Did you give a sigh of relief when you finally became eligible for fortnightly Age Pension payments? We don’t blame you. It can be quite a complicated, time consuming process (unless, of course, you ask Retirement Essentials to assist).
Having gained this important benefit, the last thing you will wish to do is lose it.
So what happens if you tip over the income threshold, say by just a few dollars?
Today we have some good news on this income test and how Centrelink treats those Age Pensioners who earn a little too much.
Here’s how the rules work.
Let’s say you qualified for the Age Pension after you retired and were earning no income from work. Yes, some of your assets are deemed to earn income. As a single, you can earn up to $2332 per fortnight and still receive a pension, as a couple it’s $3568 a fortnight. For the sake of this example, we’ll assume you are single and your deemed income from your assets is $50,000 which is below the current annual threshold for a single person of $60,632.
So you’re pleased to receive your fortnightly payments and the Pension Concession Card that was automatically issued when you became eligible.
And now you get an offer to return to work. Your expected salary will be $76,000. So even with the Work Bonus credit (currently $11,800) you will tip over the Age Pension income threshold.
You’ll immediately lose that hard-won pension and your concession card, right? So you may even reject the offer to work and earn the $76,000 even though the extra money would be more than helpful over the next year or so.
No. Not right.
Here’s what our Guru Steven, the hardworking Head of Customer Services Team, has uncovered.
When the Work Bonus increase came into effect last year, there was another substantial change for those who are on an Age Pension and then begin earning too much income.
Previously, if you were on the Age Pension and then began working and earning income higher than your relevant threshold, you would get $0 for the first six fortnights (in case it was only a temporary increase). After that, the presumption was made that you were no longer eligible and your Age Pension would be cancelled, along with your Pension Concession Card. If you subsequently reduced your income, you would have to reapply.
But as of 1 December 2022, rather than cancelling your Age Pension payments, they are only suspended and can stay suspended for up to two years before being formally cancelled. Yes, you will still lose your fortnightly payments. BUT you get to keep your Pension Concession Card and all associated benefits during the full two years. Within this time, you can simply go back to Centrelink and say, ‘I’ve stopped working now, can I receive Age Pension payments again please’ and they will resume your payment. There is no need to go through the whole application process again, unless, of course, more than two years has elapsed.
This is a significant win for those on an Age Pension, as it takes into account how volatile the job market is. How you can be in a long-term job one day, be retrenched and decide to retire the next, then find suitable work shortly afterwards – and need that extra income.
Yes, there are terms and conditions attached to all Age Pension entitlements but this change is really helpful for those who have already qualified but are making that dollar or two more than the threshold allows. Keeping the Pension Concession Card is in itself a big win – we believe it can save you between $2000 – $3000 per annum.
There’s further information on this link to Services Australia.
And Retirement Essentials can support your need to apply for an Age Pension or to maximise your entitlements in tailored consultations with an experienced adviser.
What about you? Would this ability to ‘over earn’ for a short while help your retirement income situation? Is it a relief to know you wouldn’t have to reapply for an Age Pension if this was the case?
I get Overseas Pension and also part Centrelink Pension. Added the two together the yearly income comes to $39,000. I have to pay tax on that unfortunately. My overseas pension in that country was/is tax FREE. Why does the Australian Government levy tax on it ?
hi I believe i am on the lower end of qualifying for an age pension.
What are your charges?
Hi Julie, great to hear you might be eligible! You can view our fee structure HERE but we will also send you an email separate to this comment with the next steps should you wish to proceed with our service.
Thank you for keeping us pensioners in the loop!
You are more then welcome Bozena, thank you for taking the time to compliment our work!
now that the old aged ension exceeds the taxation cut off level of !8000 does that mean every pensioner on the full pension must now lodge a tax return
Hi Lester, that’s a great question, and probably something others have been wondering too! You may find the ATO website relating to the Senior Australian Pensioner Tax Offset (SAPTO) is relevant to the question you are asking. The website isn’t the easiest to understand so I’ll try and give you a brief high level summary: Essentially it’s a tax offset which can effectively increase the tax free threshold for senior Australians on lower taxable incomes. The figures they use means that senior Australians (of age pension eligibility age or above), if their only taxable income is the age pension then they will most likely not have any tax payable. Note that each situation is different and it’s important to check with a tax specialist to discuss your individual situation specifically, this is general information only.
Great news.
I wanted to do the harvest season this summer but was having second thoughts about the pension. The season is approx 10 to 12 weeks so the
$11,800 threshold is way to low.
