Lump Sum A

What is Lump Sum A?

A lump sum payment is a one-time payment that is taxed and reported differently to your salary and wage income.

“Lump Sum A” refers to a tax offset that may apply to certain types of lump sum payments received by individuals who have reached their preservation age but are not yet retired. It is for certain unused leave that is paid out on termination.

Lump Sum A is typically associated with superannuation payments and redundancy payments. It allows individuals to receive a portion of these payments tax-free or at a reduced tax rate, depending on the circumstances and the amount received.

How does it work?

When reporting lump sum A, you need to report the lump sum type code of R or T.

  • Lump sum type code R – for all unused annual leave or annual leave loading, and the component of long service leave that accrued from 16 August 1978 that is paid out on termination only for genuine redundancy, invalidity or early retirement scheme reasons.
  • Lump sum type code T – for unused annual leave or annual leave loading that accrued before 17 August 1993, and long service leave that accrued between 16 August 1978 and 17 August 1993 that is paid out on termination for reasons other than genuine redundancy, invalidity or an early retirement scheme.

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