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  • Applying the ETP caps

    ETPs are concessionally taxed up to a certain limit, or 'cap'. The top rate of tax applies to amounts in excess of the cap.

    There are two caps:

    • the ETP cap, which is      
      • indexed each year (in 2019–20 it's $210,000)
      • reduced by any earlier ETPs paid in the same income year, and by any earlier ETPs for the same termination regardless of when they are paid.
       
    • the whole-of-income cap, which is      
      • $180,000
      • reduced by any other taxable payments (such as salary and the taxable components of any earlier ETPs) received by the employee in the same income year.
       

    Which of these caps applies depends on the type of payment. For example, a genuine redundancy payment and a 'golden handshake' may be subject to different caps.

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      Last modified: 04 Jun 2019QC 26218