The threshold is probably way to low for the majority of pensioners wanting to do seasonal work and help fill the seasonal work force shortages.
Thanks its all good info.
Hi my husband and I can’t recieve a pension as we own a holiday house and I have 400000k in super
Could we put the house in a trust for our children and cancel
Out the house so we may at least recieve a part pension
Many thanks
Wendy
Hi Wendy, thank you for sharing your situation! Generally speaking putting the house into a trust would not help. Either you would still have a controlling interest via the trust and so it would still count as your asset or if you did give up control then it would effectively be counted as a gift and still be counted as an asset for 5 years.
i am on workers compensation of $800 a week and i am 67 years old, do i qualify for the aged pension, ??. i am also single and have nil assets apart from a car.
Hi Rae, from the information you provided you may be eligible for a part age pension entitlements, and a pensioner concession card. We have an Aged Pension Eligibility Calculator where you can enter financial details and it will calculate an estimated entitlement for you. Note that when completing the calculator your workers compensation payments may not be treated as employment income, so best to include these figures in the ‘other income’ section. I will keep my fingers crossed that you are eligible for some support! If you aren’t sure where to start with your application, you can check out the services we offer to support you through the application process, which you will find out more information about when you complete the calculator. Best of luck.
what is the maximum assets one can own before getting the pension
Hi Gary, this depends on your situation. Firstly, there is both an income and assets test, which are separate calculations. Whichever one produces a lower entitlement calculation is the one that applies in your situation. Regarding specifically the assets test – there is a lower threshold which, if your total assessable assets fall below this amount, you are entitled to a full age pension under the asset test (income test might not come out so favourably though). Further to this what the actual threshold that applies to you depends on two things: your marital status, and your homeowner status. So, the answer to your question is a little complicated! We provide a brief summary including up to date thresholds on our website here. Some of the calculations can be quite confusing, if you want to discuss your situation and potential eligibility in particular you can book an Entitlements Consultation by clicking here, it costs $75 and you will walk away with a clear sense of what you could be eligible for and what may be impacting your eligibility. Alternatively, we have a free Age Pension Eligibility Calculator available online which should give you a good indication of potential entitlements. Best of luck!
Thanks RE for assistance in getting the age pension. I have interesting Centrelink information regarding the income threshold that you may be interested in. Foreign income is a grey area that nobody seems to have a thorough knowledge of. I discovered that Centrelink is taking the gross amount of my US Retirement Social Security in assessing my income. This has tipped my wife and I over the combined income threshold. I pay US 25% tax before it is sent to me and yet CLink use the gross amount. I checked on the Aus 1991 Social Security ACT and there is no definition for this payment being ‘ordinary income’ and as such, the gross amount is used. As a contradiction, there is a definition of income in ‘The Act’ for the Health Care Card that excludes social security as ‘ordinary income’. I have a Tribunal application in and expect an opportunity to argue my case that only the amount that goes into our bank account (after exchange) should be used. They are using a generalisation from Sect 8 of ‘The Act’, which is based on a AUS-US policy agreement, not legislation, to define it as ‘ordinary income’. Contact me if you would like more information on the subject. I believe there’s no legislation on income pertaining to the Australian age income. This appears to be a money grab for Centrelink.
I am on the aged pension and returned to work ( 15 hours per week) casual temporary. Lodged my tax return and received a $4000 bill. I was not paying tax on the pension and should have been. It is a trap to be aware of.
Good day…
How do I learn about being eligible for a Pension Concession card for my wife and I?
Besides our Super flexi pensions, we receive the British state pension, which is capped, and our respective Superannuation pensions from the UK.
We have been told that we may be eligible for the concession card but I can’t find a concrete answer ; should we visit Centre Link ?
Hi Iain, great to see another senior proactively seeking answers! You can check your eligibility via our free, online calculator HERE or if you would prefer to talk with someone about your situation and options you can book a CONSULTATION with our specialists.
Hi there, thanks for this information. Can you please describe how the pension if affected if the single pensioner is self-employed, and earns over the prescribed income limit? As I understand it the income is viewed annually by centrelink.
