Class Ruling CR 2022/12

What this ruling is about: 1. This Ruling sets out the tax consequences of an early retirement scheme implemented by the Department of Treasury and Finance (the Department). 2. Full details of this scheme are set out in paragraphs 9 to 31 of this Ruling. 3. All legislative references in this Ruling are to the Income Tax Assessment Act 1997, unless otherwise indicated. Who this Ruling applies to 4. This Ruling applies to you if you are a Department employee who receives a payment under this scheme. When this Ruling applies 5. This Ruling applies from 17 February 2022 to 31 December 2022. 6. The Department of Treasury and Finance early retirement scheme 2021-2022 (the Scheme) is an early retirement scheme for the purposes of section 83-180. 7. Accordingly, so much of the payment received by an eligible employee that exceeds the amount that could reasonably be expected to be received by the employee in consequence of voluntary termination of their employment at the time of the retirement will be an early retirement scheme payment. 8. In addition, so much of the Scheme payment as falls within the threshold calculated in accordance with section 83-170 is not assessable income and is not exempt income. 9. The following description of the Scheme is based on information provided by the applicant. If the Scheme is not carried out as described, this Ruling cannot be relied upon. 10. The Victorian Government 2021-22 Budget included investments to stimulate the economy, promote economic recovery, create jobs and invest in the implementation of the Victorian Government's reform agenda. 11. In the context of this changed economic landscape and increased expenditure to fund the health and economic response to the global COVID-19 pandemic, the Victorian Government is taking steps to progressively realign expenditure to target areas of highest priority. 12. The Victorian Government has endorsed a range of savings initiatives in the 2021-22 Budget which impacts funding across the Victorian Public Service over the coming four years. 13. The Department will repurpose and reduce the workforce in some areas to deliver on the Victorian Government's new priority initiatives. The main initiatives will spread across the Department's Core which covers four Divisions: 14. The purpose of the Department in implementing the proposed Scheme is to rationalise and re-organise its operations to contribute to the realignment of the Victorian Government's expenditure and the introduction of savings measures which will result in reductions to the number of employees employed by the Department against our otherwise agreed baseline of funding. 15. The class of employees to whom this Scheme applies are all employees of the Department who satisfy both of the following criteria, as at the date of the conclusion of the expression of interest (EOI) period: 16. The following employees are specifically excluded from participating in the Scheme: 17. Following approval of the Scheme, the Department will offer employees within the class the opportunity to retire early. Employees will have 14 days from the date of invitation to submit an EOI. 18. Employees will be notified of the outcome within 28 days of the conclusion of the EOI period and will have 14 days to accept or decline the offer to participate in the Scheme. 19. All eligible employees who accept an offer to participate in the Scheme will generally be required to terminate their employment and receive the early retirement payment within 28 calendar days of accepting the offer. However, the date of termination may be extended by the employer to ensure the maintenance of service delivery and to account for operational requirements, but no later than 31 December 2022. 20. There is no minimum number of employees that the Department expects to retire under the Scheme. 21. The Department will allocate a predetermined number of packages under the Scheme in respect of each relevant Division or Group. If a Division or Group is oversubscribed with EOIs and another Division or Group is undersubscribed with EOIs, the Department may also increase the number of packages available in the Division or Group that is oversubscribed by decreasing the number of packages available in the Division or Group that is undersubscribed. 22. If the number of employees initially willing to participate in the Scheme is less than the number expected by the Department, the Department may implement a second EOI process during the duration of the Scheme. In respect of the further rounds, the criteria in paragraph 15 of this Ruling would change to include employees aged between 50 years of age and the pension age as defined by the Social Security Act 1991 as at the date of their retirement. The number of packages allocated to each Division or Group as part of the second EOI process will be based on operational requirements. The process as outlined in paragraphs 17 to 19 of this Ruling will apply. 23. Where the number of employees seeking to participate in the Scheme exceeds the number of packages available (such that the Scheme is oversubscribed), applications will be processed on the basis of length of continuous service, with those with a longer service period to be given priority, followed by age (based on date of birth) with the oldest to be given priority. 24. Employees who retire under the Scheme will receive: 25. Employees will receive payment for any accrued statutory entitlements, however, these payments will not form part of the payment under the Scheme. 