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  • What is an employment termination payment?

    When you leave work or change jobs, you may receive several lump sum payments. The tax you pay on these lump sum amounts is different to your normal income. One lump sum may be an employment termination payment (ETP).

    You usually pay a lower rate of tax on ETPs, if you receive the payment within 12 months of your termination. Your ETP amount may 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 you may also pay tax on these amounts at a concessional rate.

    You will receive one or more income statements or payment summaries that show the amounts you receive and the tax withheld. Use this information to complete your income tax return.

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

      Last modified: 26 May 2021QC 50513