|
Background
I've found it incredibly difficult to determine how the age pension
is calculated so I've included the information I've found for my needs
in case it helps others.
Income Test Calculator instructions
Fill in the above form and click Submit to determine the age pension amount
based on income. Keep in mind the age pension is the lower result of the assets
test or income test. Complete both tests to determine the lower amount.
Status
Select either single or couple.
Deemed income
To simplify calculating income you use what the government deems you have earned. For example
you may get a percentage interest rate of money in the bank, but this isn't used for the pension.
You need to use the deemed income calculator.
I also think another reason income is deemed is
to discourage people putting money into the bank the generates no interest and thus a larger pension
would need to be paid. Before COVID I noticed the deemed rate was higher than
bank interest rates that were generally available. The deeming rates have been frozen for two years
given pensioners a bonus as they can get higher interest rates in the bank than the deeming rates.
In July 2024 new deeming rates may apply. We need to wait and see the deeming rates announced in
the May budget.
NOTE: Singles can earn $204 per fortnight and couples in total can earn $360 per fortnight without
affecting their pensions.
For self-employment income I've read on Services Australia, this should not be reported as employment income.
It should be reported as business income. I suspect this enables the income to be reconciled for the year
and any overpayment can be paid back. The business income can also be offset against the Work Bonus.
Income
Use this field for income that isn't deemed. For example income from a rental property or other passive income.
Income through work is a bit tricky and you can get a Work Bonus where a certain amount earned does not affect
your pension. Any amount of work income above the Work Bonus limit could then affect your pension
and can be added to the income amount.
Work Bonus
The Work Bonus enables each pensioner to earn $300 per fortnight from personal exertion (not passive income). There's
also a starting bank of $4,000 to offset work income. Plus if no money is earned or the amount earned is under $300
for the fortnight, the $300 or difference is banked to be used to offset future income.
If only one partner is on the pension, only that partner gets access to the work bonus.
Calculating the pension and taking into account work income is too complex for this calculator, but you can work it out yourself.
First work out your pension. For the current fortnight calculate how much you've earned above the work bonus balance.
Reduce your pension by 25 cents in a dollar for the amount you've earned over the work bonus balance.
Note that the work bonus is only for the person that has reached pension age and if both partners have reached pension
age, each person needs to work out their individual situation with the work bonus balance. The maximum work bonus balance
that can be accrued is $11,800.
Any income that is above the work bonus/work bonus balance, then becomes income and is assessed as income.
If I understand this correctly, since that excess income from work is assessed as income, both partners
then have their pension reduced by 25 cents in a dollar. If only one partner is on the pension, then only their
pension is reduced by 25 cents on a dollar.
Age Pension Amount
The result returned is the age pension amount based on the information provided on the Human Services site
from the 18th April 2024. Note the age pension amount you receive is the lower of the age pension amount
from the assets test or the income test.
NOTES
As at the 18th of April the following rates used have been obtained
from the Services Australia site.
Normal Rates
| Per fortnight |
Single |
Couple
combined |
| Maximum basic rate |
$1,020.60 |
$1,538.60 |
| Maximum Pension Supplement |
$81.60 |
$123.00 |
| Energy Supplement |
$14.10 |
$21.20 |
| Total |
$1,116.30 |
$1,682.80 |
Limits for full pension
| Your situation | |
| Single | $204 |
| A couple, combined | $360 |
Cut-off limits for part pension
| Your situation | |
| Single | $2,436.60 |
| A couple, combined | $3,725.60 |
For each $1 in income above the full pension limit, the single pension is reduced by 50 cents.
For a couple with a combined pension, each person's pension is reduced by 25 cents, which is 50 cents off
the total combined pension.
If only one person in the couple
is pension age, since they're the only one getting the pension, only their pension is reduced by 25 cents per $1,
since the other person is not getting the pension.
This calculator only covers the basic situation. For example it does not cover couples separate by illness
rental assistance, work bonus, etc. Hopefully I've included enough detail so you can calculate the pension for your situation.
Superannuation as income
If your or your partner have not reached retirement age, superannuation for the person who has
not reached retirement age is not considered income. Once a person reaches retirement age
their superannuation may then be deemed to earn an income. Superannuation is a complex area
when it comes to the pension.
|
