This table summarises the tax treatment of Eligible Termination Payments (ETP’s).
See this update on new rules on the taxation treatment of ETP’s relating to income Caps.
| Income component derived by your employee in the income year | Age of person at the end of the income year that the payment is
received |
Component subject to PAYG withholding | Rate of withholding (including Medicare
levy) |
Cap to apply |
Life benefit ETP – taxable component.Payment is because of:
|
Under preservation age | Up to the ETP capAmount 1 | 31.5% | ETP cap |
| Preservation age or over | Up to the ETP capAmount 1 | 16.5% | ETP cap | |
| All ages | Amount above theETP cap amount 1 | 46.5% | ETP cap | |
life benefit ETP – taxable componentPayment is:
|
Under preservation age | Up to the relevantcap amount | 31.5% | Smallest of ETP cap and whole-of-income cap 2 |
| Preservation age orover | Up to the relevantcap amount | 16.5% | Smallest of ETP cap and whole-of-income cap 2 | |
| All ages | Amount abovethe relevant capamount | 46.5% | Smallest of ETP cap and whole-of-income cap 2 | |
| Death benefit ETP paid tonon-dependants. Taxable component 3 | All ages | Up to the ETP cap amount | 31.5% | ETP cap |
| Amount above theETP cap amount | 46.5% | ETP cap | ||
| Death benefit ETP paid to dependants – taxable component 3 | All ages | Up to the ETP cap amount | Nil | ETP cap |
| Amount above theETP cap amount | 46.5% | ETP cap | ||
|
Spouse of the deceased includes another person (whether the same sex or opposite sex) and all of the following:
A dependant includes:
An interdependency relationship includes a close personal relationship between two people who live together, where one or both provides for the financial and domestic support and personal care of the other. If an ETP will be paid to the trustee of a deceased estate, no amount should be withheld. |
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