ADF Retention Benefit - What Are The Real Benefits of This Offer

You may have been deemed eligible or have met the criteria to be offered the ADF continuation bonus. This is an offer for you to complete another 3 years of service and the ADF will offer you $50,000 in return. What does that mean for you and what should you consider from this offer?

What options do you have with the payment:

• Lump sum - It won’t be $50,000 hitting your bank account. You’re going to pay tax on that $50,000. If you accept the offer within the 23/24 FY, you’re likely to pay between 32.5% and 37% tax on that amount (so about $31,500 - $33,750 Net payment). But... if you consider waiting until the 24/25 FY or splitting the offer, you may only pay 30% tax ($35,000 net payment).
• Salary sacrifice into your super - This will only get taxed 15% ($42,500 going into your super fund) and you will also be able to claim the whole amount ($50,000) as a tax deduction! This may be more of a consideration if your next posting is retirement?
• Split between super salary sacrifice and a cash lump sum - Depending on how you want to use the funds/what your goals are, this offers more flexibility.
• Split lump sum in two payment, 12 months apart - This will allow you to split the amount for further taxation and/or managing government benefits.

 
What else is affected:
This will become part of your taxable income so it will have an effect on other government financial services such as the Child Care Subsidy and Child Care payments.

If you're confident (and happy) that you will serve another 3 years in the ADF, this amount might really give you a good cash lump sum! (And take the edge off those weekend guards). It's important that you fully understand the financial implications with this retention bonus offer, both if you take the $50,000 and if you don’t complete the 3 years.