What Is the Centrelink Working Credit Scheme?

The Working Credit scheme is a Services Australia program designed to encourage employment by allowing income support recipients to build and use credits that reduce the impact of work income on their Centrelink payments. Instead of your payment dropping immediately when you start earning, your working credits act as a buffer.

Think of it as a savings account for your Centrelink payment. When you earn less than the income-free threshold, you build up credits. When you earn more, you can spend those credits to keep more of your payment. The scheme applies to several Centrelink payments, including JobSeeker Payment, Parenting Payment, and Youth Allowance.

Use our take-home pay calculator to see how Centrelink payments and work income combine to affect your total household budget.

Which Centrelink Payments Include Working Credit?

Not all Centrelink payments offer working credits. The scheme is only available to recipients of specific income-support payments where employment income is common and expected.

If you receive a payment that includes working credits, Services Australia automatically tracks your balance. You do not need to apply separately. Your myGov account and Centrelink online services show your current working credit balance whenever you report your income.

How Working Credits Accumulate

You build working credits each fortnight when your employment income falls below a set threshold. For most recipients, the threshold is $48 per fortnight. For every $0.50 your income falls below this threshold, you earn 1 working credit.

Here is a practical example. If you earn $20 in employment income during a fortnight, you are $28 below the $48 threshold. That translates to 56 working credits earned that fortnight ($28 ÷ $0.50 = 56). If you earn nothing at all, you earn the maximum of 96 credits per fortnight ($48 ÷ $0.50 = 96).

Your total working credits cap out at 1,000 credits, worth $500. Once you reach this maximum, you stop accumulating until you use some credits. This cap ensures the scheme helps people transitioning to work rather than building indefinite buffers.

How Working Credits Are Used

When your fortnightly employment income exceeds the $48 threshold, working credits automatically offset the excess. For every $0.50 over the threshold, 1 working credit is deducted from your balance. This reduces the income that Services Australia counts when calculating your Centrelink payment rate.

Here is how the calculation works step by step. First, your actual employment income is reduced by working credits. This reduced figure, called the "credit-adjusted employment income," is then used in the income test for your Centrelink payment. The result is that your payment reduces more slowly as you earn more.

Consider this example. You have 500 working credits ($250 worth) and you earn $400 in a fortnight. Your income is $352 over the $48 threshold ($400 - $48 = $352). This uses 704 credits to offset, but you only have 500 in your balance. So $250 of your income ($500 ÷ 2) is offset by credits, leaving $150 of income ($400 - $48 - $250 = $102... wait, let me recalculate).

Let me recalculate more carefully. With 500 credits, you can offset 500 × $0.50 = $250 of employment income. Your employment income is $400. First subtract the $48 threshold: $400 - $48 = $352 counted income. Apply your 500 credits (worth $250): $352 - $250 = $102. So the income test applies to $102, not $352. This means your Centrelink payment reduces much less than it would without working credits.

FY 2025-26 Working Credit Limits and Rates

Services Australia reviews Centrelink rates and thresholds each financial year. Here are the key working credit figures for FY 2025-26:

These limits apply consistently across all eligible payments. The ATO manages personal income tax separately from Centrelink's working credit system, so your working credits do not reduce your taxable income — they only affect how much Centrelink pays you. You still need to declare all employment income on your annual tax return.

Working Credit vs the Centrelink Income Test

The working credit system sits on top of the standard Centrelink income test. Understanding how the two interact is essential for anyone balancing work and income support payments.

Under the standard income test for JobSeeker Payment, your payment reduces by 50 cents for every dollar you earn over the income-free area (typically $150 per fortnight for singles, though this varies by payment type). The working credit effectively increases this income-free amount temporarily by reducing your counted income.

For example, if you have 200 working credits ($100 worth) and earn $200 in a fortnight, the calculation works like this. Your employment income is $200. The $48 threshold is deducted: $200 - $48 = $152. Your 200 working credits offset $100 of this: $152 - $100 = $52. So only $52 is counted as income for the Centrelink income test. Without working credits, all $200 would count.

Use our Medicare Levy calculator to check how your combined income from Centrelink payments and employment affects your overall tax situation.

What Happens When You Stop Receiving Centrelink Payments?

If you start a full-time job and stop receiving Centrelink payments, your working credit balance remains on the system for a period. Services Australia keeps your credits active for up to 12 weeks after your last payment. If you need to return to income support within that period, your credits are still available.

If you do not return to Centrelink payments within 12 weeks, your working credits expire. However, if you reapply for an eligible payment later, your credits restart at zero and you begin building them again from your first income report. This one-time grace period gives you a safety net while you settle into new employment.

Your working credits do not transfer between different types of Centrelink payments. If you move from JobSeeker Payment to Parenting Payment, for instance, you keep any existing credits because both payments are eligible. But moving from JobSeeker to Age Pension means your credits do not carry over since Age Pension does not participate in the scheme.

Common Working Credit Scenarios

Understanding how working credits behave in real-life situations helps you plan your work and Centrelink reporting more effectively. Here are some common scenarios.

Scenario 1: Starting casual work. You are on JobSeeker Payment and start a casual job working 1-2 days per fortnight, earning around $150. You have 0 working credits initially. Your income of $150 is $102 over the $48 threshold. Without credits, the full $102 is counted. But after 4 fortnights of earning below $48 on slow weeks, you build around 192 credits, which then offset $96 of your next higher-income fortnight.

Scenario 2: Seasonal work. You work full-time for 6 weeks earning $1,000 per fortnight, then stop for 8 weeks. During the working period, your credits drop to zero quickly. But during the 8 weeks with no income, you rebuild 96 credits per fortnight and reach the full 1,000-credit cap within about 11 weeks, protecting your Centrelink payment when you next pick up work.

Scenario 3: Steady part-time work. You consistently earn $250 per fortnight. Each fortnight you earn $202 over the $48 threshold. This uses 404 credits per fortnight. With a 1,000-credit cap, you exhaust your credits in about 2-3 fortnights. After that, without a reserve of credits, the income test applies to your full earnings above the threshold.

Frequently Asked Questions

Do I need to apply for working credits separately?

No. Working credits are automatically applied to eligible Centrelink payments. Services Australia tracks your balance from your first income report. You can view your current working credit balance through your myGov account under Centrelink online services.

Do working credits affect my tax return?

No. Working credits only affect how Centrelink calculates your payment rate. They do not change your taxable income or the amount of tax you owe. You must still declare all employment income on your annual tax return to the ATO.

Can I lose my working credits?

Yes. Your credits expire if you leave Centrelink payments for more than 12 consecutive weeks. They also do not carry over if you switch to a non-eligible payment like Age Pension. If you commit a reporting fraud or fail to report income for extended periods, Services Australia may cancel or reduce your credit balance.

What is the difference between working credit and the income-free area?

The income-free area is a fixed amount you can earn each fortnight before your Centrelink payment reduces. Working credits sit on top of this by temporarily reducing your counted employment income. The income-free area is a permanent feature of each payment's income test, while working credits are a depletable buffer that must be rebuilt.

How often should I report my income to Centrelink?

You must report your employment income every fortnight using Centrelink online services or the Express Plus Centrelink app. Reporting on time ensures your working credits are calculated correctly. Late or missed reports can delay your payment and cause your credit balance to stale.