Australia · Explainer

Work Bonus

$300 per fortnight of employment income is excluded from the Age Pension income test, and whatever is not used accrues to a balance of up to $11,800. The accrual is the part that gets missed — and it is what lets a pensioner work an intense month with no effect on the payment at all.

AU FY2026-27 Law Last reviewed 31 July 2026

What it is

The Work Bonus is an exclusion inside the Age Pension income test, not a payment. It applies to employment income and eligible self-employment income: $300 of it is set aside each fortnight before the test runs. Investment income, rent and deemed income are outside it.

The mechanic that matters is what happens to the part of the $300 a client does not use. It accrues — to a balance of up to $11,800 — and that balance is drawn on in any fortnight where employment income is higher than $300. The concession is designed for work that comes in bursts.

Key figures

Work Bonus — fortnightly exclusion
$300 per fortnight
Work Bonus — maximum balance
$11,800
Work Bonus — starting credit
$4,000
Income test free area — single
$226 per fortnight

How a fortnight is worked out

The order of operations

  1. 1. Apply $300 to the fortnight’s employment income.
  2. 2. Accrue whatever part of it was not needed, to a ceiling of $11,800.
  3. 3. Where income is higher, draw the balance down to exclude the rest — to nil income, never below.
  4. 4. Whatever employment income survives all of that goes into the income test, alongside deemed income, against the free area.

Worked example — seasonal work

A newly granted pensioner starting with the $4,000 credit, who does no paid work for four fortnights and then takes two paid fortnights. Each fortnight’s closing balance opens the next. Every figure is computed by the calculator below.

Work Bonus across six fortnights, with the balance carried forward
Fortnight Earned Excluded Assessed Balance after
1 $0 $0 $0 $4,300
2 $0 $0 $0 $4,600
3 $0 $0 $0 $4,900
4 $0 $0 $0 $5,200
5 $3,000 $3,000 $0 $2,500
6 $3,000 $2,800 $200 $0
Across the six fortnights $6,000 $5,800 $200 $0

$6,000 of employment income, of which $5,800 never reaches the income test. Only $200 is assessed, and that only because the balance ran out in the last fortnight. The four quiet fortnights are what paid for the two busy ones — which is exactly the behaviour the concession is built to reward, and exactly the behaviour a client who works steadily just above $300 a fortnight never gets.

Work Bonus calculator

One fortnight at a time, which is how it is actually applied. The $300 comes off employment income first; whatever is left of it accrues to the balance; and where income is higher than that, the balance is drawn on to exclude the rest. A new pensioner generally starts with $4,000 rather than nil.

$1,500

$4,000

Employment income counted in the income test

$0

$1,500 excluded — $300 of the fortnightly amount and $1,200 drawn from the balance, which finishes the fortnight at $2,800.

$300 per fortnight applied to income
$300
Unused, so it accrues to the balance
$0
Drawn from the balance
$1,200
Excluded from the income test
$1,500
Balance at the end of the fortnight
$2,800

Simplified illustration for education — not advice. The balance is capped at $11,800, and the concession applies to employment and eligible self-employment income only — not to investment income.

Practical points

  • Ask for the balance, do not assume it. The balance is held against the client’s record and carries over from year to year. A pensioner who has done no paid work for a while may be sitting at the $11,800 ceiling without knowing it — and any further accrual is simply lost.
  • It is per person, not per couple. Each member has their own fortnightly amount and their own balance, and one cannot lend to the other. The income test free area works the other way — $396 per fortnight is combined for a couple.
  • Concentrated work beats spread work. The same annual earnings produce a different assessment depending on how they land across the fortnights. Where the client has any control over timing, blocks of work separated by quiet periods use the concession that periods of steady part-time work cannot.
  • It does nothing for an asset-tested client. The Work Bonus only reduces income. Where the assets test is the one producing the lower rate of pension, excluding employment income changes the payment not at all — check which test is binding before building advice on it.
  • Self-employment has to be gainful work. Eligible self-employment income counts, but income from an investment activity dressed up as a business does not. Where a client’s “business” is really a portfolio, the income is deemed, not excluded.

Questions we get asked

What income does the Work Bonus apply to?
Employment income and eligible self-employment income from gainful work. Investment income, deemed income, rent and superannuation income streams are outside it entirely — the concession is for working, not for holding assets.
How does the balance build up?
Whatever part of the $300 per fortnight is not used against employment income in a fortnight accrues to the balance, to a ceiling of $11,800. That means the balance only grows in fortnights where the client earns less than $300 per fortnight — a client working steadily above that level never accrues anything, and never has a balance to draw on.
Do new pensioners really start with a credit?
Yes. A new pensioner generally starts with a $4,000 Work Bonus balance rather than a nil one, so the first stretch of part-time work after granting is largely excluded from the income test. It is the single most useful thing to know before a client turns down casual work in their first year on the pension.
Is it the same as the income test free area?
No — they stack. The Work Bonus reduces employment income before the income test sees it; the free area ($226 per fortnight for a single client, $396 per fortnight for a couple combined) then applies to everything the test does see, employment income and deemed income together.
Is the Work Bonus indexed?
No. $300 per fortnight, the $11,800 ceiling and the $4,000 starting credit are all fixed in nominal terms, so the concession tightens in real terms every year without any decision being taken. Wage growth erodes it from the other side at the same time.
Does a couple share one Work Bonus?
No. It is per person: each member of a couple has their own fortnightly amount and their own balance, and one partner cannot use the other’s. That is the opposite of the income test free area, which is a combined figure for a couple.

Sources

Sourced from the references below. The figures on this page come from the same reference file as the Age Pension rates and thresholds page.

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