Invalidity payments
An invalidity payment is part of an employment termination payment (ETP) your employer gives you. It is made up of a taxable component and a tax-free component. The invalidity payment is part of the tax-free component of the ETP.
You will receive an invalidity payment if:
- you stopped working due to physical or mental ill health, and
- two legally qualified medical practitioners have certified that it is unlikely you can ever work in a job for which you are reasonably qualified.
Disability super benefits
You may receive a disability super benefit from your super fund if:
- you experience physical or mental ill health, and
- two legally qualified medical practitioners have certified that it is unlikely you can ever work in a job for which you are reasonably qualified.
The payment may be:
- a one-off lump sum
- regular ongoing payments (called an income stream).
We tax lump sums and income stream payments differently. If you can choose how your payment is made, it is important to understand how the different options affect your tax.