Providing expert advice and assistance on the proper tax treatment of compensation payments

For nearly five years our experienced taxation lawyers have been helping veterans in receipt of lump sum arrears payments of compensation for injury and illness acquired in the course of their service with the Australian Defence Force deal with the Australian Taxation Office when it comes to tax on those payments.

We are confident in our ability to recover what is lawfully yours so that your compensation will sustain you and your families further.

veterans tax advice

Looking for an experienced tax lawyer in Newcastle, Sydney or the Hunter to assist you with a veterans tax advice matter? Call us on (02) 4929 7002, email us or complete an enquiry form.

What is a lump sum arrears payment?

Lump sum payments in arrears are “back payments” of compensation that ought to have been paid over a period of time. Often veterans will receive lump sum arrears payments where they are classified at a higher rate of incapacity for work than they had previously been classified many years after leaving the Defence Force. This means that, for all the years that person was receiving compensation payments less than their true entitlement, they are owed money. The total of all amounts owed over all the years it should have been paid becomes the lump sum payment in arrears.

Lump sum payments in arrears are subject to income tax in the year which they are received.  However, this causes an unfair result as the tax rate on large amounts of income is greater than the tax rates on smaller amounts of income.  Had the lump sum amount been paid in smaller amounts over a number of years, the tax rate on the whole payment would likely have been much less than the tax rate on one large lump sum payment.  For this reason, veterans in receipt of lump sum payments in arrears may be eligible for a tax offset to reduce the tax payable on their lump sum compensation payments to bring their tax assessment in the year of receiving the lump sum payment down to the amount of tax that ought to have been paid had the correct periodic compensation been paid from the start. In some cases, where significant tax has been withheld on the lump sum payment, the inclusion of the tax offset can result in a tax refund.

When it comes to dealing with veterans’ tax obligations, you can count on our experienced team of solicitors to give expert legal advice. 

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    How can we help?
    The experienced team at Butlers Business Lawyers have frequently applied to the Australian Taxation Office for inclusion of the lump sum payment in arrears tax offset in respect to Commonwealth Superannuation Corporation (CSC) compensation payments to veterans. Our skilled taxation lawyers have an expert understanding of the CSC payment scheme and your taxation obligations to assist you in recovering tax unnecessarily withheld.

    We can:

    • Advise on the correct tax treatment of CSC payments;
    • Calculate the amount of the lump sum in arrears tax offset you are entitled to;
    • Advocate on your behalf to the ATO for inclusion of the lump sum payment in arrears tax offset by preparing detailed taxation objections;
    • Appeal ATO decisions in regard to CSC payments to the AAT and Federal Court.

    Testimonial

    “When I received my Commonwealth Superannuation Corporation payment, I sought the advice of Butlers to assist with my tax obligations. Their experienced team of solicitors helped me recover several hundred thousand dollars in withheld tax that I was owed. It is clear to me that Butlers are highly skilled in this area and I would definitely recommend their service!”

    Barry