Work Bonus and the Age Pension: Earn $600 a Fortnight and Keep More Pension (Worked Example)
The Work Bonus lets a pensioner earn the first $300 a fortnight from work without it counting under the income test — so the usual 50c-in-the-dollar pension reduction never touches that slice. If you earn $600 in a fortnight, only $300 is assessed. Unused exemption builds into a bank of up to $11,800, and new pensioners start with a $4,000 balance, so seasonal and casual workers can absorb big pay periods.
What the Work Bonus actually does
When Services Australia works out your Age Pension under the income test, it adds up your assessable income, subtracts the income-free area, then reduces your pension by 50 cents for every dollar above that threshold (the income-free area is $218 per fortnight for a single pensioner from 20 March 2026). The Work Bonus changes the maths before that taper runs: it knocks the first $300 per fortnight of eligible work income off the figure entirely, so only what is left is assessed. See How a Work Bonus works (Services Australia) and the Age Pension income test.
The order of operations matters. The exemption is applied to your work income first; the 50c taper only ever sees what survives the Work Bonus. That is why two people with the same total income can end up with very different pensions — one earning through wages (Work Bonus eligible), one through a term deposit (not eligible).
The numbers, at a glance
| Feature | Amount | Notes |
|---|---|---|
| Fortnightly exemption | $300 per fortnight | First $300 of eligible work income ignored by the income test |
| Maximum Work Bonus bank | $11,800 | Unused exemption accrues up to this cap, then stops growing |
| Starting balance (new pensioners) | $4,000 | From 1 July 2024, granted on first claim of an eligible payment |
| Single income-free area | $218 per fortnight | From 20 March 2026 — the threshold before the 50c taper begins |
| Income test taper | 50c per $1 | Pension reduces by 50c for each $1 of assessable income over the free area |
Figures verified against Services Australia, June 2026. The $300 fortnightly amount and $11,800 maximum balance have applied since 1 December 2022; the $4,000 starting balance applies from 1 July 2024. Income-free area is the rate effective 20 March 2026.
Worked example: Robert earns $600 a fortnight
Worked example
Robert, 68, single, full-rate Age Pensioner. He picks up casual work as a school crossing supervisor and earns $600 a fortnight in wages. He has been on the pension a while and has no banked Work Bonus left (he has been using it as he goes). What gets counted?
Step 1 — Apply the Work Bonus exemption. The first $300/ft of eligible work income is exempt.
$600 wages − $300 Work Bonus = $300 of work income assessed.
Step 2 — Apply the income-free area. A single pensioner can have $218/ft of assessable income before the taper starts. Robert has no other income, so his total assessable income is $300.
$300 − $218 = $82 over the free area.
Step 3 — Apply the 50c taper. Pension reduces by 50c per $1 above the free area.
$82 × 50c = $41 per fortnight reduction.
Result: Robert keeps almost all of his pension and pockets the full $600 wage. His pension drops by just $41/ft — so on $600 of work he is up about $559 net. Without the Work Bonus, all $600 would be assessed: $600 − $218 = $382 over, × 50c = a $191/ft pension cut. The Work Bonus saves him $150 a fortnight.
The lesson: because the $300 exemption comes off before the taper, every dollar of the exemption is worth a full dollar of protected income — not 50c. That is what makes part-time and casual work genuinely worthwhile for pensioners.
The Work Bonus bank: built for casual and seasonal workers
Here is the part most people miss. In any fortnight you earn less than $300 of work income (including fortnights where you earn nothing), the leftover exemption is not wasted — it is added to your Work Bonus balance (also called the income concession bank). That balance accrues automatically up to a maximum of $11,800 and never expires. See Work Bonus balance (Services Australia).
When you finally have a big pay fortnight — harvest season, a busy market stall month, a block of relief teaching — Centrelink draws on the bank to exempt income above the regular $300, often wiping out the income-test hit entirely.
Worked example
Lyn, 70, single, seasonal farm worker. For 6 months she does no paid work. Each idle fortnight, the full $300 exemption she does not use is added to her Work Bonus bank. Over roughly 13 fortnights she banks about $3,900 (and as a recent claimant she also started with the $4,000 balance).
