Private ruling: Employment termination payments
Date of advice: 5 December 2025
Published: 27 January 2026
Ruling period: 30 June 20XX
Date scheme commenced: X X 20XX

Ruling: Q1: Can the payment received from Y Limited be treated as an Employment Termination Payment under section 82-130 of the Income Tax Assessment Act 1997 (ITAA1997) as it was made more than 12 months after termination of employment? | A1: Yes Taxation Ruling TR 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' Paragraphs 5 and 7 state that: 5. ... 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 ... Even though you received a payment of $XXX,000 from Y Limited more than 12 months after the termination of your employment with Y Limited the payment is an employment termination payment in accordance with section 82-130 of the ITAA 1997. The change of control payment was written into your termination agreement with Y. There is a causal connection between the termination of your employment with Y Limited and the payment.

Relevant facts and circumstances: You were employed by Y Limited, as a Managing Director. Your employment was terminated. You did not perform any further employment services for Y Limited. You received an Executive Service Contract Termination Agreement. Under the terms of your Executive Services Contract Termination Agreement a termination payment would become payable, to you, upon the event of a change of control of Y Limited. You provided a copy of the Executive Services Contract Termination Agreement which states: 3.2 The Executive shall continue to be entitled to the payment in circumstances provided for in clause 3.2(2) of the Agreement ... as amended by the Board of the Company and minuted on X X 20XX (Change of Control Payment) ... A Public company takeover of Y Limited occurred. You received a payment, more than 12 months after termination, described a by the company as a 'Change of Control Payment' made in consideration of you entering into the Termination Agreement. You provided a copy of the Managing Director Services Agreement. You provided a copy of the Australian Stock Exchange announcement confirming change of control of Y Limited.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 82-130