26. The Scheme payment will not be made in lieu of superannuation benefits. 27. Any employee, who terminates employment other than under the proposed Scheme, will not be entitled to receive the payment. 28. Employees that retire under the Scheme and receive the early retirement payment will do so before they reach the pension age (as defined in the Income Tax Assessment Act 1997 by reference to the Social Security Act 1991). 29. At the time of retirement, there will be no arrangement between the Department and terminating employees, or between the Department and any other person, for those employees to be employed after retirement. 30. An employee that participates in the Scheme will be restricted from working in the Victorian Public Service for a period of twelve months. 31. There is no association between the eligible employees and the Department. Accordingly, the employees and the Department will be at arm's length. Commissioner of Taxation 16 February 2022 Requirements for an early retirement scheme 32. A scheme will be an early retirement scheme if it satisfies the requirements of subsection 83-180(3). 33. Subsection 83-180(3) states that: All applicants within a class approved by the Commissioner may participate in the scheme 34. In order to satisfy the first requirement of subsection 83-180(3), the Scheme must be offered to all employees in a class approved by the Commissioner. 35. The class of employees to whom early retirement will be offered under the Scheme is set out in paragraph 15, subject to paragraph 16, of this Ruling. 36. The Commissioner considers that, for the purposes of paragraph 83-180(3)(a), this is an appropriate class of persons for the Scheme to be offered to. In approving this class of employees, the Commissioner has considered the nature of the rationalisation or re-organisation of the operations of the Department. 37. Therefore, the first requirement of subsection 83-180(3) is satisfied. The employer's purpose in implementing the scheme is to rationalise or re-organise the employer's operations in a way approved by the Commissioner 38. The proposed Scheme must be implemented by the employer with a view to rationalising or re-organising the operations of the employer, as required by paragraph 83-180(3)(b). 39. Paragraphs 10 to 14 of this Ruling describe the nature of the rationalisation or re-organisation of the employer's operations. In approving the Scheme, the Commissioner has had regard to the changes in the operations and nature of the work force of the Department. It is considered that the Scheme is to be implemented by the Department with a view to rationalising or re-organising the operations of the Department for the purposes of paragraph 83-180(3)(b). 40. Accordingly, the second requirement of subsection 83-180(3) has been met. The scheme must be approved by the Commissioner prior to its implementation 41. The Scheme is proposed to operate for a period from 17 February 2022 to 31 December 2022. 42. The Scheme will be in operation for a period considered appropriate due to the circumstances of the re-organisation. 43. As the approval provided by this Ruling was granted prior to implementation, the third requirement of subsection 83-180(3) is satisfied. Other relevant information 44. Under subsection 83-180(1), so much of the payment received by an employee because the employee retires under an early retirement scheme as exceeds the amount that could reasonably be expected to be received by the employee in consequence of the voluntary termination of their employment at the time of termination is an early retirement scheme payment. 45. It should be noted that in order for a payment to qualify as an early retirement scheme payment, it must also satisfy the following requirements (as set out in subsections 83-180(2), (5) and (6)): 46. The term 'pension age' has the meaning given by subsection 23(1) of the Social Security Act 1991. 47. The term 'arrangement' is defined in subsection 995-1(1) as meaning: 48. In accordance with section 83-170, an early retirement scheme payment that falls within the specified limit is referred to as the 'tax-free' amount and will not be assessable income and will not be exempt income. 49. For the 2021-22 income year, the tax-free amount is limited to $11,341 (base amount) plus $5,672 (service amount) for each whole year of completed employment service to which the early retirement scheme payment relates. It should be noted that six months, eight months or even eleven months do not count as a whole year for the purposes of this calculation. 50. For the 2022-23 income year, the base amount and the service amount are yet to be determined at the date of publication of this Ruling. Therefore, employees should check the ATO website for these indexed amounts at the relevant time. 51. The total of the amount received on the termination of employment calculated in accordance with paragraph 24 of this Ruling may qualify as an early retirement scheme payment. 52. The total payment calculated in accordance with paragraph 24 of this Ruling will be measured against the limit in accordance with the formula mentioned in paragraph 49 of this Ruling to determine the tax-free amount of the early retirement scheme payment. 53. The tax-free amount will not be: 54. Any payment in excess of this limit will be an ETP and will be split into tax-free and taxable components. The tax-free component of an ETP includes the pre-July 83 segment of the payment. The tax-free component is not assessable income and is not exempt income. 55. The taxable component of the ETP will be taxed at various rates depending on the person's age. It should be noted that the 'whole of income cap' does not apply to any part of the early retirement scheme payment. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft

