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What employment income includes
Employment income includes all of the following:
- salary, wages or commissions
- some allowances
- pay for piece work, such as for an amount of fruit you pick
- fixed and variable price contracts as an employee only, not for self-employment
- fringe benefits
- salary sacrifice amounts
- payments from a private trust you’re involved in that aren’t distribution or loan repayments
- payments from a company you’re involved in that aren’t dividend or loan repayments
- other income you get for work performed including lump sums such as directors fees.
Employment income paid from a private trust or company includes:
- wages
- directors fees
- other remunerative lump sums such as bonus payments or commissions.
Read more about private trusts and companies.
What it doesn’t include
Employment income doesn’t include any of the following:
- money you get from your sole trader business or partnership
- superannuation pensions
- injury compensation
- insurance payouts that relate to your job
- lump sum leave payments when your job ends.
How it affects your payment rate
To work out your payment rate we apply both an income test and an assets test.
The test result we use is the one that gives you the lower payment rate.
Income free threshold
If your income is under the income free threshold, we don’t reduce your payment.
The threshold amount depends on whether you’re single or have a partner and are getting a pension or allowance.
Everything you earn above the threshold may affect your payment.
How employment income is calculated
Employment income is generally assessed from the first day of the entitlement period in which it’s paid to you.
For Centrelink payments, an entitlement period is the period for which you may be entitled to a payment and is generally 14 days.
If the period your employment income is for is equal to or less than the length of the entitlement period, the income will be spread evenly across the entitlement period.
If the employment period is greater than the length of the entitlement period, the income will be assessed over multiple entitlement periods.
Example 1
Bob is paid $2,000 in his fortnightly pay from his employer for a period of 14 days.
Bob’s employment income will be assessed for 14 days, which equals one entitlement period.
Bob’s employment income will be applied as a daily rate of $142.85.
We calculate this as follows:
$2000/14 = $142.85 per day
Example 2
Bill was paid backpay of $5,000 for a period of 945 days.
Bill’s backpay of $5,000 will be assessed for 945 days over 68 entitlement periods. This is calculated by dividing 945 days by 14, the length of a usual entitlement period.
Bill’s employment income will be applied to the first 67 entitlement periods at a daily rate of $5.2910.
We calculate this as follows:
$5,000/945 = $5.2910 per day
$5.2910 per day x 14 days, or one entitlement period = $74.07
$74.07 x 67 entitlement periods = $4,962.69
The remaining amount is calculated as follows:
$5,000 - $4,962.69 = $37.31
This amount will be assessed as employment income for Bill in the 68th entitlement period.
Most employment income types are paid for a particular period such as a pay period. In situations where a period isn’t clear, the amount may be assessed for up to 52 weeks.
Income tests and reporting
Read any of the following for information about:
- the income test for pensions
- the income test for allowances, which covers JobSeeker Payment
- how to report your income.
Work Bonus
If you’re Age Pension age and still employed, you may qualify for the Work Bonus. This reduces the effect of your employment income on your payment rate.