Private ruling: Long service leave payment
Date of advice: 8 October 2015
Published: October 2015
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Is the payment of your unused long service leave entitlements assessable income in the 2015-16 financial year? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5. | Income Tax Assessment Act 1997 Section 83-80.

Reasons for decision: Summary: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year. Salary and wage income is regarded as ordinary income and therefore assessable under subsection 6-5(2) of the ITAA 1997. Unused long service leave payments are assessable under section 83-80 of the ITAA 1997. A payment summary issued by an employer shows the amount of gross payments and lump sum payments made in the relevant financial year. In your case, your payment summary for the year ending 30 June 2015 was amended to reduce your lump sum payments. Your amended pay slip shows that your unused long service leave was paid in July 2015. This is sufficient evidence to show that your assessable income for the 2015-16 includes the lump sum payment for your unused long service leave.

Relevant facts: You were employed in the 2014-15 financial year. | Your position was originally to end in February 2015, however your position was extended to 30 June 2015. | Following the extension of your position, your employer subsequently amended your payslips and PAYG payment summary for the year ending 30 June 2015. | Your PAYG payment summary for the year ending 30 June 2015 was amended to reduce your lump sum payments. The amount of tax withheld was also corrected. | Amended payslips were also issued. An amount of unused long service leave is now showing as being paid in July 2015.