Class of entities or scheme: 32. A scheme will be an early retirement scheme if it satisfies the requirements of subsection 83-180(3). 33. Subsection 83-180(3) states that: | All applicants within a class approved by the Commissioner may participate in the scheme: 34. In order to satisfy the first requirement of subsection 83-180(3), the Scheme must be offered to all employees in a class approved by the Commissioner. 35. The class of employees to whom early retirement will be offered under the Scheme is set out in paragraph 15, subject to paragraph 16, of this Ruling. 36. The Commissioner considers that, for the purposes of paragraph 83-180(3)(a), this is an appropriate class of persons for the Scheme to be offered to. In approving this class of employees, the Commissioner has considered the nature of the rationalisation or re-organisation of the operations of the Department. 37. Therefore, the first requirement of subsection 83-180(3) is satisfied. | The employer's purpose in implementing the scheme is to rationalise or re-organise the employer's operations in a way approved by the Commissioner: 38. The proposed Scheme must be implemented by the employer with a view to rationalising or re-organising the operations of the employer, as required by paragraph 83-180(3)(b). 39. Paragraphs 10 to 14 of this Ruling describe the nature of the rationalisation or re-organisation of the employer's operations. In approving the Scheme, the Commissioner has had regard to the changes in the operations and nature of the work force of the Department. It is considered that the Scheme is to be implemented by the Department with a view to rationalising or re-organising the operations of the Department for the purposes of paragraph 83-180(3)(b). 40. Accordingly, the second requirement of subsection 83-180(3) has been met. | The scheme must be approved by the Commissioner prior to its implementation: 41. The Scheme is proposed to operate for a period from 17 February 2022 to 31 December 2022. 42. The Scheme will be in operation for a period considered appropriate due to the circumstances of the re-organisation. 43. As the approval provided by this Ruling was granted prior to implementation, the third requirement of subsection 83-180(3) is satisfied. | Other relevant information: 44. Under subsection 83-180(1), so much of the payment received by an employee because the employee retires under an early retirement scheme as exceeds the amount that could reasonably be expected to be received by the employee in consequence of the voluntary termination of their employment at the time of termination is an early retirement scheme payment. 45. It should be noted that in order for a payment to qualify as an early retirement scheme payment, it must also satisfy the following requirements (as set out in subsections 83-180(2), (5) and (6)): 46. The term 'pension age' has the meaning given by subsection 23(1) of the Social Security Act 1991. 47. The term 'arrangement' is defined in subsection 995-1(1) as meaning: 48. In accordance with section 83-170, an early retirement scheme payment that falls within the specified limit is referred to as the 'tax-free' amount and will not be assessable income and will not be exempt income. 49. For the 2021-22 income year, the tax-free amount is limited to $11,341 (base amount) plus $5,672 (service amount) for each whole year of completed employment service to which the early retirement scheme payment relates. It should be noted that six months, eight months or even eleven months do not count as a whole year for the purposes of this calculation. 50. For the 2022-23 income year, the base amount and the service amount are yet to be determined at the date of publication of this Ruling. Therefore, employees should check the ATO website for these indexed amounts at the relevant time. 51. The total of the amount received on the termination of employment calculated in accordance with paragraph 24 of this Ruling may qualify as an early retirement scheme payment. 52. The total payment calculated in accordance with paragraph 24 of this Ruling will be measured against the limit in accordance with the formula mentioned in paragraph 49 of this Ruling to determine the tax-free amount of the early retirement scheme payment. 53. The tax-free amount will not be: 54. Any payment in excess of this limit will be an ETP and will be split into tax-free and taxable components. The tax-free component of an ETP includes the pre-July 83 segment of the payment. The tax-free component is not assessable income and is not exempt income. 55. The taxable component of the ETP will be taxed at various rates depending on the person's age. It should be noted that the 'whole of income cap' does not apply to any part of the early retirement scheme payment. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft

