From 1 July 2007, under changes made by the Superannuation Legislation (Amendment) Simplification Act 2007 to superannuation, eligible termination payments are now referred to as employment termination payments (ETPs). Under these superannuation changes ETPs are not able to be rolled-over into superannuation. Transitional arrangements may apply to ETPs made between 1 July 2007 and 30 June 2012.
This topic provides information about the following:
An ETP is generally part of a lump sum payment received when a person is:
An ETP includes:
As defined in the Income Tax Assessment Act 1997, the following payments are not considered ETPs:
Example: The tax free amount of a genuine redundancy payment or an approved early retirement scheme payment could be 2 weeks pay or wages for each year of service.
A genuine redundancy payment is so much of a payment that:
Example 1: A person who resigns after 10 years employment could expect payment of:
Example 2: A person who is made redundant may receive payments beyond their leave payments, such as 2 weeks pay or wages for each year of service.
Transitional arrangements may apply to ETPs made between 1 July 2007 and 30 June 2012, if you were entitled as at 9 May 2006 to such a payment specified under:
A roll-over is a transfer of part or all of the transitional ETP which is disregarded for IMP purposes. Rolling-over means that the employer uses all of part of the transitional ETP for one of the following purposes, rather than pay the employee in cash:
Note: More detailed information on transitional ETPs and roll-overs can be found on the ATO website.
Last reviewed: 11 February 2013