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  • Table A: Withholding rates for ETPs

    Table A: Withholding rates for ETPs

    Income component derived by your employee in the income year

    Age of person at the end of the income year that the payment is received

    Component subject to PAYG withholding

    Rate of withholding

    Cap to apply

    Life benefit ETP – taxable component

    Payment is because of:

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

    Under preservation age

    Up to the ETP cap amount

    32%

    ETP cap

    Preservation age or over

    Up to the ETP cap amount

    17%

    ETP cap

    All ages

    Amount above the ETP cap amount

    47%

    ETP cap

    Life benefit ETP – taxable component

    Payment is:

    • a ‘golden handshake’
    • non-genuine redundancy payment
    • severance pay
    • a gratuity
    • in lieu of notice
    • for unused sick leave
    • for unused rostered days off.
     

    Under preservation age

    Up to the relevant cap amount

    32%

    Smallest of ETP cap and whole-of-income cap

    Preservation age or over

    Up to the relevant cap amount

    17%

    Smallest of ETP cap and whole-of-income cap

    All ages

    Amount above the relevant cap amount

    47%

    Smallest of ETP cap and whole-of-income cap

    Death benefit ETP paid to non-dependants – taxable component

    All ages

    Up to the ETP cap amount

    32%

    ETP cap

    Amount above the ETP cap amount

    47%

    ETP cap

    Death benefit ETP paid to dependants – taxable component

    All ages

    Up to the ETP cap amount

    Nil

    ETP cap

    Amount above the ETP cap amount

    47%

    ETP cap

    Death benefit ETP paid to a trustee of a deceased estate

    -

    -

    Nil

    -

    Additional information

    The ETP cap amount for the 2018–19 income year is $205,000. The amount is indexed annually.

    The whole-of-income cap amount for the 2018–19 income year and future years is $180,000. This amount is not indexed.

    A death benefit dependant for taxation purposes includes:

    • spouse of the deceased
    • child of the deceased under 18 years old
    • a person who had an interdependency relationship with the deceased
    • a person who was a dependant of the deceased just before the latter died.

    A spouse of the deceased includes another person (of any sex) who:

    • was in a relationship with the deceased as registered under a prescribed state or territory law
    • lived with the deceased on a genuine domestic basis in a relationship as a couple, although not legally married.

    A child of the deceased includes:

    • an adopted child, stepchild or ex-nuptial child
    • a child of the deceased’s spouse
    • a child of the deceased within the meaning of the Family Law Act 1975 (for example, a child who is considered to be a child of a person under a state or territory court order giving effect to a surrogacy agreement).

    An interdependency relationship includes:

    • a close personal relationship between two people who live together, where one or both provides for the financial and domestic support and personal care of the other
    • a close personal relationship between two people who live together but do not satisfy one or more of the requirements mentioned in the previous dot point due to either or both of them suffering from a physical, intellectual or psychiatric disability.

    For further information on interdependency relationships and before accepting that a person is financially dependent, phone us on 13 10 20.

    If an ETP will be paid to the trustee of a deceased estate, no amount should be withheld.

    Rounding of withholding amounts

    Withholding amounts calculated by applying this schedule are rounded to the nearest dollar. Results of 50 cents or higher are rounded upwards. If a TFN is not provided, ignore cents when calculating withholding amounts.

    Delayed termination payments

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

    A delayed termination payment is not treated as an ETP. It must be reported in 'Gross payments' in the employee's PAYG payment summary – individual non-business.

    When a TFN is provided

    If your employee has given you their TFN, withhold an amount equal to 32% from the payment. Withholding amounts are rounded to the nearest dollar once calculated. Results ending in 50 cents are rounded to the next higher dollar.

    When a TFN has not been provided

    You must withhold 47% from the payment you make to a resident employee and 45% from a foreign resident employee (ignoring any cents) who has not given you their TFN.

    Last modified: 14 Jun 2019QC 55466