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  • Employment termination payments – for employees

    This information is for people whose employment has been terminated. It explains how your termination payments are taxed and how to complete your tax return.

    When you leave work or change jobs, you may receive several lump sum payments that are taxed differently to your normal income. One of these may be an employment termination payment (ETP).

    ETPs are generally taxed at a lower rate than your normal income, provided the payment is made within 12 months of your termination. ETPs include:

    • payments for unused sick leave or unused rostered days off
    • payments in lieu of notice
    • a gratuity or 'golden handshake'
    • an invalidity payment for permanent disability.

    You may also receive lump sum payments for unused annual or long service leave, or the tax-free part of a genuine redundancy or early retirement scheme. These aren't part of your ETP but may also be concessionally taxed.

    Your employer will give you one or more payment summaries showing the amounts you've been paid and the tax withheld. You use the information in these payment summaries to complete your income tax return.

    You can't roll over your ETP to your super.

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      Last modified: 31 May 2019QC 50513