Then harvest hits and she earns $2,500 in one fortnight. Centrelink works it out like this:
| Step | Amount |
|---|---|
| Work income this fortnight | $2,500 |
| Less standard $300 fortnightly exemption | −$300 |
| Less draw-down from Work Bonus bank | −$2,200 |
| Work income assessed under income test | $0 |
Result: Lyn keeps her full pension and the entire $2,500. The $300 exemption plus a $2,200 bank draw-down fully covered her wages. Her remaining bank balance is reduced by the $2,200 used, and starts rebuilding the next time she earns under $300.
The $4,000 starting balance for new pensioners
From 1 July 2024, anyone who claims an eligible payment (including the Age Pension) for the first time starts with a Work Bonus balance of $4,000, on top of the ongoing $300/ft exemption. This is designed so a brand-new pensioner can take on work straight away — finishing off a contract, doing seasonal work — without an immediate hit to their first few pension payments. You do not apply for it; it is credited automatically on commencement (Work Bonus — Services Australia).
Eligible income vs ineligible income
The Work Bonus is strictly for income from gainful work — active personal effort. It does not touch passive or deemed income, which goes through the normal income test in full.
| Eligible for the Work Bonus | NOT eligible (assessed normally) |
|---|---|
| Wages and salary from employment | Bank interest and term-deposit returns |
| Self-employment income from gainful work (active personal effort — e.g. a tradie, consultant, market stall) | Deemed income from financial assets (shares, managed funds, super in account-based pensions) |
| Director's fees and commissions for work performed | Rental income from an investment property |
| Income earned working overseas from employment | Distributions and dividends you do not actively work for |
The dividing line is whether you are being paid for your effort (eligible) or for your capital (not eligible). A self-employed person must be doing genuine personal exertion work; income that is really a return on assets does not qualify. The Department of Social Services Social Security Guide 3.1.15.40 sets out the detailed rules and calculation examples.
How to make the Work Bonus work for you
- Report your gross work income every fortnight. The exemption and bank are applied automatically — but only once Centrelink sees the income. Use your Centrelink online account through myGov.
- Don't fear the big fortnight. If you have bank balance built up, a lump of seasonal work may cost you nothing under the income test.
- Check whether the assets test is binding first. The Work Bonus only helps if the income test is the one setting your rate. If your assets give you the lower pension, working more won't change your payment (though it still puts money in your pocket).
- Keep evidence that self-employment is genuine work, not a disguised return on investment — that's what makes it Work Bonus eligible.
Free Age Pension + Work Bonus checklist
A one-page guide to the current thresholds, the $300 exemption, the $11,800 bank and how to report work income without losing pension.
You're on the list — we'll be in touch.
Frequently asked questions
How much can I earn before the Work Bonus stops helping?
The Work Bonus exempts the first $300 of eligible work income per fortnight straight off the top, before the income test applies. If you earn more than $300/ft and have no banked Work Bonus, only the amount above $300 is assessed. If you have a Work Bonus balance built up (up to $11,800), it can absorb even more, so a big pay period may count as little or nothing.
What is the Work Bonus bank and how does it build up?
Any of the $300 fortnightly exemption you do not use is added to your Work Bonus balance (sometimes called the income concession bank). It accrues automatically up to a maximum of $11,800 and carries forward indefinitely. When you have a high-earning fortnight, Centrelink draws down this balance to reduce the work income counted under the income test.
Do new pensioners get a starting Work Bonus balance?
Yes. From 1 July 2024, eligible pensioners who claim an Age Pension for the first time start with a Work Bonus balance of $4,000, on top of the ongoing $300 per fortnight exemption. This lets new pensioners take on work straight away without an immediate income-test hit.
Does the Work Bonus apply to my term deposit or share dividends?
No. The Work Bonus only applies to eligible income from gainful work, such as wages, salary and self-employment from active personal effort. Investment income, deemed income from financial assets, rental income and superannuation income streams are not eligible and are assessed under the normal income test rules.
Does the Work Bonus affect the assets test?
No. The Work Bonus only reduces the work income counted under the income test. It does nothing to the assets test. Your pension is paid at the lower of the two test results, so if the assets test gives you the lower rate, the Work Bonus will not change your payment.
Do I have to apply for the Work Bonus?
No. The Work Bonus is applied automatically by Services Australia once you report your employment income. You do not lodge a separate claim, but you must still report your gross work income each fortnight so the exemption and any banked balance are applied correctly.
Sources: Services Australia — Work Bonus, How a Work Bonus works, Work Bonus balance, Age Pension income test, DSS Social Security Guide 3.1.15.40. Figures current as at June 2026.