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  • myTax 2019 Employment termination payments

    This section is about employment termination payments (ETPs), which you received as a result of the termination of your employment.

    These payments are shown on an income statement or a PAYG payment summary – employment termination payment.

    On this page

    Essentials

    On termination from employment, you may be paid several types of lump sums including ETPs. These lump sums are reported and taxed differently to normal income.

    ETPs include:

    • a gratuity or golden handshake
    • Genuine redundancy or early retirement scheme payments above the tax-free limit
    • severance pay
    • Non-genuine redundancy payments
    • payments in lieu of notice of termination
    • unused rostered days off (RDOs)
    • unused sick leave
    • compensation for loss of job
    • compensation for wrongful dismissal, provided it is paid within 12 months of the actual termination of employment
    • payments for loss of future super payments
    • payments arising from an employee's termination because of ill health (invalidity), other than compensation for personal injury
    • lump sum payments paid on the death of an employee.

    Other types of ETPs include:

    • death benefit ETPs; these are certain payments made as a consequence of the cessation of a person's employment that you received due to that person's death
    • foreign ETPs; these are certain ETPs received from overseas employment which were exempt from income tax under that country's law
    • late termination payments; these are certain ETPs you received more than 12 months after you retired or ceased employment.

    For more information, see Payments that are ETPs.

    Do not show at this section

    You do not need to show the following payments anywhere on your tax return:

    • foreign termination payments; these are certain termination payments that were not exempt from income tax of the foreign country
    • ETPs you received as the trustee of a deceased estate (ETP code T); these payments must be shown on the trust tax return of the deceased estate
    • departing Australia superannuation payments.

    Completing this section

    You will need your income statement or PAYG payment summary – employment termination payment.

    • An income statement provides your end of year income and tax information if your employer advises that you will not be issued with a payment summary. Income statements:
      • can be accessed through your ATO Online account in myGov
      • should be pre-filled in myTax.
       

    Don’t use any income statements that are not 'Tax Ready'. For more information, see income statements.

    • A payment summary may continue to be provided by some employers. If so, and you don't have all your payment summaries or comparable statements, contact your employer or payer for a copy or comparable statement. If you are unsuccessful in obtaining any of these, see Lost or missing PAYG withholding payment summary.

    If you have received a foreign ETP, your foreign employer may not have issued you with an income statement/PAYG payment summary - employment termination payment.

    We pre-fill your tax return with ETP information provided to us. Check for ETPs you received that are not pre-filled and ensure you add them.

    1. For each ETP that has not been pre-filled in your tax return, or each foreign ETP, select Add.
    2. Answer the question Is this an Australian ETP?
    3. Enter information from your income statement/PAYG payment summary – employment termination payment into the corresponding fields.
      If you indicated this is not an Australian ETP, you will need to select Country employed in. This foreign ETP will not be included in the myTax calculation of taxable income and the myTax estimate will not match the assessment issued by us.
    4. Select the Employment termination payment code. If your income statement /PAYG payment summary – employment termination payment does not have a code, contact the employer or payer. If you are unable to contact the employer or payer, select the code that best describes your payment using the ETP code descriptions below.
    5. Select Save.
    6. Select Save and continue.

    ETP code descriptions

    Code

    Description

    R

    if you received your ETP because of

    • early retirement scheme
    • genuine redundancy
    • invalidity
    • compensation for
      • personal injury
      • unfair dismissal
      • harassment
      • discrimination
       
     

    O

    if your ETP is not described by R, for example, you received it because of

    • golden handshake
    • gratuity
    • payment in lieu of notice
    • payment for unused sick leave
    • payment for unused rostered days off 
     

    S

    if you received a code R ETP in 2018–19 and you had received another ETP (code R or code O), or a transitional termination payment, in an earlier income year for the same termination of employment

    P

    if you received a code O ETP in 2018–19 and you had received another ETP (code R or code O), or a transitional termination payment, in an earlier income year for the same termination of employment

    D

    if you received a death benefit ETP and you were a death benefits dependant

    B

    if you received a death benefit ETP in 2018–19 and you were not a death benefits dependant, and you had received another death benefit ETP in an earlier income year for the same termination of employment

    N

    if you received a death benefit ETP and you were not a death benefits dependant, and code B does not apply.

      Last modified: 26 Jun 2019QC 58928