Accrued Leave Before Retirement: Holiday or Lump Sum? (July 2025)

Relevant For:

Individuals nearing retirement with accrued annual or long service leave.

Key Points:

• Taking leave before retiring means super is paid on your holiday pay, but not on lump sum payouts.
• Using leave now may help satisfy the super “work test” or qualify for the “work test exemption”.
• Lump sum payments are taxed in the year received; deferring may reduce tax or increase ETP cap.
• Lump sums may affect Age Pension asset tests, but not the income test.
• Paid holidays don’t affect pension eligibility and can offer more financial flexibility pre-retirement.

Full Article:

If you’re approaching retirement and have accumulated