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  • Employment termination payments

    An employment termination payment (ETP) is a lump sum payment made as a result of the termination of a person's employment. It can include:

    • payments for unused sick leave or unused rostered days off
    • payments in lieu of notice
    • a gratuity or 'golden handshake'
    • an employee's invalidity payment (for permanent disability, other than compensation for personal injury)
    • compensation for loss of job or wrongful dismissal
    • genuine redundancy payments or early retirement scheme payments that exceed the tax-free limit
    • certain payments made after the death of an employee
    • the market value of the transfer of property (less any consideration given for the transfer of this property).

    ETPs do not include:

    • lump sum payments for unused annual or long service leave
    • the tax-free part of a genuine redundancy payment or an early retirement scheme payment
    • superannuation benefits (for example, a lump sum or income stream from a super fund)
    • foreign termination payments.

    An ETP is taxed in the year in which it is received.

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

    Your ETP is concessionally taxed if it is received within 12 months of your termination. There are different caps on the concessional treatment of ETPs paid to you or your dependants.

    See also:

    Last modified: 21 Sep 2018QC 27127