Ruling: 1. This Ruling sets out the tax consequences of an early retirement scheme implemented by the Department of Treasury and Finance (the Department). 2. Full details of this scheme are set out in paragraphs 9 to 31 of this Ruling. 3. All legislative references in this Ruling are to the Income Tax Assessment Act 1997, unless otherwise indicated. | Who this Ruling applies to: 4. This Ruling applies to you if you are a Department employee who receives a payment under this scheme. | When this Ruling applies: 5. This Ruling applies from 17 February 2022 to 31 December 2022. 6. The Department of Treasury and Finance early retirement scheme 2021-2022 (the Scheme) is an early retirement scheme for the purposes of section 83-180. 7. Accordingly, so much of the payment received by an eligible employee that exceeds the amount that could reasonably be expected to be received by the employee in consequence of voluntary termination of their employment at the time of the retirement will be an early retirement scheme payment. 8. In addition, so much of the Scheme payment as falls within the threshold calculated in accordance with section 83-170 is not assessable income and is not exempt income. 9. The following description of the Scheme is based on information provided by the applicant. If the Scheme is not carried out as described, this Ruling cannot be relied upon. 10. The Victorian Government 2021-22 Budget included investments to stimulate the economy, promote economic recovery, create jobs and invest in the implementation of the Victorian Government's reform agenda. 11. In the context of this changed economic landscape and increased expenditure to fund the health and economic response to the global COVID-19 pandemic, the Victorian Government is taking steps to progressively realign expenditure to target areas of highest priority. 12. The Victorian Government has endorsed a range of savings initiatives in the 2021-22 Budget which impacts funding across the Victorian Public Service over the coming four years. 13. The Department will repurpose and reduce the workforce in some areas to deliver on the Victorian Government's new priority initiatives. The main initiatives will spread across the Department's Core which covers four Divisions: 14. The purpose of the Department in implementing the proposed Scheme is to rationalise and re-organise its operations to contribute to the realignment of the Victorian Government's expenditure and the introduction of savings measures which will result in reductions to the number of employees employed by the Department against our otherwise agreed baseline of funding. 15. The class of employees to whom this Scheme applies are all employees of the Department who satisfy both of the following criteria, as at the date of the conclusion of the expression of interest (EOI) period: 16. The following employees are specifically excluded from participating in the Scheme: 17. Following approval of the Scheme, the Department will offer employees within the class the opportunity to retire early. Employees will have 14 days from the date of invitation to submit an EOI. 18. Employees will be notified of the outcome within 28 days of the conclusion of the EOI period and will have 14 days to accept or decline the offer to participate in the Scheme. 19. All eligible employees who accept an offer to participate in the Scheme will generally be required to terminate their employment and receive the early retirement payment within 28 calendar days of accepting the offer. However, the date of termination may be extended by the employer to ensure the maintenance of service delivery and to account for operational requirements, but no later than 31 December 2022. 20. There is no minimum number of employees that the Department expects to retire under the Scheme. 21. The Department will allocate a predetermined number of packages under the Scheme in respect of each relevant Division or Group. If a Division or Group is oversubscribed with EOIs and another Division or Group is undersubscribed with EOIs, the Department may also increase the number of packages available in the Division or Group that is oversubscribed by decreasing the number of packages available in the Division or Group that is undersubscribed. 22. If the number of employees initially willing to participate in the Scheme is less than the number expected by the Department, the Department may implement a second EOI process during the duration of the Scheme. In respect of the further rounds, the criteria in paragraph 15 of this Ruling would change to include employees aged between 50 years of age and the pension age as defined by the Social Security Act 1991 as at the date of their retirement. The number of packages allocated to each Division or Group as part of the second EOI process will be based on operational requirements. The process as outlined in paragraphs 17 to 19 of this Ruling will apply. 23. Where the number of employees seeking to participate in the Scheme exceeds the number of packages available (such that the Scheme is oversubscribed), applications will be processed on the basis of length of continuous service, with those with a longer service period to be given priority, followed by age (based on date of birth) with the oldest to be given priority. 24. Employees who retire under the Scheme will receive: 25. Employees will receive payment for any accrued statutory entitlements, however, these payments will not form part of the payment under the Scheme. 26. The Scheme payment will not be made in lieu of superannuation benefits. 27. Any employee, who terminates employment other than under the proposed Scheme, will not be entitled to receive the payment. 28. Employees that retire under the Scheme and receive the early retirement payment will do so before they reach the pension age (as defined in the Income Tax Assessment Act 1997 by reference to the Social Security Act 1991). 