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Tax on ETP amounts can vary based on “Preservation Age”. ETP’s are also subject to caps – see this post.

Preservation in the context of Eligible Termination Payments (ETP’s) determines the tax applicable to the payment.

Preservation age is determined using your employee’s date of birth. The preservation table below shows the preservation age based on date of birth:

Date of birth Preservation age
before 1/7/1960

55

1/7/1960 – 30/6/1961

56

1/7/1961 – 30/6/1962

57

1/7/1962 – 30/6/1963

58

1/7/1963 – 30/6/1964

59

After 30/6/1964

60

 

Tax rates applicable to ETP’s are as follows:

  • Under preservation age – Up to the ETP cap amount – 31.5% (including Medicare Levy)
  • Preservation age or over – Up to the ETP cap amount 16.5% (including Medicare Levy)
  • All employees Over the ETP cap amount 46.5% (including Medicare Levy)
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