Post by Banker on Aug 31, 2011 15:22:44 GMT 7
The strategy To maintain my age pension even though I'm working part-time.
Can I do that? There are limits but from July 1 the government has made it easier for seniors to do part-time work without losing some of their pension.
The new rules effectively allow you to average your earnings over a year and will be of most benefit to pensioners who only work for part of the year - such as the often-quoted retiree Santas. You'll now be able to earn up to $6500 from employment in a year before losing any of your pension.
How does it work? Under the old rules, 50 per cent of the first $500 of employment income earned in a fortnight was exempt from the Centrelink income test. The first $250 is now exempt and any unused amount is stored to offset any future employment income you earn.
In her budget summary, the director of Strategy Steps, Louise Biti, used the example of Colleen, an age pensioner who earns $300 a fortnight from a part-time job. Under the old rules, half of that amount - $150 - was exempt from the income test while the other $150 would have reduced her pension entitlement. Now the first $250 is exempt and so she is assessed on just $50 - leaving her with more age pension.
As the maximum exemption of $250 hasn't changed, no pensioners will be worse off as a result of the change. But many earning less than $500 a fortnight will be better off.
How does the averaging work? Think of it as a bank where any unused entitlement you have each fortnight is squirrelled away for future use. So if you don't earn any employment income in a particular fortnight, $250 is ''banked'' to offset against future employment income.
Centrelink uses the example of Angela, who has a current work bonus balance of $350. The next fortnight she earns $200. After applying the $250 bonus, the full $200 she earned is exempt from the income test and $50 is added to her work bonus balance, bringing it to $400.
The following fortnight Angela earns $550. That is reduced to $300 by the $250 work bonus, then to nil by drawing on her work balance ''bank'', which now has a balance of $100.
In the third fortnight, Angela earns $600. The $250 work bonus reduces that to $350 and drawing on her ''bank'' wipes out another $100. But as Angela has now used up all her entitlements, the remaining $250 is included in the income test and will reduce her pension entitlement for that fortnight.
In another example, Joe works during Christmas as a part-time Santa and earns $600 a fortnight. This is the only work he does all year. By the time Joe starts working this year, he will have built up a work bonus balance of $2250. His $600 fortnightly income will be reduced to $350 by the normal work bonus and to zero by deducting $350 from his work bonus ''bank''. His pension won't be affected. After working for six weeks, his ''bank'' will have been reduced to $1200 but will start to increase by $250 a fortnight again as he is no longer working.
Do I lose my bank if I don't use it? The balance can be carried forward to future years but has a maximum limit of $6500.
Do I have to do anything to claim the bonus? No, Centrelink will automatically apply the bonus to any earnings you declare. But you do still have to notify Centrelink of the full amount of any employment income you receive. Centrelink says the bonus only applies to employment income and doesn't include income from other sources such as investments, super, self-employment income and leave payments
Read more: www.smh.com.au/money/planning/work-bonus-changes-20110830-1jiuw.html#ixzz1WaoYESr5
Can I do that? There are limits but from July 1 the government has made it easier for seniors to do part-time work without losing some of their pension.
The new rules effectively allow you to average your earnings over a year and will be of most benefit to pensioners who only work for part of the year - such as the often-quoted retiree Santas. You'll now be able to earn up to $6500 from employment in a year before losing any of your pension.
How does it work? Under the old rules, 50 per cent of the first $500 of employment income earned in a fortnight was exempt from the Centrelink income test. The first $250 is now exempt and any unused amount is stored to offset any future employment income you earn.
In her budget summary, the director of Strategy Steps, Louise Biti, used the example of Colleen, an age pensioner who earns $300 a fortnight from a part-time job. Under the old rules, half of that amount - $150 - was exempt from the income test while the other $150 would have reduced her pension entitlement. Now the first $250 is exempt and so she is assessed on just $50 - leaving her with more age pension.
As the maximum exemption of $250 hasn't changed, no pensioners will be worse off as a result of the change. But many earning less than $500 a fortnight will be better off.
How does the averaging work? Think of it as a bank where any unused entitlement you have each fortnight is squirrelled away for future use. So if you don't earn any employment income in a particular fortnight, $250 is ''banked'' to offset against future employment income.
Centrelink uses the example of Angela, who has a current work bonus balance of $350. The next fortnight she earns $200. After applying the $250 bonus, the full $200 she earned is exempt from the income test and $50 is added to her work bonus balance, bringing it to $400.
The following fortnight Angela earns $550. That is reduced to $300 by the $250 work bonus, then to nil by drawing on her work balance ''bank'', which now has a balance of $100.
In the third fortnight, Angela earns $600. The $250 work bonus reduces that to $350 and drawing on her ''bank'' wipes out another $100. But as Angela has now used up all her entitlements, the remaining $250 is included in the income test and will reduce her pension entitlement for that fortnight.
In another example, Joe works during Christmas as a part-time Santa and earns $600 a fortnight. This is the only work he does all year. By the time Joe starts working this year, he will have built up a work bonus balance of $2250. His $600 fortnightly income will be reduced to $350 by the normal work bonus and to zero by deducting $350 from his work bonus ''bank''. His pension won't be affected. After working for six weeks, his ''bank'' will have been reduced to $1200 but will start to increase by $250 a fortnight again as he is no longer working.
Do I lose my bank if I don't use it? The balance can be carried forward to future years but has a maximum limit of $6500.
Do I have to do anything to claim the bonus? No, Centrelink will automatically apply the bonus to any earnings you declare. But you do still have to notify Centrelink of the full amount of any employment income you receive. Centrelink says the bonus only applies to employment income and doesn't include income from other sources such as investments, super, self-employment income and leave payments
Read more: www.smh.com.au/money/planning/work-bonus-changes-20110830-1jiuw.html#ixzz1WaoYESr5