Work Bonus Rules: How Much Work Income You Can Keep

The Work Bonus lets eligible Age Pension recipients who work ignore up to $300 of employment income each fortnight before the pension income test is applied. Any part of the $300 you don’t use is banked in a Work Bonus balance, which is capped at $11,800 and does not expire. You don’t apply for it. You declare your income, and Services Australia applies it automatically.

This guide explains who qualifies, what counts as eligible income, how the balance builds and drains, and what to report. It also includes worked examples so you can see the effect on a real fortnight.

TL;DR

• The Work Bonus disregards up to $300 of eligible work income per fortnight before the income test applies, and unused amounts can be banked.
• The balance maxes out at $11,800 and does not expire.
• Wages, director’s fees and self-employment income from your own effort count. Super, investments and termination payments do not.
• You must still report all employment income every fortnight, even if your pension is reduced to $0.
• Staying under the income test cut-off, or holding a balance, helps you avoid a pension suspension.

Table of Contents

• What the Work Bonus is
• Who is eligible
• How the $300 and the balance work
• What income counts, and what doesn’t
• How the Work Bonus interacts with the income test
• Worked examples
• Pension suspension: why the balance matters
• Reporting your work income
• Perspective: planning around the Work Bonus
• Common mistakes to avoid
• Work with us on your retirement income
• FAQ
• Sources

What the Work Bonus is

The Work Bonus is not an extra payment. It is a concession that reduces the amount of employment income counted in the income test, so you keep more of your pension while working. Services Australia describes it as an incentive for older Australians to participate in the workforce.

It works on the income side only. It does nothing to the assets test, and the Age Pension is paid at whichever test gives the lower rate. If you want a refresher on how the two tests interact, our guides to the Age Pension income test and the assets test cover the thresholds in detail.

Who is eligible

The Work Bonus is available to people who are Age Pension age or older and receive the Age Pension, Carer Payment or Disability Support Pension. Pensioners on a transitional rate are not eligible.

The same factsheet says it also covers eligible Department of Veterans’ Affairs customers who receive Income Support Supplement, a Service Pension or the DVA Age Pension, subject to the payment rules that apply to them. The Department of Veterans’ Affairs explains its version on its own page.

Two practical points:

• You need to be receiving a qualifying payment. If you haven’t yet qualified for the pension, the Work Bonus isn’t yet in play. Our guide to Age Pension eligibility covers age, residency and the means tests.
• If you are not sure about your qualifying age, see retirement age in Australia.

How the $300 and the balance work

Each fortnight, Services Australia looks at your eligible work income and applies the concession in a set order. Their Work Bonus balance page sets out the rules:

1. Up to $300 of eligible income is disregarded first.
2. If your eligible income is under $300, the unused part is added to your balance.
3. If your eligible income is over $300, the $300 is applied first. Your accumulated balance can then offset the remaining eligible income.
4. The balance is capped at $11,800.

The balance builds even if you aren’t working. Services Australia says $300 is credited each fortnight when you don’t work, until you reach the maximum. That means a pensioner who starts a job after some time on the pension may already have a substantial buffer.

The balance does not expire

The Social Security Guide states that a balance does not expire, can carry across financial years, and is retained if your pension stops and later resumes, still subject to the $11,800 maximum. So a few months of part-time work followed by a break doesn’t waste what you have built.

Short instalment periods

When an instalment period is shorter than 14 days, the $300 is prorated: $300 multiplied by the number of days in the period, divided by 14. You are most likely to see this in a fortnight where your payment starts or stops.

What income counts, and what doesn’t

The Work Bonus applies to income from personal effort. According to Services Australia’s legislative instrument, qualifying income includes:

• wages and salary
• director’s fees
• continuing-employment leave payments
• self-employment income earned through active participation or personal exertion, including qualifying sole-trader, partnership, trust or company activity

Excluded income includes:

• termination leave payments
• investment income
• superannuation income
• self-employment income not earned through personal exertion

This last category catches business owners. If you run a business that earns money without your active work, for example a passive rental-style arrangement through a trust, the Work Bonus will not shelter it. If you own a business and are planning an exit or a wind-down, it is worth mapping out which income is active before you rely on the concession.

How the Work Bonus interacts with the income test

The Work Bonus is applied before the income test, not after. In the words of the Social Security Guide, it reduces assessable employment or gainful self-employment income, and whatever remains is dealt with under the normal pension-rate calculation.

Under the standard test, Services Australia lists:

• A single person’s pension starts to reduce when assessable income is above $226 per fortnight, at 50 cents for each dollar over.
• For a couple living together, the combined free area is $396, and each person’s pension reduces by 25 cents per dollar over it.

The same page gives the income cut-off points: $2,701.40 per fortnight for a single person, $4,128 combined for a couple living together, and $5,346.80 combined for a couple living apart because of ill health. The Work Bonus can lift the cut-off that applies to you.

Free area figures are indexed and change, so confirm the current numbers on the Services Australia page before you plan around them. Our article on the income test free area tracks the July 2026 changes.

Worked examples

These are illustrative calculations using the $226 single free area and 50 cent taper above. They ignore other income such as deemed income from financial assets, which also counts toward the income test. See our deeming rates guide for that part. Your own result will differ.

Example 1: part-time work under $300

Margaret, a single pensioner, earns $250 a fortnight from casual work. The Work Bonus reduces her eligible income to $0. The unused $50 is added to her balance. Her work does not reduce her pension at all.