Hi Dayle, thanks for your question. If you are currently already on a part age pension entitlement and your income in the most recent year has increased and you now exceed the income threshold, then there is a possibility you may no longer be eligible for age pension. If it has increased but still remains below the upper threshold then you may see a reduction in your age pension entitlements. Generally for every additional $1.00 of income you receive you can see a decrease of up to $0.50 in age pension. Note that the ‘suspension’ of age pension for those that are on age pension and lose their payments if their income exceeds the cut-off, which allows you to keep your pensioner concession card for up to 2 years, unfortunately only applies to employees, not self-employed. To check what thresholds apply to you you can take a look at our website by clicking here, which explains eligibility rules in more details including up-to-date thresholds.
Thanks for keeping us up to date with your newsletter.
Very interesting.
Thank you for keeping us informed of developments within the rule makers! Would be nice if the same rules applied to them!
does the current annual threshold for a single person of $60,632 allow receipt of the full Pension or only part? Can that $60,632 be earned as rental or interest or from investments?
Hi Adrian, thanks for your comment! Any Age Pension payments you receive are NOT counted as income. You can review Centrelink’s formal list of assessable income sources HERE but yes, income from a rental property is counted and so to is return on investments however this is done in the form of DEEMING.
That’s really good to know as I thought I was about lose my pension because of extra income from working temporarily to fill in for someone on paternity leave. I can now go ahead with the work. Thank you
My partner and I are Aged Pensioners. She has a casual job and as a consequence Centrelink deducts $137 per fortnight from our combined pension payments, which totals $3570 per annum. BIG DEAL!! Then, along comes the ATO at tax time and counts that as earnings and adds that amount back into my partners total income and taxes that amount as well – thus the Government double dips into our measly income. I am disgusted with this when the folk at the other end of town can squirrel away tens of millions into an assortment of cubbyholes, thumbing their noses at the ATO and do so legally!
I think she could put most of the money into her super account up to a certain amount and therefore draw on your super without paying tax.
do I have to pay tax being on an age pension as I also work 20 casual per week using up my work credits as well till further notice
Hi Annette, thanks for seeking further clarity! You may still have to pay tax, we cannot be certain and recommend you speak with a tax agent to be sure.
I am receiving a defined benefit pension from the CES (Commonwealth Employment Service) that is taxable. Does this income count for the Centrelink benefits (Pension, Healthcare card etc)?
For the asset test how do I calculate my CES assets?
Hi Srinivasan, thank you for sharing your situation with us! You are correct that Centrelink will assess your defined benefit as income and as it is a pension and not employment income, you cannot use the work bonus to offset it. As this pension will be assessed as income it does not count as an asset.
Your article above states: “As a single, you can earn up to $2332 per fortnight and still receive a pension, as a couple it’s $3568 a fortnight.” So for a couple $92,768.
1) Is that correct?
2) Can this earning be from any source such as solopreneur work, other income, or purely via employment?
Thanks.
Hi Fred, the amounts you quote are the upper income test thresholds whereby Age Pension benefits are $0 if they are exceeded. However, the lower thresholds are $204pfn (Single) or $360pfn (couple). Age Pension benefits reduce by $0.50 for every dollar over the lower thresholds, not taking work bonus into account for eligible income. Broadly speaking, types of income which are commonly included in the income test is Deeming, rent, employment, self-employment & some super pensions etc. Hope this helps. Thanks, Megan
Hi How do I book a talk with your advisers re pension etc. I am working 3 days a week and earn approx. $79k pa. ; and will work for maybe another 6 months – 2.5 years.
I am 67 years old. My wife is 60 and earns approx. $48 k pa.
I have a CSHC .
Cheers
Hi Guy, thank you for reaching out. I would be happy to discuss your Retirement Planning needs and Age Pension eligibility in our General consultation. You can book one by clicking here. I look forward to meeting you, thanks, Megan
A thought on additional income earnt. I am 69 and considering working 15 hours a week which would generate income of around $600 PW.
Is there any reason why I cannot salary sacrifice the whole amount into super ? This is not a wage/ or pay and so should not affect the pension entitlements accepting that my super balance will increase and hence the amount deemed would raise slightly. The only tax would be the 15% deducted by the super fund. Your thoughts on this strategy.
Hi Clive, thank you for reaching out. Salary sacrificing into super may assist in reducing income tax and growing retirement wealth however, Centrelink uses gross employment income under the test, therefore salary sacrificing doesn’t reduce assessable income for Age Pension purposes. Eligible employment income may benefit from the Work Bonus to reduce assessable income, I would be happy to discuss how employment income may impact Age Pension benefits in one of our General Consultations, which can be booked here. Thanks, Megan
Thank you so much for your advice.
