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This topic covers examples of rate calculations under the income test from 1 July 2011 where there is employment income and eligibility for the work bonus and for accrual in the person's employment income concession bank.
An Age pensioner currently has no employment income. This person has $250 a fortnight credited to their employment income concession bank.
A person has employment income of $200 in a given fortnight.
Step 1: The work bonus is applied ($250 work bonus concession minus $200 employment income equals $50).
Step 2: The remaining $50 is credited to their employment income concession bank.
As their fortnightly employment income was less than the $250 exemption amount, no employment income is assessed for this age pensioner in the given fortnight.
An Age pensioner has employment income of $600 in a fortnight. They have a nil balance in their employment income concession bank.
Step 1: Apply the work bonus - $250 is not counted as assessable employment income, leaving $350 in assessable employment income.
Step 2: The assessable employment income test free area is then added to any other assessable income and the income free area is then applied to the total amount of income and the pension rate calculated.
A person is employed for 2 weeks as an examination supervisor earning $900 for the fortnight. They have $600 in their employment income concession bank.
Step 1: The work bonus is applied for the fortnight reducing the earnings by $250 ($900 minus $250 equals $650).
Step 2: The balance in the employment income concession bank is then applied against the remaining $650. Therefore, only $50 of income is assessed as income from employment in that fortnight. The person's employment income concession bank balance reduces to nil.
A person is employed for 6 weeks playing Santa Claus, earning $1,200 a fortnight. They have an employment income concession bank of $2,500.
Step 1: The work bonus exemption of $250 is applied for the first fortnight, which leaves $950 in assessable employment income.
Step 2: The employment income concession bank credit is then applied leaving no assessable employment income in that fortnight.
($2,500 bank minus $950 employment income leaves $1,550 as the new employment income concession bank balance.)
The next fortnight:
Step 1: The work bonus exemption of $250 is again applied on the earnings of $1,200, leaving $950.
Step 2: The balance of the employment income concession bank credit of $1,550 is applied leaving no assessable income for the fortnight and a balance of $600 in the employment income concession bank.
The third fortnight of assessable employment income:
Step 1: The work bonus exemption of $250 is applied to the earnings leaving a balance of $950.
Step 2: The balance in the employment income concession bank of $600 is applied leaving $350 in assessable employment income for the third fortnight and a nil balance in the employment income concession bank.
One partner has employment income of $1,040 in the fortnight and an employment income concession bank balance of $800. The other partner does not earn income. They have no other income.
Step 1: Apply the work bonus exemption of $250. This leaves $790 ($1,040 minus $250).
Step 2: The employment income concession bank balance of $800 is applied resulting in no income being assessed and $10 remaining in the employment income concession bank .
One partner has employment income of $600 per fortnight and the other partner has income of $100. They have no other income and neither partner has a credit in their employment income concession bank at the start of the period.
First partner's assessment:
Second partner's assessment:
Their combined assessable employment income = $350
One partner with $800 in their employment income concession bank, has employment income of $600 a week for 2 weeks as an examination invigilator. The other partner with $1,000 in their employment income concession bank has income of $300 a week playing Santa Claus for 2 weeks. They have no other income.
First partner's assessment:
Second partner's assessment:
For the couple the result is combined employment income of $150
The Age pensioner partner has employment income of $1,040 per fortnight and an employment income concession bank of $500. The allowee partner does not earn income. They have no other income.
Step 1: The first step in the assessment is to apply the work bonus, $250 of the income is not counted leaving employment income of $790.
Step 2: The Age pensioner partner's employment income concession bank of $500 is applied, leaving assessable income of $290. ($790 minus $500). The employment income concession bank reduces to nil.
Half of the $290, $145, is treated as assessable income of each member of the couple and the respective income free areas are then applied.
The Age pensioner partner has employment income of $1,040 per fortnight, with an employment income concession bank of $200 and the couple have other income of $248 a fortnight.
Step 1: Apply the work bonus - $250 of the income is not counted under the income test which leaves employment income of $790.
Step 2: Apply the employment income concession bank of $200. This leaves $590 in assessable employment income. The employment income concession bank reduces to nil.
Step 3: Combine the remaining assessable employment income $590 with the other income of $248, a total assessable income of $838.
Half of the $838, $419, is treated as assessable income for each member of the couple.
The respective income free areas are then applied.
The Age pensioner partner, with an employment income concession bank of $100 has employment income of $800 a fortnight and the allowee partner has employment income of $200 per fortnight. Assume no working credit.
Step 1: Apply the work bonus to the Age pensioner's employment income. This leaves $550 in assessable employment income ($800 minus $250).
Step 2: Apply the employment income concession bank of $100 - this leaves assessable employment income of $450.
Step 3: Combine this income of $450, with the allowee partner's employment income of $200, a total assessable income of $650.
Step 4: Half of the $650, $325, is treated as assessable income of each member of the couple and the respective income free areas are applied.
Note: This example assumes that the allowee recipient has no available working credits, however in circumstances where a working credit balance is greater than nil, working credits deplete after the application of the work bonus to the total employment income.
Act reference: SSAct section 1073D To whom do working credit accrual and depletion rules apply?
Policy reference: SS Guide 3.1.11 Working Credit
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Last reviewed: 1 July 2011
