What is a life benefit ETP?

An ETP is a lump sum payment you make: to an employee when their employment is terminated (referred to as a ‘Life benefit’ ETP) to an employee’s estate because their employment has been terminated due to death (referred to as a ‘Death benefit’ ETP).

What is the preservation age for ETP?

ETP amounts in excess of either cap are taxed at the top marginal tax rate. The preservation age is 55 years for individuals born before 1 July 1960.

What is ETP payment summary?

Use the PAYG payment summary – employment termination payment form (NAT 70868) if you make an employment termination payment (ETP) to: an employee whose employment has been terminated. a non-dependant because of an employee’s death. a trustee of a deceased employee’s estate.

Is ETP tax-free?

An ETP has a tax-free component – if part of the payment is for invalidity or work done before 1 July 1983, you don’t withhold tax from this component.

What does ETP include?

An ETP can include: payments for unused sick leave or unused rostered days off. payments in lieu of notice. a gratuity or ‘golden handshake’ an employee’s invalidity payment (for permanent disability, other than compensation for personal injury)

What is the difference between ETP cap and whole-of-income cap?

The taxable component of your ETP is taxed at either 17% or 32% up to your whole-of-income cap. Any amounts over the whole-of-income cap are taxed at the top tax rate (47%).

How does the ETP cap work?

The $180,000 whole-of-income cap is reduced by any other taxable income earned in the income year either before or after receiving the ETP. For the purposes of withholding from the ETP, you work out the cap based on the employee’s taxable income before they are terminated.

What age can I retire at?

The full retirement age is 66 if you were born from 1943 to 1954. The full retirement age increases gradually if you were born from 1955 to 1960 until it reaches 67. For anyone born 1960 or later, full retirement benefits are payable at age 67.

Is ETP taxable income?

How much tax do you pay on ETP?

Any taxable component of the ETP below $180,000 is taxed either at 16.5% or 31.5%, depending on the type of payment. Any amount that exceeds $180,000 is taxed at the top marginal rate of 46.5%.

Is ETP annual leave?

Accrued leave If you receive an ETP, your employer will also pay out any unused annual or long service leave. Lump sum payments for unused annual leave and long service leave don’t form part of your ETP.

Is the remainder of the ETP taxable?

The remainder of the ETP is the taxable component. not withhold from the tax-free component. If part of the ETP relates to employment that occurred before 1 July 1983, the amount to include in the tax-free component is worked out as follows:

What is genegenevieve’s ETP amount?

Genevieve receives an ETP from her super fund of $602,000, which consists of a post-June ’83 component of $541,800 (the whole of which is a taxed element) and a pre-July ’83 component of $60,200. The ATO makes an RBL determination and finds that $17,000 of the ETP is excessive.

This is known as a ‘life benefit ETP’ when it’s paid to an employee. If the employee has died, a ‘death benefit ETP’ is paid to their estate. The steps below help you work out: ETPs include things like gratuities and severance pay, but not payments for accrued annual leave or the tax-free part of genuine redundancy payments.

What is the preservation age for ETPS?

The concession also only applies to a limited amount, determined by the application of two separate caps. ETP amounts in excess of either cap are taxed at the top marginal tax rate. The preservation age is 55 years for individuals born before 1 July 1960. For those born after that date, the preservation aged depends on date of birth.