29. At the time of retirement, there will be no arrangement between the Department and terminating employees, or between the Department and any other person, for those employees to be employed after retirement. 30. An employee that participates in the Scheme will be restricted from working in the Victorian Public Service for a period of twelve months. 31. There is no association between the eligible employees and the Department. Accordingly, the employees and the Department will be at arm's length. Commissioner of Taxation 16 February 2022 | Requirements for an early retirement scheme: 32. A scheme will be an early retirement scheme if it satisfies the requirements of subsection 83-180(3). 33. Subsection 83-180(3) states that: | All applicants within a class approved by the Commissioner may participate in the scheme: 34. In order to satisfy the first requirement of subsection 83-180(3), the Scheme must be offered to all employees in a class approved by the Commissioner. 35. The class of employees to whom early retirement will be offered under the Scheme is set out in paragraph 15, subject to paragraph 16, of this Ruling. 36. The Commissioner considers that, for the purposes of paragraph 83-180(3)(a), this is an appropriate class of persons for the Scheme to be offered to. In approving this class of employees, the Commissioner has considered the nature of the rationalisation or re-organisation of the operations of the Department. 37. Therefore, the first requirement of subsection 83-180(3) is satisfied. | The employer's purpose in implementing the scheme is to rationalise or re-organise the employer's operations in a way approved by the Commissioner: 38. The proposed Scheme must be implemented by the employer with a view to rationalising or re-organising the operations of the employer, as required by paragraph 83-180(3)(b). 39. Paragraphs 10 to 14 of this Ruling describe the nature of the rationalisation or re-organisation of the employer's operations. In approving the Scheme, the Commissioner has had regard to the changes in the operations and nature of the work force of the Department. It is considered that the Scheme is to be implemented by the Department with a view to rationalising or re-organising the operations of the Department for the purposes of paragraph 83-180(3)(b). 40. Accordingly, the second requirement of subsection 83-180(3) has been met. | The scheme must be approved by the Commissioner prior to its implementation: 41. The Scheme is proposed to operate for a period from 17 February 2022 to 31 December 2022. 42. The Scheme will be in operation for a period considered appropriate due to the circumstances of the re-organisation. 43. As the approval provided by this Ruling was granted prior to implementation, the third requirement of subsection 83-180(3) is satisfied. | Other relevant information: 44. Under subsection 83-180(1), so much of the payment received by an employee because the employee retires under an early retirement scheme as exceeds the amount that could reasonably be expected to be received by the employee in consequence of the voluntary termination of their employment at the time of termination is an early retirement scheme payment. 45. It should be noted that in order for a payment to qualify as an early retirement scheme payment, it must also satisfy the following requirements (as set out in subsections 83-180(2), (5) and (6)): 46. The term 'pension age' has the meaning given by subsection 23(1) of the Social Security Act 1991. 47. The term 'arrangement' is defined in subsection 995-1(1) as meaning: 48. In accordance with section 83-170, an early retirement scheme payment that falls within the specified limit is referred to as the 'tax-free' amount and will not be assessable income and will not be exempt income. 49. For the 2021-22 income year, the tax-free amount is limited to $11,341 (base amount) plus $5,672 (service amount) for each whole year of completed employment service to which the early retirement scheme payment relates. It should be noted that six months, eight months or even eleven months do not count as a whole year for the purposes of this calculation. 50. For the 2022-23 income year, the base amount and the service amount are yet to be determined at the date of publication of this Ruling. Therefore, employees should check the ATO website for these indexed amounts at the relevant time. 51. The total of the amount received on the termination of employment calculated in accordance with paragraph 24 of this Ruling may qualify as an early retirement scheme payment. 52. The total payment calculated in accordance with paragraph 24 of this Ruling will be measured against the limit in accordance with the formula mentioned in paragraph 49 of this Ruling to determine the tax-free amount of the early retirement scheme payment. 53. The tax-free amount will not be: 54. Any payment in excess of this limit will be an ETP and will be split into tax-free and taxable components. The tax-free component of an ETP includes the pre-July 83 segment of the payment. The tax-free component is not assessable income and is not exempt income. 55. The taxable component of the ETP will be taxed at various rates depending on the person's age. It should be noted that the 'whole of income cap' does not apply to any part of the early retirement scheme payment. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft


