Can I earn money if I go Bankrupt?

There is no limit on how much money you can earn during bankruptcy. Your trustee will assess your income each year for the period of your bankruptcy. Our expert team can help you plan what you can Earn Money if Bankrupt around the Restrictions and Conditions. If your net income exceeds the relevant income threshold, you must pay your trustees half of the amount you earn over that threshold.

Bankruptcy Advisory Centre - Sole Trader | Earn Money if Bankruptcy

What is classed as ‘income’ during bankruptcy?

You may think that the ‘base income threshold amount’ is classed as any money that you receive in your hand from an employer during bankruptcy. Still, several other things are considered ‘income’ under Section 139L of the Bankruptcy Act.

These include but are not limited to the following:

  • Fringe benefits: Using a motor vehicle, whether provided by an employer or other party.
  • Superannuation that is an annuity or pension: A regular weekly payment from your super fund but not one-off Lump sum draw-down payments from your super fund.
  • Most Centrelink benefits, such as the JobSeeker Payment and Disability Support Pension
  • A loan received from an associated entity: this is to prevent bankrupts from taking their wage as a loan if employed by a related entity.
  • Money someone else receives for your work: you can’t direct invoices or wages to be paid to your spouse or partner to avoid earning any ‘income’.
  • Any form of salary sacrifice: any voluntary super contributions from your salary

Some types of payments are excluded:

  • Child support and Maintenance amounts: if they are part of the Child Support (Registration and Collection) Act 1988.
  • Government Rent subsidies: Other than those paid by an employer.
  • National Disability Insurance Scheme: payments for reasonable personal support.
  • Army, Navy and Air Force Reserve payments:
  • Any compulsory superannuation: payments made by an employer.
  • Certain family assistance and social security payments: as referenced in section 35 of the Bankruptcy Regulations 2021.

How much income can you earn during bankruptcy?

While there is no limit to how much you can earn, AFSA sets out income threshold amounts that increase twice yearly. There are different rates for those with dependents.

For Bankruptcy Act purposes, a dependant is defined as someone:

  • Who resides with the bankrupt person.
  • Who is wholly or partially dependent on you for economic support and
  • Whose income is less than a certain indexed amount.

If you earn over the relevant threshold, you must pay your trustee half of the difference between the threshold and what you earn.

Example from AFSA income contributions practice statement:

Can Bankruptcy Advisory Centre | I earn money if Bankrupt?

Employment Restrictions

You cannot do certain types of work if you become bankrupt. They differ from state to state in Australia and are covered in this article—state By State Employment Restrictions for Bankrupts.

Need more information about bankruptcy? Contact Us

You Can Earn Money if a Bankruptcy Order is Made

“The financial ramifications of bankruptcy are unique to each person and business, which seems like a scary prospect when starting the process. Contrary to what you might think, there is no limit on how much money you can earn during bankruptcy, but there are some restrictions. We’ll work to find the best solution for you regarding your income within the framework of the law.”


Andrew Bell Bankruptcy Advisor

Let’s Talk 

With over 30 years of experience in debt solutions and bankruptcy in Australia Andrew can find a solution for you.

“Nothing is more satisfying to me than knowing that I’ve helped someone get back on their feet by guiding them through the Bankruptcy Process. Rest assured, you’re in good hands with me as we solve your financial problems together.”

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