The income test

Income up to a free area does not reduce the pension at all. Above it, every dollar reduces the maximum payment rate by 50 cents— the rate the Act states, as a fraction of the excess, at point 1064-E10.

The reduction is a fixed fraction of the amount by which ordinary income exceeds the free area, stated by point 1064-E10 as a multiplication of the excess. Because point 1064-E2 halves a couple's combined income before the test runs, the same rate can be described either as what a couple loses per dollar of COMBINED income above the combined free area, or as half that per person. Both statements describe one taper.

If a person is a member of a couple, add the couple's ordinary incomes (on a yearly basis) and divide by 2 to work out the amount of the person's ordinary income for the purposes of this Module.

The consequence catches people out: it does not matter which partner earns the income. A couple where one person works and the other does not is assessed exactly as a couple splitting the same income evenly, because the Act pools it before it looks at either of them.

If you are still working, the first $300 of work bonus income each fortnight is disregarded before the income test sees it. Anything left is then reduced against an unused concession balance, which starts at $4,000, accrues whatever you do not spend of the fortnightly concession, and is capped at $11,800. Somebody who works a few weeks a year can therefore have a great deal more than the fortnightly figure disregarded when they do.

Work bonus income — employment income plus income from gainful work. s 1073AAA defines gainful work as work for financial gain or reward other than as an employee, involving personal exertion, and excludes managing one's own or one's family's financial investments or real property, and domestic, household-maintenance and gardening tasks at one's own residence. Investment returns are therefore NOT work bonus income.

The order matters, and it is stated: If the person is a member of a couple, apply this section in relation to the person, and to the person's partner, before applying point 1064-E2. In other words the bonus is applied to each partner’s own income first, and only then is the couple’s income pooled and halved. Applying it the other way round would halve its value for every couple.

Ordinary income on a yearly basis. What enters it is governed by Division 1 of Part 3.10, and financial assets produce a DEEMED income under Division 1B rather than their actual return — the deeming rates and thresholds are themselves indexed amounts and are NOT sourced in this payload, so no consumer may state one. The work bonus (s 1073AA) reduces this quantity before the test runs.

Nothing on this page tells you what you will be paid on its own. Work through the assets test as well, and take the lower of the two.

For completeness, this is what the Act itself prints — and a good illustration of why the statute cannot answer the question a reader came with.