How pension is calculated is still a mystery to me.
I’m 70 and my wife isn’t qualified yet for pension. A few months ago I started receiving a pension of $802 per fortnight.
I work part-time on a commission-based only job, the income is unpredictable, usually around $45,000pa. my saving and super are minimal, no property, investment…
My wife doesn’t have income.
I always wonder if that $802/fortnight is correct; remembering Robodebt, in the back of my mind, I worry maybe one day Centrelink will ask me to pay back (???)
Hi Frank, thanks for reaching out. I would be happy to explain how Centrelink assess commission-based income, how this may impact Age Pension benefits, what the process is to keep Centrelink up to date and if appropriate what happens if there is a debt incurred. We can go through all of this in a General Consultation, which can be booked by clicking here, I look forward to meeting you. Thanks, Megan
Hi my husband will get age pension soon.He also get the British pension.
I am 61 and was told I can apply for dole money and volunteer work 30 hours a fortnight to get it. Can this money go into my super account and not be counted as income?
Hi Lorraine, thanks for your question. Generally any voluntary contributions that you make to super can’t be used to reduce assessable income, however you may have capacity to contribute the money to super if you wish. For the purposes of calculating age pension entitlements Jobseeker and many other social security payments will not be counted as income when calculating your husband’s age pension. Hope this helps.
Hi, I am a single old age pensioner, 77 years old. I live in a house that belongs to my brothers and sisters as a family trust. I pay all rates, utilities, upkeep, and repairs and maintenance. I now want to shut off half the house and rent it to a 79 year old friend for $200 per week which will include all utilities. Will this affect my pension?
Hi Yvonne, always good to have a little bit of extra money coming in! Centrelink will assess the $200 per week as income and you will not be able to use the work bonus to offset it (because it is not employment income). This may cause your pension to reduce however if you have a high balance of assets then Centrelink may use them to assess your pension, rather then the income, in which case there would be no impact.
I am wondering if the same applies to the deeming threshold from the assets test. Because I have lost the pension twice when my assets were deemed to have exceeded the allowed threshold and later when the threshold was increased I became eligible again.
I lost the pension with little announcement along with the concession card. It would be beneficial if the two year allowance of keeping the card and having the pension suspended instead of withdrawn is now the policy for this situation too.
Hi Alan, thanks for the great question! Regrettably the ability to keep your card and only lose the pension payments is only applicable if you exceed the income threshold (not assets) and only if you exceed the income threshold due to employment income.
Ok, thanks for the prompt reply and clarification Steven. Maybe they might include this concession further down the track.
My partner is on part age pension works part time earning 835 dollars a fortnight.
I am not of pension age and also work.
I can increase my hours and if we were to go over the income threshold would my partners pension be suspended or would it be cancelled??
Hi Kelly, thanks for your comment! If you earnt in excess of the threshold due to employment income then your partner’s Age Pension payments would be suspended for up to 2 years before the pension was formally cancelled. This means your partner would continue using the Pensioner Concession Card and receive any/all associated entitlements, just the pension payments would stop. If this continued for more then 2 years then the card would be cancelled and you/your partner would need to formally re-apply.
I am 65 and my wife is 70 and receives the Aged pension. I have the opportunity of doing extra full time work for a year, which would mean my income would not allow her to keep getting the pension. Do the suspension rules of up to 2 years apply still in this case? My wife doesn’t work at all/
Thank you
Hi Bruce, thanks for asking a great question! Sorry to be the bearer of bad news, the answer is no. The exemption only applies if the Age Pension recipient earns income that puts you (as a couple) over the threshold. If the younger partner is the sole income earner then the exception does not apply.
I’m currently receiving $800 per fortnight from c/link .my son would like me to assist with his book work and could pay me $200/week,will this wage affect my current pension .?
Hi Les, thanks for reaching out! It may impact how much Age Pension you receive but there are actually a lot of factors to consider as well as the $200/week, for instance the value of your assets could be a determining factor. To be sure the best thing to do is fill in our free online calculator HERE.
We are both part-pensioners. What if I earn $13,000 for this year and this is our combined earnings. What happens in this case when the threshold is $9,300?
Hi Carolyn, it may depend on a number of different factors including the type of income you are receiving and your other income and assets over the year. Sometimes the amount of assessable income from an age pension perspective is different from the actual income you might receive. To better understand how the rules work and get an explanation specific to your circumstances you can book an Entitlements Consultation by clicking here. Best wishes, Nicole.