Employment Termination Payments (ETP)

Overview

An ETP is a lump sum payment that is made in some circumstances when an employee ceases working for an employer. You can find more information on ETP's on the ATO website. 

ETPs are taxed at different rates, depending on:

• the employee’s age;
• the circumstances of the ETP; and
• the length of employment.

You can categorise a lump sum pay as an ETP by selecting the ETP Code from the drop-down list underneath the Employee search bar.

The ETP Codes are:

Type R	If an ETP is paid because of: early retirement scheme genuine redundancy invalidity compensation for personal injury, unfair dismissal, harassment or discrimination
Type O	If an ETP is not described by R. For example, it was received because of:  golden handshake  gratuity  payment in lieu of notice*  payment for unused sick leave*  payment for unused rostered day off*  golden handshake*  gratuity*  *In some circumstances, these payments may be classified as excluded payments and subject to ETP cap only. The employer will need to categorise the payments as excluded or non-excluded based on the following factors:  the employment conditions, for example, what is reasonably required to be paid by the employer under the industrial agreement or employment contract for that termination type  what is paid as extra, discretionary or separate to what is reasonably required for that particular type of termination
Type S	If a code R ETP was paid in 2018-19 and the employee had received another ETP (code R or code O), or a transitional termination payment, in an earlier income year for the same termination of employment
Type P	If a code O ETP was paid in 2018-19 and the employee had received another ETP (code R or code O) or a transitional termination payment, in an earlier income year for the same termination of employment
Type D	If a death benefit ETP is paid and the payee is a death benefits dependant
Type B	If the payee received a death benefit ETP in 2018-19 and they were not a death benefits dependant and they received another death benefit ETP in an earlier income year for the same termination of employment
Type N	If the payee received a death benefit ETP and they were not a death benefits dependent, and code B or T does not apply
Type T	A death benefit payment directly to a trustee of the deceased estate. This person may be an executor or administrator who has been granted probate or letters of administration by a court.

You can review the ETP lump sum pays for your entity in the ETP Lump Sum Pays report.