Work Bonus legislation passed

Article published on: 20-11-2023

Legislation has passed to incentivise older Australians to engage in employment through changes in the Work Bonus and ‘employment nil rate period’. 

Changes to Work Bonus

The increase in the maximum Work Bonus balance from $7,800 to $11,800 will be permanent from 1 January 2024. This higher temporary Work Bonus balance was set to reduce to $7,800 on that date. In addition, from 1 January 2024:

• new recipients of the Age Pension, Disability Support Pension or Carers Payment who are at least Age Pension age and certain veterans’ entitlement recipients will receive a one-off Work Bonus income bank credit of $4,000, and
• an additional income bank credit will be received by some individuals who were previously eligible recipients, lost entitlement to their payment and become eligible again.

Upfront credit

The upfront income bank credit will mean that up to $4,000 of employment income can be immediately disregarded when calculating entitlement for income tested individuals, rather than having to accrue an amount in their income bank.

Individuals previously entitled

From 1 July 2024, modified rules will apply to individuals who have previously had a Work Bonus income bank, have had their payment cancelled, but become eligible for a qualifying payment again from this date. The individual will receive an income bank top up so that their balance is increased to $4,000, provided they have:

• a retained income bank balance (at the time they previously lost entitlement to their payment) of less than $4,000, and 
• not had their income bank balance topped up under these rules within the last two years.

This will not apply in circumstances where:

• payment was suspended, but not cancelled, and
• their entitlement to a payment ceased, but they became entitled again within the ‘employment income nil rate period’ (see below).

Work Bonus background

The Work Bonus provides eligible income support recipients of Age Pension age with an exemption on the first $300 per fortnight of employment or self-employment income under the pension income test. This is in addition to the ordinary pension income free area. Any unused part of the $300 per fortnight Work Bonus accrues in the Work Bonus income bank up to the maximum limit and can be subsequently drawn on to offset future income from work.

For more information, please see our Centrelink Work Bonus adviser article.

Changes to ‘employment income nil rate period’

From 1 July 2024, the ‘employment nil rate period’ will double from 12 weeks to 24 weeks and access will be expanded to those who enter full time employment. This will apply to recipients of JobSeeker Payment, Youth Allowance, Austudy, Parenting Payment, Age Pension, Disability Support Pension and Carer Payment. The employment income nil rate period allows:

• An eligible income support recipient to retain concession cards and other supplementary benefits for a period. For example, child care subsidy and the Pensioner Concession Card or Health Care Card may be retained where their entitlement to the qualifying pension or allowance ceases due to increased employment income. 
• For eligible pensions and allowances to be reinstated without the need to re-apply, if during the employment nil rate period, the recipient’s income falls below the income cut-off threshold. 

This change will apply to people in casual, part-time and full-time employment. The significance of this is that some payments (such as Carer’s Payment) are not otherwise payable to individuals working full-time. It’s also intended to encourage people to take up work, particularly casual and short-term roles, reducing the impact of the potential loss of concession cards and the reapplication process if entitlements are lost.