‘Does the pension count as an income? And can I keep it if I head back to work?’

Mar 25, 2020
It's important to always keep retirement income healthy and growing. Source: Getty.

Q: I am 73 years old and have been receiving a full Age Pension since retiring a year ago. I now wish to commence part-time employment that would give me a gross income of about $42,000 per annum. Would I retain any of my pension, and would it be preferable for me to work as a contractor (I have an ABN)?

A: A single person can earn $53,060 a year before their pension cuts off completely. Irrespective of whether you work as a contractor or as a sole trader, Centrelink will use your taxable income when calculating the income for the income test. It would be worthwhile talking to a tax agent – it may be that a contractor could have access to more tax deductions, which would in turn reduce your taxable income.

You should also be entitled to the Work Bonus that exempts the first $7800 a year of employment income. This will have a big beneficial effect on your pension.

Q: My wife and I are retired. We now each receive an allocated pension from each of our superannuation accounts. We don’t work, so we don’t have any income from work. Recently I had to answer some questions on a form, and one question was “what is our income?” Could you let us know if our allocated pension is classed as income?

A: If you are talking about Centrelink, money in superannuation is assessed under the deeming rules, and a notional income applied to it. This would be then used for the income test. But in most cases income from allocated pensions is tax-free, therefore for tax purposes your allocated pension would not be classed as income.

If you have a question for Starts at 60’s money experts, email it to [email protected].

Important information: The information provided on this website is of a general nature and for information purposes only. It does not take into account your objectives, financial situation or needs. It is not financial product advice and must not be relied upon as such. Before making any financial decision you should determine whether the information is appropriate in terms of your particular circumstances and seek advice from an independent licensed financial services professional.

Join the community that will get you through the hard times ahead.

Starts at 60 is the community you need when Covid-19 is changing life as we know it. We stick together, help each other, share information and have a whole lot of fun online.

Join for interactive online events, expert advice, timely news, great deals and community conversation.

Have you thought about heading back to work part time after retiring?

Please sign in to post a comment.
Retrieving conversation…
Stories that matter
Emails delivered daily
Sign up