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Tax and other useful facts

Employment related payments (ETP)

Section: 6.5

Component Age when paid Amount subject to tax Max tax rate*
Line benefit ETP
Taxable component Under preservation age Up to $215,000 32.0%
  At or above preservation age Up to $215,000 17.0%
  All ages Up to $215,000 47.0%
Death benefit ETP paid to non-dependents
  • taxable component
All ages Up to $215,000 32.0%
    Above $215,000 47.0%
Death benefit ETP paid to dependents
  • taxable component
All ages Up to $215,000 Nil
    Above $215,000 47.0%
Death benefit ETP paid to dependents
  • taxable component
*Taxed in the hands of the beneficiary of the estate, as above, based on whether the beneficiary is a dependent or not.

* Includes Medicare levy and an ETP must generally be made within 12 months of terminating employment in order to qualify for lower tax rates.

Unused annual leave payment rules:

Period of accrual leave Assessable portion Maximum rate
General retirement or termination: 100%

100%

30%

Marginal

  • accrual before 18 August 1993
  • accrual on or after 18 August 1993
Bona fide redundancy amount, early retirement scheme amount or invalidity amount paid on or after 18 August 1993 100% 30%

Unused Long service leave payment rules:

Period of accrual leave Assessable portion Maximum rate
General retirement or termination:
  • accrual before 16 August 1978
  • accrual 16 August 1978 to 17 August 1993
  • accrual on or after 18 August 1993

Bona fide redundancy amount, early retirement scheme amount or invalidity amount:

  • accrual before 16 August 1978
  • accrual on or after 16 August 1978
5%

100%

100%

5%

100%

Marginal

30%

Marginal

Marginal

30%ff

Genuine redundancy and early retirement scheme payments

Income year Based amount For each completed year of service
2020-21 $10,989 $5,496
2019-20 $10,638 $5,320

The tax-free amount of a redundancy payment for 2020-21 is calculated as follows:

$10,989 + ($5,496 x completed years of service)

This technical resource is intended for the use of financial advisers only. It is current as at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements.

Last modified: Thursday, August 27, 2020