $300 work bonus for the current fortnight entitlement period. $0 + $300 = $300 The work bonus income concession bank balance is now $300.	300
3	Work out assessable employment income. The $200 employment income was less than the work bonus income concession bank balance of $300. No employment income is assessed for the fortnight entitlement period.	0
4	Work out the remaining work bonus income concession bank balance. The person's $300 work bonus income concession bank balance is reduced by the $200 employment income they were paid. $300 − $200 = $100 The work bonus income concession bank balance is now $100.	100

Example 3: Single age pensioner with income from self-employment from gainful work over $300 a fortnight

A single age pensioner has gainful work income from self-employment of $650 in a given fortnight. The pensioner has a nil balance in their work bonus income concession bank.

Step	Action	Amount ($)
1	Work out the person's work bonus income concession bank balance at the end of the previous fortnight entitlement period. The balance is $0.	0
2	Add the person's $300 work bonus for the current fortnight entitlement period. $0 + $300 = $300 The work bonus income concession bank balance is now $300.	300
3	Work out assessable self-employment income from gainful work. The $650 self-employment income from gainful work was more than the work bonus income concession bank balance of $300. $650 − $300 = $350 $350 income from self-employment from gainful work is assessed for the fortnight entitlement period.	350
4	Work out the remaining work bonus income concession bank balance. The person's income self-employment from gainful work of $650 exceeded their income concession balance of $300. The person's income concession bank balance is now $0.	0

Example 4: Single age pensioner employed for one fortnight paid $1,000 employment income

A single age pensioner is employed for one fortnight as an examination supervisor and is paid $1,000 for the fortnight. The pensioner has a $600 balance in their work bonus income concession bank. The pensioner also has deemed income from a bank account of $272 per fortnight.

Step	Action	Amount ($)
1	Work out the person's work bonus income concession bank balance at the end of the previous fortnight entitlement period. The balance is $600.	600
2	Add the person's $300 work bonus for the current fortnight entitlement period. $600 + $300 = $900 The income concession bank balance is now $900.	900
3	Work out assessable employment income. The $1,000 employment income was more than the work bonus income concession bank balance of $900. $1000 − $900 = $100 $100 employment income is assessed for the fortnight entitlement period.	100
4	Work out the remaining work bonus income concession bank balance. The person's employment income of $1,000 exceeded their work bonus income concession balance of $900. The person's work bonus income concession bank balance is now $0.	0
5	Work out total income. The $100 assessable employment income and $272 deemed income are added. $100 + $272 = $372 The person's total assessable income is $372.	372

Note: More information about calculating pension rates is at 5.5.1.

Example 5: Single age pensioner earning $1,200 a fortnight from self-employment from gainful work for 3 fortnights

A single age pensioner is self-employed for 3 fortnights, earning $1,200 a fortnight from gainful work. The pensioner has a work bonus income concession bank of $2,500.

The first fortnight:

Step	Action	Amount ($)
1	Work out the person's work bonus income concession bank balance at the end of the previous fortnight entitlement period. The balance is $2,500.	2,500
2	Add the person's $300 work bonus for the current fortnight entitlement period. $2,500 + $300 = $2,800 The work bonus income concession bank balance is now $2,800.	2,800
3	Work out assessable self-employment income from gainful work. In the first fortnight, the $1,200 self-employment income from gainful work was less than the work bonus income concession bank balance of $2,800. No income is assessed for the first fortnight entitlement period.	0
4	Work out the remaining work bonus income concession bank balance. The person's $2,800 work bonus income concession bank balance is reduced by the $1,200 self-employment income they earned from gainful work. $2,800 − $1,200 = $1,600 The person's work bonus income concession bank balance is now $1,600.	1,600

The second fortnight:

