Issue #4   
 
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How much can I earn before I lose my pension?

If you are a Sole Parent with one child, you can earn up to $1385.35 per fortnight before becoming ineligible for a part pension payment. This amount increases by $24.60 for each child in your care.
(Income Test for Pensions – “A guide to Australian Government Payments: 20 September – 31 December 2005”)

Although this is the figure stated in Centrelink Income Equivalent literature, I have found that when using the Centrelink Rate Estimator, the maximum amount you can earn and still keep your Pensioner Concession Card is slightly less.  To err on the side of caution, I suggest you go by the following figures, which will definitely ensure that you continue to have access to your Pension Card.

 

Maximum Income to Maintain Part Pension (per fortnight)

Equivalent Weekly Income Equivalent Annual Income (wage only)
1 Child $1,370.00 $685.00 $35,620
2 Children $1,395.00 $697.50 $36,270
3 Children $1,420.00 $710.00 $36,920
4 Children $1,440.00 $720.00 $37,440 
5 Children $1,465.00 $732.50 $38,090

An excellent tool for working out how employment income will affect your benefit is Centrelink’s Rate Estimator at the following link. You can play around with different amounts and get a clear idea of just how much pension you will receive if you decide take on employment.

Centrelink Rate Estimator 


How will working affect my Family Tax Benefit?

As long as you maintain a part payment of your Parenting Payment Single Pension, you will continue to receive the maximum Family Tax Benefit.  This is because pensioners are exempt from income testing for Family Tax Benefit.

Once you earn over the Pension Income Threshold and are no longer entitled to Parenting Payment Single, your Family Tax Benefit Part A becomes income tested.  This means that for every dollar earned over $33,361 per year, your FTB Part A decreases by 30 cents.

If you are considering employment that will take you off Parenting Payment Single, you can calculate how your FTB will be affected by using the Family Assistance Estimator also located on the link above.

Family Tax Benefit Part B is not income tested for Sole Parents.  Regardless of your income, you will always receive this amount.

What about other benefits like Rent Assistance, Pensioner Education Supplement and Child Care Benefit?

As long as you maintain a part payment of your Parenting Payment Single Pension, your employment income will have no effect on Rent Assistance, Pensioner Education Supplement, Child Care Benefit or any other Centrelink Benefit or Allowance you may receive.

If you commence employment that takes you off Parenting Payment Single, you will automatically lose the Pensioner Education Supplement and your other benefits will become income tested (resulting in a reduction or loss of benefits).

In plain English…

As long as you maintain a part payment of your Parenting Payment Single Pension, you will continue to receive all of the other benefits you currently enjoy.

Examples

Jane is a sole parent with two primary school aged children.  She lives in rented accommodation and pays $250pw in rent.  Her current financial status is as follows:

Parenting Payment Single  $488.90
Pharmaceutical Allowance  $5.80
Family Tax Benefit Part A   $274.12
Family Tax Benefit Part B   $82.04
Rent Assistance    $116.62
TOTAL      $967.48

Scenario 1
Jane takes on a part-time job for 15 hours per week.  She is paid at $17 per hour and earns a gross income of $255 per week

Parenting Payment Single  $354.18
Pharmaceutical Allowance  $5.80
Family Tax Benefit Part A   $274.12
Family Tax Benefit Part B   $82.04
Rent Assistance    $116.62
Wages (NET – tax already paid) $409.67
Sub Total     $1,242.43

Less – Out Of School Hours Care
Costs for 4 days per fortnight  $65.00
Less – Travel/petrol Expenses   $40.00

TOTAL      $1,137.43

Additional NET Income   $169.95

 

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Scenario 2
Jane takes on a part-time job for 30 hours per week.  She is paid at $17 per hour and earns a gross income of $510 per week

Parenting Payment Single  $150.18
Pharmaceutical Allowance  $5.80
Family Tax Benefit Part A   $274.12
Family Tax Benefit Part B   $82.04
Rent Assistance    $116.62
Wages (NET – tax already paid) $861.53
Sub Total     $1,490.29

Less – Out Of School Hours Care
Costs for 2 days per week (estimate) $130.00
Less – Travel/petrol Expenses   $80.00

TOTAL      $1,280.29

Additional NET Income   $312.81

Scenario 3
Jane takes on a full-time supervisors job.  She earns a salary of $695pw

Parenting Payment Single  $2.18
Pharmaceutical Allowance  $5.80
Family Tax Benefit Part A   $274.12
Family Tax Benefit Part B   $82.04
Rent Assistance    $116.62
Wages (NET – tax already paid) $1,098.70
Sub Total     $1,579.46

Less – Out Of School Hours Care
Costs for 2 days per week (estimate) $160.00
Less – Travel/petrol Expenses   $100.00

TOTAL      $1,319.46

Additional NET Income   $351.98

Why does Child Care still cost me when my Child Care Benefit is 100% (or more)?

The government pays up to $2.88 per hour for pre-school aged children and 85% of that rate ($2.45 per hour) for school aged children.  Your CCB rate is the proportion of these rates that you are entitled to.  For example, if your CCB rate is 100%, you will be entitled to the full $2.88 per hour for a pre-school aged child.

Most Child Care Services charge considerably more than $2.88 per hour.  This is where the additional amount you pay comes from.

Example:
Emily has two children.  One is aged 4 and attends a long day care centre.  Her other child is 7 years old and attends Out Of School Hours Care.  Her Child Care Benefit is 104.9%

Stuart 4 is in long day care 2 days per week.  The centre has a fee of $48 per day.  All children using the centre are charged the full day (7am – 7pm) totalling 12 hours care per day.

Calculation:  Child Care Fee is $48 x 2 days = $96
CCB Entitlement is 104.9% x $2.88 = $3.02 per hour
Fee is for 2 x 12 hours care = 24 hours
24 hours @ $3.02 = $72.48
The Government will pay the centre $72.48
Emily will need to pay the remaining $23.52

Jemima 7 attends Out Of School Hours Care 2 days per week.  Each day she spends 2 hours in care before school and another 2.5 hours in care after school.  A total of 10 hours care each week.  The OOSH provider charges $4.20 per hour.

Calculation:  Child Care Fee is $4.20 x 10 hours = $42
School Aged child receives 85% of CCB rate only
i.e. $2.88 x 85% = $2.45per hour
CCB Entitlement is 104.9% x $2.45 = $2.57 per hour
10 hours @ $2.57 = $25.70
The Government will pay the centre $25.70
Emily will need to pay the remaining $16.30

 

Information supplied to SPB by:

Coleen Rivas
Career and Training Consultant
(specialising in single parent issues)
www.careerprofilers.com.au
 

 
   
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