Private ruling: Employment termination payment
Date of advice: 18 March 2026
Published: 15 June 2026
Ruling period: Year ended 30 June 20YY
Date scheme commenced: 29 June 20YY

Ruling: Q1: Is the payment made to the taxpayer by the employer an employment termination payment (ETP) under section 82-130 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes.

Relevant facts and circumstances: The Taxpayer (was employed as XXX by the Employer) from XX/XX/XX until XX/XX/XX, most recently under the terms of employment set out in the Employment Agreement signed by the Taxpayer on the XX/XX/XX. The Employer sold the company to XXXXXXXXX in XX/XXX.. The Taxpayer continued their role until the XX/XX/XX and was then advised their employment was being terminated with 6 months' notice under their employment contract. The Taxpayer was placed on XX leave for the remaining period of their 6 months' notice period. On the XX/XX/XX, the Taxpayer lodged an application for general protections involving dismissal with the Fair Work Trading (Proceedings). The breach was due to the Taxpayer suffering from injuries and or/damages and or/loss as a result their termination. Following the lodging of the Application, the Taxpayer and the Employer agreed to settle the matter, by the signing of a Deed of Release (the Deed). A copy of the Deed, signed by a representative of the Employer and the Taxpayer XX/XX/XX, has been provided with the application for private ruling, received by the Australian Tax Office on XX/XX/XX. Under the 'Agreement' of the Deed, the Employer agreed to make a payment of $XXXXX, to the Taxpayer, in 'general damages'. The Deed does not refer to 'suffering from injuries and or/damages and or/loss'. Relevantly, the Deed states: The parties to this Deed, without any admission of liability, seek to resolve the Proceedings and all other claims or possible claims for damages and all claims concerning or arising from the Employment, Termination and Proceedings on the terms of this deed below. On XX/XX/XX, the payment of $XXXXX (the Payment) was paid into the Taxpayer's bank account.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 82-130 | Income Tax Assessment Act 1997 subsection 82-130(1) | Income Tax Assessment Act 1997 paragraph 82-130(1)(b) | Income Tax Assessment Act 1997 Section 82-135 | Income Tax Assessment Act 1997 subsection 995-1(1) We followed these ATO view documents | Taxation Ruling 2003/13: Income tax: employment termination payments (ETP): payments made in consequence of the termination of any employment: meaning of the phrase 'in consequence of' | Income Tax Employment Termination Payments (12-month rule) Determination 2018

Reasons for decision: Summary: The payment received by the taxpayer is an ETP under section 82-130 of the ITAA 1997. | Detailed Reasoning - Detailed reasoning: By virtue of subsection 995-1(1) of ITAA 1997, employment termination payments are defined in subsection 82-130(1) of the ITAA 1997, which states that a payment is an employment termination payment if: (a) it is received by you: (i) in consequence of the termination of your employment; or (ii) after another person's death, in consequence of the termination of the other person's employment; and (b) it is received no later than 12 months after that termination (but see subsection (4)); and (c) it is not a payment mentioned in section 82-135. To determine if a payment is an employment termination payment (ETP), all the conditions in subsection 82-130(1) of the ITAA 1997 must be satisfied. | Detailed Reasoning - Paid as 'in consequence of' the termination of employment: Taxation Ruling IT 2003/ 13 Income tax: employment termination payments (ETP): payments made in consequence of the termination of any employment: meaning of the phrase 'in consequence of' explains that the Commissioner considers that a payment is received by a taxpayer in consequence of the termination of the taxpayer's employment if the payment 'follows as an effect or result of' the termination. In other words, but for the termination of employment, the payment would not have been received by the taxpayer. It is clear that, but for the termination of employment, the payment would not have been made. Following the termination of employment, the application was made. The Deed Release was entered into as a consequence of the application being made. The payment followed 'as an effect or result of' the termination of employment. This requirement is satisfied. | Detailed Reasoning - Payment received no later than 12 months after termination: To receive concessional tax treatment, an ETP must generally be paid within 12 months of termination. Paragraph 82-130(1)(b) says that a payment is an ETP if it is received no later than 12 months after the termination of employment. The Taxpayer's employment was terminated on XX/XX/XX. The Payment was made on XX/XX/XX, which is less than 12 months after the termination. This requirement is satisfied. | Detailed Reasoning - Payment is not a payment mentioned under section 82-135 of the ITAA 1997: Section 82-135 of the ITAA 1997 lists specific payments that are excluded from being an ETP. The Payment made to the Taxpayer is not a payment type listed under section 82-135. Accordingly, this requirement is satisfied. | Detailed Reasoning - Conclusion: We consider that the payment meets all the requirements to be an ETP under subsection 82-130(1) of the ITAA 1997. The payment is an ETP.

Reasons for decision: These reasons for decision accompany the Notice of private ruling for XXXXXX. | This is to explain how we reached our decision. This is not part of the private ruling.