Step	Action	Amount ($)
1	Work out the person's work bonus income concession bank balance at the end of the previous fortnight entitlement period. The balance is $1,600.	1,600
2	Add the person's $300 work bonus for the current fortnight entitlement period. $1,600 + $300 = $1,900 The work bonus income concession bank balance is now $1,900.	1,900
3	Work out assessable self-employment income from gainful work. In the second fortnight, the $1,200 self-employment income from gainful work was less than the work bonus income concession bank balance of $1,900. No income is assessed for the second fortnight entitlement period.	0
4	Work out the remaining work bonus income concession bank balance. The person's $1,900 work bonus income concession bank balance is reduced by the $1,200 self-employment income they earned from gainful work. $1,900 − $1,200 = $700 The person's work bonus income concession bank balance is now $700.	700

The third fortnight:

Step	Action	Amount ($)
1	Work out the person's work bonus income concession bank balance at the end of the previous fortnight entitlement period. The balance is $700.	700
2	Add the person's $300 work bonus for the current fortnight entitlement period. $700 + $300 = $1,000 The income concession bank balance is now $1,000.	1,000
3	Work out assessable self-employment income from gainful work. In the third fortnight, the person's $1,200 self-employment income from gainful work was more than their work bonus income concession bank balance of $1,000. $1,200 − $1,000 = $200 $200 income is assessed for the third fortnight entitlement period.	200
4	Work out the remaining work bonus income concession bank balance. The person's $1,200 self-employment income from gainful work was more than their work bonus income concession balance of $1,000. The person's work bonus income concession bank balance is now $0.	0

Example 6: Age pensioner couple where one partner has employment income

Partner 1 has employment income of $1,200 in the fortnight and a work bonus income concession bank balance of $800. Partner 2 does not have employment income, or income from self-employment from gainful work, and has a work bonus income concession bank balance of $5,000.

Step	Action	Partner 1 amount ($)	Partner 2 amount ($)
1	Work out the person's work bonus income concession bank balance at the end of the previous fortnight entitlement period. Partner 1 has a balance of $800. Partner 2 has a balance of $5,000.	800	5,000
2	Add each person's $300 work bonus for the current fortnight entitlement period. Partner 1: $800 + $300 = $1,100 Partner 2: $5,000 + $300 = $5,300 The work bonus income concession bank balance is $1,100 for partner 1 and $5,300 for partner 2.	1,100	5,300
3	Work out assessable employment income. Partner 1: $1,200 − $1,100 = $100 Partner 2: $0 Partner 1's $1,200 employment income was more than their income concession bank balance of $1,100 and $100 employment income is assessed for the fortnight entitlement period.	100	0
4	Work out the remaining work bonus income concession bank balance. Partner 1's employment income of $1,200 is more than their income concession balance of $1,100. Partner 1's income concession bank balance is now $0. Partner 2 now has a balance of $5,300.	0	5,300

Note: A person's income that is eligible for the work bonus can only be offset against their own work bonus income concession bank balance, NOT their partner's balance.

Example 7: Age pensioner couple, both partners have employment income

Partner 1 has employment income of $700 in a fortnight and partner 2 has employment income of $100 in the same fortnight. Both partners have a nil balance in their respective work bonus income concession banks at the start of the period.

Step	Action	Partner 1 amount ($)	Partner 2 amount ($)
1	Work out the person's work bonus income concession bank balance at the end of the previous fortnight entitlement period. Partner 1 and partner 2 both have a balance of $0.	0	0
2	Add each person's $300 work bonus for the current fortnight entitlement period. Partner 1: $0 + $300 = $300 Partner 2: $0 + $300 = $300 The income concession bank balance is $300 for partner 1 and $300 for partner 2.	300	300
3	Work out assessable employment income. Partner 1: $700 − $300 = $400 Partner 2: $0 Partner 1's $700 employment income is more than their work bonus income concession bank balance of $300 and $400 employment income is assessed for the fortnight entitlement period. Partner 2's $100 employment income is less than their income concession bank balance of $300 and no employment income is assessed for the fortnight entitlement period.	400	0
4	Work out the remaining work bonus income concession bank balance. Partner 1: $0 Partner 2: $300 − $100 = $200 Partner 1's employment income of $700 is more than their income concession balance of $300. Partner 1's work bonus income concession bank balance is now $0. The $300 work bonus income concession bank balance for partner 2 is reduced by the $100 employment income they earned. Partner 2's work bonus income concession bank balance is now $200.	0	200

Note: A person's income can only be offset against their own employment income concession bank balance, NOT their partners balance.

