Services Prices Tax Records Super Company Setup FamilyAssist Sole Trader Start a Business Rental Property

EMPLOYMENT TERMINATION PAYMENTS

30 June 2018

EMPLOYMENT TERMINATION PAYMENTS TAX RATES

Under preservation age

Up to $200,000 - taxed at a maximum rate of 30% plus Medicare levy 2%.

Over $200,000 - taxed at top marginal at rate 47% plus Medicare levy 2%.

 

Over preservation age

Up to $200,000 - taxed at a maximum rate of 15% plus Medicare levy 2%.

Over $200,000 - taxed at top marginal tax rate 47% plus Medicare levy 2%.

 

TAX FREE AMOUNT

Tax-free part of genuine redundancy payments and early retirement scheme payments.

Base Limit $10,155 plus $5,078 for each complete year of service.

 

ETP - WHOLE OF INCOME CAP

Only applies to ETPs with a codes of O or P.

$200,000 minus other taxable income you earned throughout the income year.

 

Under preservation age

Up to $200,000 - taxed at a maximum rate of 30% plus Medicare levy 2%.

Over $200,000 - taxed at top marginal at rate 47% plus Medicare levy 2%.

 

Over preservation age

Up to $200,000 - taxed at a maximum rate of 15% plus Medicare levy 2%.

Over $200,000 - taxed at top marginal tax rate 47% plus Medicare levy 2%

 

Example:

Mark is 51 years old who earns $195,000. His employer pays him an ETP of $8,000 code O.

Mark is under preservation age.

$200,000 minus wages $195,000 wages = $5,000.

This means only $5,000 of Mark's $8,000 is taxed at 32%.

The remainded $3,000 which is over the whole of income cap is taxed at the top marginal tax rate.

$5,000 x 32% = $1,600 plus

$3,000 x 49% = $1,470.

 

 

UNUSED ANNUAL LEAVE AND ANNUAL LEAVE LOADING TAX RATES

Normal Termination

Pre - 18 August 1993 - 32%

Post - 17 August 1993 - Marginal Rates

 

Termination because of genuine redundancy, invalidity or early retirement scheme

 Maximum - 32%

 

UNUSED LONG SERVICE LEAVE LOADING TAX RATES

Normal Termination

Pre - 16 August 1978 - 5% at Marginal Rates

Pre - 16 August 1978 to 17 August 1993 - 32%

Post - 17 August 1993 - Marginal Rates

 

Termination because of genuine redundancy, invalidity or early retirement scheme

Pre - 16 August 1978 - 5% at Marginal Rates

Post - 16 August 1978 - 32%

 

Google ATO employment termination payments

 

DISCLAIMER
The information provided in the above documents is not intended to be, nor should it be construed as tax advice. Any specific recommendation for a client can only be done after their individual circumstances have been determined by David Douglas Accountants.

We have clients from the following locations:

Brisbane, Albion, New Farm, Teneriffe, Newstead, Windsor, Wilston, Bowen Hills, Wooloowin, Herston, Lutwyche, Hamilton, Eagle Farm, Gordon Park, Fortitude Valley, Clayfield, Ascot, Hendra.

Morayfield, Burpengary, Caboolture, Bellmere, Wamuran, Narangba, North Lakes, Mango Hill, Kallangur, Dakabin, Deception Bay, Bribie Island, Elimbah, Kippa-Ring.

We do tax returns for individuals, trusts, companies, partnerships, contractors, ABNs and sole traders Limited...

 

Liability Limted by a scheme approved under Professional Standards legistration.