As the year draws to a close, you might want to consider a unique opportunity to boost your income before the temporary Work Bonus credit of $4,000 expires on December 31st. Perhaps playing the role of Santa Claus is not just a fun idea but a practical one.
Many people are unaware of the Work Bonus, so let's look at what it is and how it can help you to earn more without losing your Age Pension.
The Work Bonus is designed to benefit pensioners by allowing them to earn up to $300 every fortnight from employment without it affecting their pension payments. This bonus is in addition to the pension income threshold, which currently stands at $204 per fortnight for singles and $360 per fortnight for couples.
One of the great features of the Work Bonus is the income bank which enables pensioners to accumulate any unused work bonus for use in the future. This is particularly handy for those who do irregular or seasonal work. Last year, a temporary credit was introduced, increasing the maximum balance of your income bank to $11,800, up from the normal limit of $7,800. However, this credit is set to expire on December 31st, after which it will revert to the $7,800 limit again.
There are approximately 8 fortnights before the credit expires. During that time a single pensioner can earn up to $1,979 a fortnight, in addition to receiving an Age pension of $1,097 per fortnight. This amounts to a total income of more than $24,500 between now and the end of the year.
The Work Bonus program is open to all pensioners who have reached the Age Pension age, currently 67 years. To qualify, your income must come from employment, such as salary, bonuses, commissions, or self-employment income from personal exertion. It cannot be applied to income generated from managing investments, investment properties, or domestic or gardening tasks within your home.
Let's look at a couple of examples to see the benefits of the Work Bonus:
1. Liz: Liz is a single age pensioner with $52,000 in investments and $20,000 in personal assets. She has never utilized the Work Bonus but is contemplating taking on a part-time retail job during the holiday season. Her investments would be deemed to earn $5 per fortnight, which would count towards the $204 income threshold. Using her accumulated work bonus and the $300 per fortnight concessional amount, Sally could earn $1,775 per fortnight from work. This means she could earn $1,780 per fortnight until the year's end while still receiving her full age pension of $1,097 per fortnight.
2. Peter and Sue: Peter and Sue have $408,000 in investments and $20,000 in personal assets. Peter has been offered a part-time gardening job earning $800 per fortnight, while Sue is considering a part-time position at a florist with a $600 per fortnight income. Both Peter and Sue have $11,800 in their Work Bonus income bank. Their investments would be deemed to generate $276 per fortnight, which counts towards the combined pension income threshold of $360 per fortnight. Using the Work Bonus their work income can be fully offset for the remainder of the year. In fact, Peter could earn an additional $975 per fortnight, and Sue could earn up to $1,175 more without affecting their Age Pension of $1,653 per fortnight. Over the 8 fortnights until the end of the year, Peter and Sue could earn $30,608 and receive pension payments of $13,175, totaling more than $44,500.
Whether you want to add some extra cheer to your Christmas, save for a future trip, or build your savings, the Work Bonus program offers a good opportunity to put more money in your pocket this festive season.