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.
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.