Lump sums while receiving an income support payment
You may get income as a lump sum. A lump sum is a one off payment of money.
If you get a lump sum, it may affect your income support payment.
How we assess a lump sum amount for the income test depends on its nature. Generally, we treat lump sum amounts as income from the date you're entitled to receive the money.
If you get a lump sum, you need to tell us within 14 days so we can assess it. Otherwise you may be overpaid and have to pay the money back. Even if the money is exempt from the income test, you have to tell us of any change to your assets.
The Australian Taxation Office may assess your lump sum payment. If they decide it’s taxable, this may affect your adjusted taxable income for family assistance payments.
Lump sums exempt from the income test
Some lump sums are exempt from the income test. These lump sums are unlikely to be repeated, can't be reasonably predicted, and isn't money paid to you for a service or profit.
Examples of exempt lump sums:
- a one-time gift
- an inheritance
- an irregular superannuation amount, such as commutation of a superannuation pension
- compensation and insurance payouts for damages to property or personal effects
- the value of emergency relief such as financial assistance for floods, bushfires and droughts
- certain redress payments, for example, historical negligence
- a prize, reward or lottery win not made in regular instalments
- single or occasional gambling wins if you don't rely on it for a living
- a compensation payment you get from an Australian trust
Using your exempt lump sum
What you do with exempt lump sums may affect your payment under the income or asset test.
Any amount you spend on an exempt asset such as your home, mortgage, or medical equipment, won't change the value of your assets we assess.
If you buy non-financial assets, such as artwork or a holiday home, we assess your purchase as an asset and this may affect your rate of payment.
If you use the lump sum to increase your financial assets, for example, you put it in the bank, loan it, or use it to buy securities or investments, it's assessed as a financial asset. A notional rate of income is deemed. If you deposit the lump sum with your superannuation fund, it won't be assessed as an asset if you're under age pension age and haven't started drawing on the fund.
Gifting your lump sum may affect your payment. It's your right to give away part or all of your lump sum. However, gifts of more than $10,000 per year or $30,000 in a 5 year period are included in your deemed financial assets. If you put the funds into a trust, we assess whether the income and assets are still yours or you've gifted them.
Read more about gifting.
Lump sums included in the income test
The assessment of lump sum amounts included in the income test depends if it's remunerative or non-remunerative.
Examples of remunerative lump sums:
- a commission payment
- a bonus
- director’s fees
- leave paid out while you're still employed
- a payment to a professional sports person such as a signing on fee, sponsorship or endorsement payment
- loan arrangements where there's no expectation the loan will be repaid, in lieu of services performed
If remunerative lump sums are paid regularly, we assess them over the same frequency. For example, we assess a monthly commission over the following month.
One off or irregular income is apportioned for the same period of time it was earned over, if this is known. For example, a 6 week job where the commission can only be calculated and paid afterwards, is apportioned over the 6 weeks after it's received.
Otherwise, remunerative lump sums are apportioned over 52 weeks.
Examples of non-remunerative lump sums:
- a distribution from a family trust
- a royalty payment
- a grant or scholarship
- a lottery win paid as a series of payments under a single contract, for example, win $10,000 a year for life
- a dividend from a private company
- a distribution from a private trust
Non-remunerative lumps sums are apportioned as income from the date received for 52 weeks.