Employment termination payment caps

For ETPs made after 1 July 2012, two different ETP caps apply:

  • the ETP cap is the existing ETP cap that applies to all ETPs and has a threshold that is indexed each year
  • the whole-of-income cap is a non-indexed cap that applies to some ETPs and works in conjunction with the ETP cap.

ETP cap

The ETP cap is a limit on how much of your ETP can receive concessional tax treatment. The amount over this cap will be taxed at the highest marginal tax rate.

The ETP cap amount is indexed annually. For the current and other years ETP cap amount, refer to ETP cap for life benefit termination payments.

This cap applies to all taxable ETPs.

Payments the ETP cap only applies to

The ETP cap applies to excluded payments. Excluded payments include the following types of payments:

  • genuine redundancy payments and payments that would have been genuine redundancy had you not reached your retirement age
  • early retirement scheme payments
  • invalidity payments
  • compensation payments principally for personal injury, unfair dismissal, harassment or discrimination
  • payments that do not meet the ETP rules.
    Last modified: 26 Jul 2016QC 26218