• Employment termination payments

    An employment termination payment (ETP) is a lump sum payment made because your employment has finished. It can include:

    • payments for 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)
    • certain payments after the death of an employee.

    ETPs do not include either:

    • 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.

    In general, the rules affecting taxation of ETPs are:

    • you may pay less tax on a payment that is received within 12 months of your termination
    • ETPs can't be rolled over into super.

    ETPs have special tax treatment and there are different caps on the concessional treatment of ETPs paid to you or your dependants.

    See also:

    Last modified: 15 Nov 2016QC 27127