Commonly known as ‘the Pension’, the Age Pension is income support paid by Services Australia to older Australians. To qualify, you need to be the right age, meet the residency requirements, and pass means testing: both the Assets test and the Income test.
This guide explains the Income test. It covers what counts as income, how much you can earn before your pension starts to reduce, and the cut-off point where payments stop. Age Pension assessment can feel complicated, so we have answered the questions people ask most often.
What is ‘means testing’?
Means testing is how Services Australia works out whether you qualify for a rate of Age Pension, and how much. There are two tests: the Income test and the Assets test. Services Australia applies both to your circumstances, then pays you based on whichever test produces the lower rate. You need to pass both tests to qualify.
What counts as income for the Income test?
You do not need a job to have income in the eyes of Services Australia. As well as wages, it counts money you receive from sources such as:
- rent from an investment property or from boarders
- distributions or dividends from a private company or trust
- some lump-sum payments.
Services Australia also applies a set rate of return to your financial investments to work out your ‘deemed’ income, whether or not you actually earn that much. This deemed income counts towards your income limit as well.
How much income can I earn?
The table below shows how much you can earn each fortnight and still receive the full pension. If you earn more than this, you may still get a part-pension, up to a cut-off point.
| Living arrangement | Fortnightly income limit | Amount that fortnightly pension reduces by above this limit |
|---|---|---|
| Single person | Up to $226 | 50 cents for each dollar over $226 |
| Couple living together or apart due to ill health | Up to $396 | 50 cents for each dollar over $396 |
Source: Services Australia, July 2026
Pension cut-off points per fortnight:
| Living arrangement | Pension will be cut off if you earn the following |
|---|---|
| Single person | $2,627.80 |
| Couple living together | $4,016.80 combined |
| Couple living apart due to health | $5,199.60 combined |
Source: Services Australia, July 2026
Services Australia adjusts these limits three times a year, in March, July and September, in line with inflation. The adjustments are based on the Consumer Price Index (CPI) published by the Australian Bureau of Statistics.
The Work Bonus lets you earn up to $300 per fortnight from work without it affecting your pension. This is on top of your Income test limit, so a single pensioner can earn $526 a fortnight ($226 plus $300) and still receive the maximum rate of pension.
Any unused Work Bonus builds up in a balance, up to $11,800, which you can use to offset employment income later. For example, if you earned $5,000 in a single fortnight and had no other income that year, that amount sits under the $11,800 balance, so it would not be assessed under the Income test and your pension would not change.
The Work Bonus is applied automatically.
What is deemed income?
Services Australia assumes your financial investments earn a certain level of income, even when they do not. This is called deeming. It applies to savings accounts, term deposits, managed investments, shares and some income streams, and in some cases your superannuation.
The deemed rate is a set percentage of your investment balance. It depends on whether you are single or a member of a couple, and on the total value of your investments. If your investments actually earn more than the deemed rate, only the deemed amount counts towards your Income test, not the higher real return. Some exemptions also apply.
How does my superannuation affect the Age Pension?
Once you reach Age Pension age, your superannuation counts in both tests. The balance on your latest superannuation statement is counted under the Assets test, and deeming rates are applied to that same balance for the Income test.
I have an income stream product, can I still receive Age Pension?
Having an income stream, such as a superannuation income stream or an annuity, does not automatically rule you out of the Age Pension. Income streams are treated differently under means testing.
For means testing, income streams fall into four categories:
- exempt or partly exempt from the Assets test
- asset-tested lifetime
- asset-tested long term
- asset-tested short term.
Each category has its own rules for how income and assets are assessed. Because the treatment varies, it is worth speaking to a Financial Information Service officer on the Centrelink Older Australians Line to confirm which category your product falls into.
What happens if I receive a lump sum while on Age Pension?
Most one-off lump sums are not counted as income. That includes a lottery win or an inheritance. It also includes:
- other one-off gifts, prizes or rewards, or amounts of superannuation
- gambling wins, unless you gamble for a living
- natural disaster payments
- some redress payments
- a payout from a property settlement, or a damages compensation payment.
Even so, what you do with the money can affect your Income test or Assets test later. And whatever the lump sum, you must tell Centrelink within 14 days of being able to access it, even if you think it is exempt.
Can I still get the Age Pension if I’m living overseas?
You can usually still receive the Age Pension while living overseas, though the rate may change to what is called the ‘Outside Australia rate’. If you are away for six weeks or less, you do not need to tell Services Australia and your pension is unaffected. If you are away for more than 26 weeks, your rate will depend on how long you were an Australian resident. A social security agreement between Australia and another country can also affect what you receive.
I’ve heard of a transitional pension, will that apply to me?
The transitional pension rate only applies if you were already receiving the Age Pension on 20 September 2009. It exists to protect pensioners who would otherwise be worse off under today’s Income test.
Summary
The Income test is one part of the eligibility requirements for the Age Pension. You can receive the pension while still earning an income, but there are limits, and a cut-off point where payments stop.
The Age Pension can be tricky to work through, and you do not need to calculate your entitlement to the dollar yourself. Services Australia does that for you. But understanding the terms and how your finances are assessed makes it easier to plan with confidence.
The information in this article is general in nature.