The Guides to Social Policy Law is a collection of publications designed to assist decision makers administering social policy law. The information contained in this publication is intended only as a guide to relevant legislation/policy. The information is accurate as at the date listed at the bottom of the page, but may be subject to change. To discuss individual circumstances please contact Services Australia.

1.1.E.180 Exempt lump sums

Definition

For the purposes of all income support payments, exempt lump sums are amounts that are unlikely to be received again and cannot reasonably be expected to be received or anticipated. They do not represent the receipt of money for services rendered directly or indirectly.

Example:

  • one-off gifts, and
  • lottery winnings (not winnings paid on a periodic basis).

Note: The initial exemption of the lump sum amount from the income test does NOT mean that any on-going income generated by the lump sum is exempt, nor does it mean that the asset the lump sum turns into is exempt. The continuing assets and income tests treatment will be determined by how a person makes use of the funds. The funds may be used to obtain additional assets such as a car. For a purchase such as this the assets test would apply. Or, the funds may be invested in a financial investment. The funds have then become a financial asset (refer to SSAct section 9(1) for all the types of financial assets), assessable as an asset and subject to the income test deeming rules.

Act reference: SSAct section 8(8) Excluded amounts-general, section 8(11) An amount received by a person is an exempt lump sum if …, section 9(1) Financial assets and income streams definitions

Policy reference: SS Guide 4.3.2.30 Income exempt from assessment - legislated, 4.3.2.31 Income exempt from assessment - specifically approved, 4.3.2.35 Income exempt from assessment - s 8(11) exempt lump sums, 4.4.1.30 Scope of deeming

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