TAX ON TERMINATION PAYMENTS FROM 1/7/2017

Reason for Termination: • Resignation

• Retirement
• Dismissal
• Refer to separate list for genuine redundancy / approved early
retirement schemes / invalidity

TYPE OF PAYMENT PAYG TAX CALCULATION PAYMENT SUMMARY

ANNUAL LEAVE & LOADING:
- Accrued up to 17/8/93 All taxed at 32% Lump Sum Payment A
- Accrued from 18/8/93 All taxed at marginal rates Gross Payment
LONG SERVICE LEAVE:
- Accrued up to 15/8/78 5% assessable taxed at marginal rates Lump Sum Payment B
- Accrued 16/8/78 to 17/8/93 All taxed at 32% Lump Sum Payment A
- Accrued from 18/8/93 All taxed at marginal rates Gross Payment
EMPLOYMENT TERMINATION
PAYMENTS (ETPs)
- Pre 1/7/83 component Tax free ETP Payment Summary
- Post 1/7/83 Component
- Employee at or over preservation age 17% up to the threshold* thereafter 47% ETP Payment Summary
- Employee less than preservation age 32% up to the threshold* thereafter 47% ETP Payment Summary

This table is issued as a summary of termination taxation. To use this table correctly, the user must have a complete
understanding of the ATO’s termination procedures and the calculation of ETP caps.

PRESERVATION AGE
DATE OF BIRTH PRESERVATION AGE
Before 1 July 1960 55
1 July 1960 - 30 June 1961 56
1 July 1961 - 30 June 1962 57
1 July 1962 - 30 June 1963 58
1 July 1963 - 30 June 1964 59
From 1 July 1964 60

The Association for Payroll Specialists Pty Limited acts in a non-representational capacity for users of its services and attempts to provide operational
solutions to payroll problems as they arise. All tax and financial solutions offered are of an operational nature and are not provided to satisfy any statutory
obligations nor is any solution provided as conclusive financial or tax advice. For example, you should consult a registered tax agent in preparing your tax
return, as responsibility for your tax return, including its preparation, rests with you.

Tax on Terminations
Keeping Payroll People Informed since 1990. 1300 711 240 payroll.com.au
Page
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 TAX ON TERMINATION PAYMENTS FROM 1/7/2017
Reason for Termination: • Genuine Redundancy
• Approved Early Retirement Scheme
• Invalidity
• Refer to separate list for resignation / retirement / dismissal

TYPE OF PAYMENT PAYG TAX CALCULATION PAYMENT SUMMARY

ANNUAL LEAVE & LOADING:
- All Payments All taxed at 32% Lump Sum Payment A
LONG SERVICE LEAVE:
- Accrued up to 15/8/78 5% assessable taxed at marginal rates Lump Sum Payment B
- Accrued from 16/8/78 All taxed at 32% Lump Sum Payment A
GENUINE REDUNDANCY AND EARLY
RETIREMENT SCHEME PAYMENTS:
(not applicable for Invalidity Payments)

Up to limit of $10,155 + $5,078 per

completed year of service. Tax free Lump Sum Payment D
EMPLOYMENT TERMINATION PAYMENTS
(ETPs)
- Invalidity Component Tax free ETP Payment Summary
- Pre 1/7/83 component Tax free ETP Payment Summary
- Post 1/7/83 Component
- Employee at or over preservation age 17% up to the threshold* thereafter 47% ETP Payment Summary
- Employee less than preservation age 32% up to the threshold* thereafter 47% ETP Payment Summary

This table is issued as a summary of termination taxation. To use this table correctly, the user must have a complete
understanding of the ATO’s termination procedures and the calculation of ETP caps.

The Association for Payroll Specialists Pty Limited acts in a non-representational capacity for users of its services and attempts to provide operational
solutions to payroll problems as they arise. All tax and financial solutions offered are of an operational nature and are not provided to satisfy any
statutory obligations nor is any solution provided as conclusive financial or tax advice. For example, you should consult a registered tax agent in
preparing your tax return, as responsibility for your tax return, including its preparation, rests with you.

Tax on Terminations
Keeping Payroll People Informed since 1990. 1300 711 240 payroll.com.au
Page
2
 TAX ON TERMINATION PAYMENTS FROM 1/7/2017
TAXING AN ETP - POST 1 JULY 1983 COMPONENT
Step 1. Is the employee over or under the preservation age?  Over (17%)

 Under (32%)

Step 2. Tax the Excluded ETP (flat threshold of $200,000)

Gross Tax rate Tax

$ x 17% $

$ x 32% $

$ x 47% $

$ TOTAL $

Step 3. Calculate the employee’s threshold for the Non-Excluded ETP by comparing the two caps

$200,000 $180,000

YTD income paid so far this financial year -

Taxable value of AL, LL & LSL paid on termination -
Any Excluded ETP paid on termination -
Individual ETP threshold amount = =
Step 4. Tax the Non Excluded ETP (using the lower of the two thresholds from step 3)

Gross Tax rate Tax

$ x 17% $

$ x 32% $

$ x 47% $

$ TOTAL $

This table is issued as a summary of termination taxation. To use this table correctly, the user must have a complete
understanding of the ATO’s termination procedures and the calculation of ETP caps.

Tax on Terminations
Keeping Payroll People Informed since 1990. 1300 711 240 payroll.com.au
Page
3