Example 2: higher earnings, no balance

David, a single pensioner with no other assessable income and an empty balance, earns $1,000 a fortnight.

His pension falls by about $237 for the fortnight, compared with about $350 if the Work Bonus did not exist.

Example 3: same earnings, full balance

Now assume David has built the maximum $11,800 balance. The $300 is applied first, leaving $700. The balance can then offset that remaining $700, so his assessable work income is $0 and the balance drops to $11,100. He could repeat that for many fortnights before running out, with the balance falling each time he earns above $300.

The lesson: a balance acts like a buffer, and a pensioner who has been on the pension for a while without working may have a good one ready.

Pension suspension: why the balance matters

There is one rule that surprises people. If your Australian employment income stays above the cut-off for more than 12 consecutive fortnights, Services Australia may suspend your Age Pension for up to two years. The listed exceptions include having a Work Bonus balance, or having only passive self-employment income.

Suspension is not cancellation, and the page describes the arrangement as being for up to two years. But it is worth knowing before you accept a full-time contract or a lucrative consulting stretch. A suspended pension can also affect related benefits, so if you hold a concession card, read our guide to Pensioner Concession Card eligibility and check how a suspension would affect you.

Reporting your work income

You don’t apply for the Work Bonus. As the factsheet puts it, you need to declare your income. Services Australia then applies the concession automatically.

The obligations, per the Working while you’re getting Age Pension page:

• Tell Services Australia when you or your partner start paid work.
• Report employment income on time.
• Keep reporting even when the reported income reduces your pension to $0 for a fortnight.

Failing to report can lead to an overpayment debt or a payment stoppage. You can check your balance through your Centrelink online account linked to myGov, according to the Work Bonus balance page.

A sensible habit: keep your payslips together, and look at the balance at the start of each financial year. If something doesn’t match your records, raise it with Services Australia straight away rather than waiting for an overpayment letter.

Perspective: planning around the Work Bonus

Most of the pre-retirees and retirees we meet in Melbourne and Bayside don’t wake up wanting to maximise a concession. They want to know whether they can ease into retirement, keep a few days of work they enjoy, and still draw the pension they are entitled to.

In our experience the Work Bonus is most valuable when it is planned alongside everything else, not treated on its own. How much you draw from an account-based pension, whether your super is counted in deeming, whether you work as an employee or through a business structure, and when you start the pension all change how much of your income is actually assessed.

We build advice around each client’s real position, not a template. For someone considering part-time work, that usually means modelling the income test and assets test together, looking at how super withdrawals fit alongside wages, and reviewing the plan regularly as thresholds are indexed and circumstances change.

If you are working or thinking about working while receiving a pension, a conversation early is far better than an overpayment letter later.

Adam

Common mistakes to avoid

• Assuming all income qualifies. Super pensions, investments and termination payments are excluded from the Work Bonus.
• Stopping reporting when the pension hits $0. You must still report employment income.
• Ignoring the 12-fortnight rule. Long stretches above the cut-off can lead to suspension unless an exception applies.
• Forgetting the partner. Because the income test for couples is assessed on combined income, your partner’s work affects you both.
• Overlooking the assets test. Work Bonus does nothing for it, and the lower of the two results sets your rate. See our note on timing mistakes with super and the Age Pension.

Work with us on your retirement income

If you are mixing work, super and the Age Pension, the numbers move together, and it pays to see them on one page. We help Melbourne and Bayside pre-retirees and retirees, and clients across Australia where appropriate, model their income, structure their super and review their Age Pension strategy. Our retirement planning service is built around your actual situation, with regular reviews as rules change.

If you are also weighing up super withdrawals, our guide to tax on super in retirement explains what to expect after 60.

FAQ

How much can I earn before my Age Pension is affected?

The first $300 of eligible work income each fortnight is disregarded under the Work Bonus. Beyond that, a single person’s pension starts to reduce once assessable income is above $226 per fortnight, and a balance can offset more. The full cut-off points are listed by Services Australia and are indexed over time.

Do I need to apply for the Work Bonus?

No. Services Australia applies it automatically to eligible income when you meet the rules. Your job is to declare your income accurately and on time.

Does my Work Bonus balance expire?

No. The balance can carry across financial years and is kept if your pension stops and later resumes. It is capped at $11,800.

Does the Work Bonus apply to my super pension or investment income?

No. Superannuation income, investment income and termination leave payments are excluded. Only income from your own work effort, such as wages or active self-employment income, qualifies.

Where do I check my Work Bonus balance?

You can see it in your Centrelink online account through myGov. If it looks wrong, contact Services Australia to have it reviewed.

Sources

• Work Bonus factsheet, Services Australia
• How a Work Bonus works, Services Australia
• Work Bonus balance, Services Australia
• Work bonus application, Social Security Guide
• Qualifying income instrument, Services Australia
• Income test for Age Pension, Services Australia
• Working while you’re getting Age Pension, Services Australia
• Work bonus, Department of Veterans’ Affairs

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This article is general information, not a substitute for advice from a qualified financial advisor. Consult a qualified financial professional about your own circumstances before acting on anything here. General Advice Warning Disclaimer: The information on this website is general information only and is not intended to be a recommendation. We strongly recommend you seek advice from your financial adviser as to whether this information is appropriate to your needs & financial situation.