Centrelink assistance for working age pensioners and incentives to downsize your home

There have been positive Centrelink changes to incentivise pensioners to increase their participation in the workforce (amid staff shortages) and to downsize from their family home.

There have been positive Centrelink changes to incentivise pensioners to increase their participation in the workforce (amid staff shortages) and to downsize from their family home.

$4,000 Work Bonus increase

The Work Bonus provides senior Australians with an incentive to continue working at least on a part time basis, by providing an exemption to income from work.

How it works

Under the Work Bonus, the first $300 of fortnightly income from work is not assessed under the pension income test. Any unused part of the $300 fortnightly Work Bonus accrues in the Work Bonus income bank and can be used to offset future income from work.

On 1 December 2022, a one-off $4,000 income credit was added to the Work Bonus income bank of those at least pension age and in receipt of an Age Pension, Disability Support Pension, Carer Payment or certain Veterans entitlement.

Prior to 1 December 2022, the Work Bonus income bank was capped at $7,800. This has been temporarily increased to $11,800 until 31 December 2023. Effective 1 January 2024, any amount in the Work Bonus income bank that exceeds $7,800 will be lost and not available to offset future employment income.

Case study:

Mary is an age pensioner who works for three consecutive fortnights as an accountant. She has no other income. As Mary has not worked in the previous 12 months, she has accumulated the maximum income bank amount of $7,800 (26 fortnights x $300). Since 1 December 2022, her income bank was credited with $4,000, which brings her total income bank to $11,800 ($7,800 + $4,000).

During the three fortnights that she works, Mary earns $3,000 a fortnight, a total of $9,000. As Mary’s income bank amount is more than her employment income, none of the $9,000 is assessed under the income test and so her work income does not reduce her age pension.

In contrast, without the additional $4,000 credit to her income bank, her age pension may have been reduced due to her work income.

For income tested pensioners (eligible for the Work Bonus), those earning:

  • more than $300 per fortnight may see a temporary increase in entitlements, and
  • less than $300 per fortnight may consider temporarily taking on additional paid work without impacting their Centrelink entitlements. 

Centrelink incentives to downsize your home

Pensioners are often concerned about downsizing their existing home, where the sales proceeds may become assessed towards their assets and income test and negatively impact their age pension (previously their home was exempt from assessment while they lived there).

To encourage pensioners to downsize, in conjunction with the Super downsizer contributions law, the Government has legislated to enhance the Centrelink concessions applicable to pensioners who sell their existing home and intend on applying a portion of those proceeds to purchase, build, repair or renovate a new home.

Since 1 January 2023, the asset test exemption period has been extended to 24 months (from 12 months). The exemption only extends to the amount that is intended to be used for these purposes. For example, if a pensioner is downsizing and only 75% of the home proceeds will be utilised for the new home, the assets test exemption is limited to this amount.

Exempt proceeds that are held in a financial investment, such as a bank account, will be subject to the income test via the lower deeming rate only (currently 0.25%) during the exemption period. They are also isolated from other financial assets which may be deemed at the higher deeming rate of 2.25%.

Please seek further advice from your Financial Adviser.


Important Information

This publication is prepared by Actuate Alliance Services Pty Ltd (ABN 40 083 233 925, AFSL 240959) (‘Actuate’), a member of the Insignia Financial group of companies (‘Insignia Financial Group’). The information in this publication is general only and has not been tailored to individual circumstances. Before acting on this publication, you should assess your own circumstances or seek personal advice from a licensed financial adviser. This publication is current as at the date of issue but may be subject to change or be superseded by future publications. In some cases, the information has been provided to us by third parties. While it is believed that the information is accurate and reliable, the accuracy of that information is not guaranteed in any way. Past performance is not a reliable indicator of future performance, and it should not be relied on for any investment decision. Whilst care has been taken in preparing the content, no liability is accepted by any member of the Insignia Financial group, nor their agents or employees for any errors or omissions in this publication, and/or losses or liabilities arising from any reliance on this document. This publication is not available for distribution outside Australia and may not be passed on to any third person without the prior written consent of Actuate.

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