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  • myTax 2020 Employment termination payments

    Complete this section if you received an employment termination payment (ETP) 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.

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    Things to know

    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.

    If you have been stood-down or have lost your job as a result of COVID-19, you will need to consider if you have received an ETP.  See Tax on employment payments for more information on payments you may receive in these circumstances.

    Were you 65 years old but under 66 years old when your employment was terminated? If you were, a law change on 29 October 2019 to the tax treatment of genuine redundancy and early retirement scheme payments may affect your tax-free limit and the amount of tax your pay. Before you complete your tax return, visit Genuine redundancy and early retirement scheme changes to work out if your payment is affected.

    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.

    For more information, see Payments that are ETPs.

    Other types of ETPs include:

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

    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.

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

    See also:

    We pre-fill your tax return with ETP information provided to us. Check them, and add any ETP's you received that have not pre-filled.

    To personalise your return to show ETP's, at Personalise return select:

    • You received salary, wages or other income on an income statement/payment summary, Australian Government payments, or First home super saver (FHSS) scheme payment
    • Employment termination payments (ETP)

    To show your ETP's, at Prepare return select 'Add/Edit' at the Income statements and payment summaries banner.

    At the Employment termination payments (ETP) banner:

    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 or 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.
    4. Select the Employment termination payment code. If your income statement or 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 when you have finished the Income statements and payment summaries section.

    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 2019–20 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 2019–20 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 2019–20 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: 01 Jun 2020QC 62369