• Schedule 11 – Tax table for employment termination payments

    For payments made on or after 1 July 2017

    This document is a withholding schedule made by the Commissioner of Taxation in accordance with sections 15-25 and 15-30 of Schedule 1 to the Taxation Administration Act 1953 (TAA). It applies to withholding payments covered by paragraph 12-85(b) of Schedule 1 to the TAA.

    Using this table

    You should use this table if you pay an individual an amount that is either:

    • an employment termination payment (ETP)
    • a delayed termination payment – that is, a payment that would be an ETP but was paid more than 12 months after the relevant termination of employment.

    See also:

    Employment termination payments

    An ETP is a lump sum payment you make:

    • to an employee when their employment is terminated (referred to as a 'Life benefit' ETP)
    • to an employee’s estate because their employment has been terminated due to death (referred to as a 'Death benefit' ETP).

    ETPs include lump sum payments paid upon resignation, retirement or death. A payment from a super fund is not an ETP.

    A payment must generally be made within 12 months of termination to qualify as an ETP. A payment made outside 12 months is a delayed termination payment, unless we have given approval for the payment to be treated as an ETP.

    Tax treatment of ETPs

    ETPs can comprise of two different components:

    • a tax-free component
    • a taxable component.

    You only withhold tax from the taxable component.

    Depending on the type of ETP, the concessional tax treatment may be limited to the smaller of:

    • the ETP cap
    • the whole-of-income cap.

    The top rate of tax applies to amounts paid in excess of these caps.

    The ETP cap amount for the 2017–18 income year is $200,000. This amount is indexed annually.

    The whole-of-income cap amount for the 2017–18 income year is $180,000. This amount is not indexed. This cap is reduced by any other taxable income payments your employee receives in the income year – for example, salary or wages you have paid to your employee.

    In some cases, you may need to include an ETP in the taxable payments when working out the whole-of-income cap.

    The ETP payment summary has an ETP code that you use to describe the type of ETP and which cap has been applied to it.

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    Last modified: 14 Jun 2017QC 52077