Is long service leave income?

Noreta has recently retired and wants to know whether her long service leave counts as employment income.

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Q. Noreta
I have retired from my job as a school crossing supervisor and I am set to receive long service leave paid at six hours per fortnight for a total of 60 hours. When I use the self-reporting link, do I put the long service leave payments in as work income?

A. Leave payments paid on cessation of employment are not assessed as income for pensioners of Age Pension age, so assuming that you are of Age Pension age, you will not need to report the payments as income.

If you had chosen to take your long service leave while continuing your work as a school crossing supervisor, that would change the situation.

If a pensioner receives paid leave as part of a continuing employer/employee relationship, the amount received is assessed as employment income under the normal income test. The period covered by a lump sum payment will be allocated to appropriate instalment periods and spread evenly throughout the instalment periods.

For example, if a pensioner takes eight weeks long service leave paid as a lump sum in advance with the first four weeks at full pay and the second four weeks at half pay, the advance lump sum in the first two fortnights is treated as employment income at the full pay rate with the second two fortnights assessed at the half pay rate.

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Written by Ben

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