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Lump sum payments in arrears tax offset calculator

Version 3.3.0
Takes 5 to 10 minutes to complete

What is a lump sum payment in arrears?

A lump sum payment in arrears is a payment received in one tax year that includes income that accrued in previous tax years. The lump sum is assessable in the year of receipt. However, you may be eligible for a tax offset to reduce the amount of tax you have to pay.

A lump sum payment in arrears tax offset is not available where the lump sum payment in arrears is less than 10% of your normal taxable income less the lump sum payment in arrears. Your normal taxable income is your taxable income less any amount subject to income averaging, any employment termination payment (ETP), any lump sum payment for unused annual leave or unused long service leave and any capital gain that you received. If you received a payment summary and you may be eligible for the tax offset, it should show the lump sum at Label E.

Taxpayers who have received a lump sum payment in arrears and are liable for the Medicare Levy Surcharge may be eligible for a tax offset that will reduce in whole or in part their Medicare Levy Surcharge liability. If you are eligible for the Medicare Levy Surcharge tax offset and you have a spouse, your spouse may also be eligible for a tax offset. This calculator does not calculate whether you or your spouse, if you have one, are entitled to a Medicare Levy Surcharge tax offset.

Information you will need

  • The years and amounts to which the lump sum relates. If you received a payment summary with Label E showing the lump sum payment, your payer should have also provided this information.
  • Your taxable income in the year the lump sum is received, and the other years to which the lump sum relates.

Disclaimer

  • This calculator provides an estimate only. The actual amount of your offset can only be calculated when you lodge your income tax return.
  • You should not include the amount of offset in your income tax return – the amount of your offset will be automatically calculated by the ATO.
  • This calculator is unable to perform a calculation where the taxable income includes an amount subject to income averaging, an employment termination payment, a capital gain, a lump sum payment of unused annual leave or unused long service leave or you made a loss in the tax year or any of the two most recent accrual years.
  • This calculator can only be used where the year the lump sum is received and the two most recent accrual years are on or after 1 July 2005.
Takes 5 to 10 minutes to complete