Appendix: Requirements for an early retirement scheme: 32. A scheme will be an early retirement scheme if it satisfies the requirements of subsection 83-180(3). 33. Subsection 83-180(3) states that: | All applicants within a class approved by the Commissioner may participate in the scheme: 34. In order to satisfy the first requirement of subsection 83-180(3), the Scheme must be offered to all employees in a class approved by the Commissioner. 35. The class of employees to whom early retirement will be offered under the Scheme is set out in paragraph 15, subject to paragraph 16, of this Ruling. 36. The Commissioner considers that, for the purposes of paragraph 83-180(3)(a), this is an appropriate class of persons for the Scheme to be offered to. In approving this class of employees, the Commissioner has considered the nature of the rationalisation or re-organisation of the operations of the Department. 37. Therefore, the first requirement of subsection 83-180(3) is satisfied. | The employer's purpose in implementing the scheme is to rationalise or re-organise the employer's operations in a way approved by the Commissioner: 38. The proposed Scheme must be implemented by the employer with a view to rationalising or re-organising the operations of the employer, as required by paragraph 83-180(3)(b). 39. Paragraphs 10 to 14 of this Ruling describe the nature of the rationalisation or re-organisation of the employer's operations. In approving the Scheme, the Commissioner has had regard to the changes in the operations and nature of the work force of the Department. It is considered that the Scheme is to be implemented by the Department with a view to rationalising or re-organising the operations of the Department for the purposes of paragraph 83-180(3)(b). 40. Accordingly, the second requirement of subsection 83-180(3) has been met. | The scheme must be approved by the Commissioner prior to its implementation: 41. The Scheme is proposed to operate for a period from 17 February 2022 to 31 December 2022. 42. The Scheme will be in operation for a period considered appropriate due to the circumstances of the re-organisation. 43. As the approval provided by this Ruling was granted prior to implementation, the third requirement of subsection 83-180(3) is satisfied. | Other relevant information: 44. Under subsection 83-180(1), so much of the payment received by an employee because the employee retires under an early retirement scheme as exceeds the amount that could reasonably be expected to be received by the employee in consequence of the voluntary termination of their employment at the time of termination is an early retirement scheme payment. 45. It should be noted that in order for a payment to qualify as an early retirement scheme payment, it must also satisfy the following requirements (as set out in subsections 83-180(2), (5) and (6)): 46. The term 'pension age' has the meaning given by subsection 23(1) of the Social Security Act 1991. 47. The term 'arrangement' is defined in subsection 995-1(1) as meaning: 48. In accordance with section 83-170, an early retirement scheme payment that falls within the specified limit is referred to as the 'tax-free' amount and will not be assessable income and will not be exempt income. 49. For the 2021-22 income year, the tax-free amount is limited to $11,341 (base amount) plus $5,672 (service amount) for each whole year of completed employment service to which the early retirement scheme payment relates. It should be noted that six months, eight months or even eleven months do not count as a whole year for the purposes of this calculation. 50. For the 2022-23 income year, the base amount and the service amount are yet to be determined at the date of publication of this Ruling. Therefore, employees should check the ATO website for these indexed amounts at the relevant time. 51. The total of the amount received on the termination of employment calculated in accordance with paragraph 24 of this Ruling may qualify as an early retirement scheme payment. 52. The total payment calculated in accordance with paragraph 24 of this Ruling will be measured against the limit in accordance with the formula mentioned in paragraph 49 of this Ruling to determine the tax-free amount of the early retirement scheme payment. 53. The tax-free amount will not be: 54. Any payment in excess of this limit will be an ETP and will be split into tax-free and taxable components. The tax-free component of an ETP includes the pre-July 83 segment of the payment. The tax-free component is not assessable income and is not exempt income. 55. The taxable component of the ETP will be taxed at various rates depending on the person's age. It should be noted that the 'whole of income cap' does not apply to any part of the early retirement scheme payment. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft


What this Ruling is about | If this Ruling applies to you, and you correctly rely on it, we will apply the law to you in the way set out in this Ruling. That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Ruling. | All employees within a class approved by the Commissioner may participate in the scheme | ... any arrangement, agreement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable (or intended to be enforceable) by legal proceedings.


Related rulings: TR 2006/10
Legislative references: ITAA 1997 82-135 ITAA 1997 82-135(e) ITAA 1997 83-170 ITAA 1997 83-180 ITAA 1997 83-180(1) ITAA 1997 83-180(2) ITAA 1997 83-180(3) ITAA 1997 83-180(3)(a) ITAA 1997 83-180(3)(b) ITAA 1997 83-180(5) ITAA 1997 83-180(6) ITAA 1997 995-1(1) TAA 1953 Social Security Act 1991 23(1) Workplace Injury Rehabilitation and Compensation Act 2013 (Vic)
Other references: 2021-22 State Budget | Department of Treasury and Finance Victoria (dtf.vic.gov.au)