Income Tax (Transitional Provisions) Act 1997
This section applies to a transitional termination payment you receive (except any part of the payment that is a directed termination payment) if you are under your preservation age on the last day of the income year in which you receive the payment.
You do not pay income tax on directed termination payments: see section 82-10G .Tax free component 82-10C(2)
The tax free component of the payment is not assessable income and is not exempt income. Taxable component 82-10C(3)
The taxable component of the payment is assessable income. 82-10C(4)
You are entitled to a tax offset that ensures that the rate of income tax on the amount mentioned in subsection (5) does not exceed 30%.
The remainder of the taxable component is taxed at the top marginal rate in accordance with the Income Tax Rates Act 1986 .82-10C(5)
The amount is so much of the taxable component of the payment as does not exceed your upper cap amount under section 82-10D .
If you have received another life benefit termination payment in the same income year (or in an earlier income year) that is not a transitional termination payment, your entitlement to a tax offset under this section is not affected by your entitlement (if any) to a tax concession for the other payment (under section 82-10 of the Income Tax Assessment Act 1997 ).