Tax Tips

Termination Payments

 

Eligible Termination Payments are now known as either:

 

  • Employment Termination Payments (ETPs) when paid by an employer, or
  • Australian Superannuation Lump Sums when paid by a superannuation fund

 

 

Employment Termination Payments (ETPs) include:

 

  • a lump sum paid to you by your employer when you retired or ceased employment
  • a lump sum paid to you as a death benefit, by the employer of a person who has died
  • a payment that is a late termination payment, and
  • a transitional termination payment

 

A lump sum paid to you by your employer is a payment you received within 12 months of, and in consequence of, the termination of your employment, such as:

 

  • a payment in lieu of notice or a 'golden handshake'
  • a payment for unused sick leave or unused rostered days off
  • compensation for loss of a job or wrongful dismissal
  • a genuine redundancy payment or an approved early retirement scheme payment that exceeds the tax-free threshold for
  • such payments
  • a payment you receive because of invalidity or a disability that stopped you being gainfully employed

 

If you received an ETP you should have received a PAYG payment summary - employment termination payment from the payer. Some portions of ETPs will be tax-free whilst other elements will have reduced tax attibuted to them so it is important to have the PAYG payment summary. If you do not have a PAYG payment summary, contact the employer for a replacement one. If they refuse Taxlogic can provide you with a Statutory Declaration for payment summaries.

 

Australian Superannuation Lump Sums include:

 

  • lump sum payments from a superannuation fund, an approved deposit fund, retirement savings account providers or life insuarance companies, including those you received as a death benefit of a person who has died
  • payments to you from the Tax Office of amounts in respect of the Superannuation Guarantee Charge (SGC), the Superannuation holdings accounts special account or Super Co-contributions
  • payments to you of unclaimed money from the unclaimed money registers.

 

 

You should have received a PAYG payment summary - superannuation lump sum from your payers. Some portions of superannuation lump sums will be tax-free whilst other elements will have reduced tax attibuted to them so it is important to have the PAYG payment summary. If you do not have a PAYG payment summary, contact the employer for a replacement one. If they refuse Taxlogic can provide you with a Statutory Declaration for payment summaries.