Example 8: Age pensioner couple, both have employment income

Partner 1 has employment income of $700 in a fortnight and a work bonus income concession bank balance of $800. Partner 2 has employment income of $750 in the same fortnight and a work bonus income concession bank balance of $350.

Step	Action	Partner 1 amount ($)	Partner 2 amount ($)
1	Work out the person's work bonus income concession bank balance at the end of the previous fortnight entitlement period. Partner 1 has a balance of $800. Partner 2 has a balance of $350.	800	350
2	Add each person's $300 work bonus for the current fortnight entitlement period. Partner 1: $800 + $300 = $1,100. Partner 2: $350 + $300 = $650. The income concession bank balance is $1,100 for partner 1 and $650 for partner 2.	1,100	650
3	Work out assessable employment income. Partner 1: $0 Partner 2: $750 − $650 = $100 Partner 1's $700 employment income is less than their work bonus income concession bank balance of $1,100 and no employment income is assessed for the fortnight entitlement period. Partner 2's $750 employment income is more than their work bonus income concession bank balance of $650 and $100 employment income is assessed for the fortnight entitlement period.	0	100
4	Work out the remaining work bonus income concession bank balance. Partner 1: $1,100 − $700 = $400 Partner 2: $0 Partner 1's work bonus income concession bank balance of $1,100 is reduced by the $700 employment income they were paid. Partner 1's work bonus income concession bank balance is now $400. Partner 2's employment income of $750 is more than their work bonus income concession balance of $650. Partner 2's work bonus income concession bank balance is now $0.	400	0

Note: A person's income that is eligible for the work bonus can only be offset against their own work bonus income concession bank balance, NOT their partners balance.

Example 9: Age pensioner/allowee couple, both have employment income

The Age partner has employment income of $850 in a fortnight and a work bonus income concession bank balance of $100. The allowee partner has employment income of $200 in the same fortnight and a working credit of $50.

Step	Action	Amount ($)
1	Work out the pensioner's work bonus income concession bank balance at the end of the previous fortnight entitlement period. The work bonus income concession bank balance is $100.	100
2	Add the pensioner's $300 work bonus for the current fortnight entitlement period. $100 + $300 = $400 The pensioners work bonus income concession bank balance is now $400.	400
3	Work out assessable employment income of the pensioner. $850 − $400 = $450 The $850 employment income of the pensioner was more than the work bonus income concession bank balance of $400. $450 employment income is assessed for the fortnight entitlement period.	450
4	Apply the working credit of $50 to the allowee partner's employment income of $200. This leaves $150 in assessable employment income. $200 − $50 = $150	150
5	Combine the income of both partners. $450 + $150 = $600 The pensioner partner's assessable employment income of $450 is combined with the allowee partner's assessable employment income of $150, a total assessable income of $600.	600
6	Half of the combined income is treated as assessable income of each member of the couple. Half of the $600, that is $300, is treated as assessable income of each member of the couple and the respective income free areas are applied. $300 for each partner.	300
7	Work out the remaining work bonus income concession bank balance. The pensioner partner's employment income of $850 is more than their income concession balance of $400. The pensioner partner's income concession bank balance is now $0.	0

Note: For information about calculating payment rates for a pension/allowee couple, see 5.5.3.50.

Act reference: SSAct section 1073AA Work bonus, 1073AAA Meaning of gainful work, section 1073AB Unused concession balance, section 8(1) – ‘employment income’

Policy reference: SS Guide 3.1.15 Work bonus