Working Credit 108-07020000

Customers eligible for Working Credits build up credits in each fortnight they have little or no ordinary income. When a customer has income from employment, they can draw on their Working Credits to reduce the effect of that income on their payment. Only income from employment can be used to deplete Working Credits.

A self-employed person already benefits from spreading income over a year (therefore accessing the benefit of all income test free areas) and allowable deductions for business income, so will not benefit from Working Credit. Self-employed customers cannot deplete their self-employment income against their Working Credit balance. If their total ordinary income (including self-employment income) is less than $48 per fortnight, they can accrue credits.

Working Credit applies from date of grant. Customers not receiving payment due to a waiting period are eligible for Working Credit after the waiting period ends. Working Credit balance starts at zero unless the customer is eligible to transfer or restore their previous Working Credit, Income Bank or Australian Apprentice income bank balance.

The information customers can view online includes Working Credit balance and balance history online.

Note: income from paid leave upon cessation of employment is not employment income. Paid Leave upon cessation of employment is included in ordinary income and used when calculating the accrual of Working Credits, however the customer is unable to deplete their Working Credits.

Customers can view their Working Credit balance online via Payments and Claims > Manage payments > My payments in their Centrelink Online account.

This service is available to registered customers during the self service hours of operation.

See Resources for information about issues that may arise when a customer wants to view their Working Credit balance online and possible Service Officer actions.

The maximum Working Credits a customer can accrue is 1,000 credits, or 3,500 credits for Youth Allowance (YA) (job seeker) customers.

The maximum accrual per fortnight is 48 credits. All Total Ordinary Income (TOI) affects accrual. Customers can accrue Working Credits each fortnight if their total ordinary income from all sources is less than $48. If the customer has income, they accrue the difference between their total ordinary income and $48 each fortnight. This is calculated based on a daily maximum possible accrual rate of 48/14 = 3.4286 credits.

Employment income is spread evenly over the entitlement period, regardless of the days worked or the type of earnings, and is subject to the Working Credit and income test rules for each day in the entitlement period. Other ordinary income (non-employment income) is assessed from the date of event of the change (change point), therefore, the daily rate of this income may change throughout the entitlement period.

Note: pensioners of Age Pension age may be entitled to a Work Bonus. The Work Bonus is applied (where entitled) prior to calculating the employment income component for Working Credits.

A partner's income will only affect the customer's Working Credit balance if at least one member of the couple receives a pension. The customer's circumstances must be considered when determining accrual amounts for couples.

If Working Credits can be used, it is not a choice to use them. They are not discretionary.

If the customer's total ordinary income is greater than the Income Free Area (IFA) applicable to their payment type, the customer may use their Working Credits to reduce the effect of employment income on their entitlement. This is called depletion.

Accrued Working Credits are used to reduce the impact of the customer's income only if some or all of this income is from employment. Each credit can be used to offset $1.00 of employment income. Working Credits deplete on a daily basis.

Working Credits do not affect the current income test. Working Credits are used to reduce the customer's affecting employment income first, then the current income test for the payment type is applied to the customer's remaining total ordinary income. For example, if a customer has $200 income, and Working Credit depletion is calculated at 100 credits, only $100 of customer's income is used in applying the income test.

Working Credit calculations for Wife Pension customers who transition to JSP on 20 March 2020 are based on the same rules used to calculate the transitional rate applicable to the payment

The Working Credit calculation that applies to the customer's current transitional rate is to be used as follows:

• JSP income tests and income free areas for customers on the notional JobSeeker Payment rate or the notional Wife Pension transitional rate (method 1), or
• Wife Pension income test and income free area, frozen at 19 March 2020 for customers on the notional Wife Pension transition rate (Method 2)

For these customers there will be two Working Credit balances kept at the same time although the customer will only see the Working Credit balance applicable to the higher rate actually being paid as JSP.

See the Resources page for a link to a summary.

For Working Credit purposes, customers who have lost qualification to payment due to employment are treated as being qualified for the period it takes to deplete all their Working Credits, before cancellation. This is available to the following customers:

• Disability Support Pension (DSP) customers employed for over 30 hours a week
• Carer Payment (CP) customers who no longer meet the constant care requirement

This treatment continues until one of the following situations occurs:

• their Working Credit balance is reduced to nil
• qualification (other than related to the employment) is lost
• payability (other than related to the income test) is lost

To continue being treated as qualified until Working Credits are depleted, the customer is required to satisfy their reporting requirements, that is, lodge their continuation form or report their income.

Note: a job seeker who commences employment as an Australian Apprentice may also choose to deplete their Working Credits prior to transferring to payment as an Australian Apprentice. However, normally a person will receive greater benefit by having their job seeker payment suspended from the date they commence full-time employment.

Policy contains links to the Guide to Social Security Law, one of which is a link leading to examples of Working Credit accrual and depletion daily calculations.

When making an unfavourable decision speak to the customer:

• explain the decision
• give the customer a chance to give further details or evidence
• advise their review and appeal rights, and record an application for a formal review if required

Make 2 genuine attempts to contact the customer before finalising the decision.