Document ID: chunk:federal_register_of_legislation:C2025C00029:section:6:p10
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 6 (pt 10/20)
Character Range: 1577922–1580625

termination payments: life benefits

Guide to Subdivision 82‑A

82‑5  What this Subdivision is about

      If you receive a life benefit termination payment, part of the payment may be tax free (the tax free component).
      You are entitled to a tax offset on the remaining part of the payment (the taxable component), subject to limitations.
      The extent of your entitlement to the offset depends on your age in the year you receive the offset, on the total amount of payments you receive in the same year, and on the total amount of payments you receive in consequence of the same employment termination.

Table of sections

Operative provisions
82‑10 Taxation of life benefit termination payments

Operative provisions

82‑10  Taxation of life benefit termination payments

Tax free component
 (1) The *tax free component of a *life benefit termination payment you receive is not assessable income and is not *exempt income.

Taxable component
 (2) The *taxable component of the payment is assessable income.
 (3) You are entitled to a *tax offset that ensures that the rate of income tax on the amount mentioned in subsection (4) does not exceed:
 (a) if you are your *preservation age or older on the last day of the income year in which you receive the payment—15%; or
 (b) otherwise—30%.
Note: The remainder of the taxable component is taxed at the top marginal rate in accordance with the Income Tax Rates Act 1986.
 (4) The amount is so much of the *taxable component of the payment as does not exceed the smallest of the following:
 (a) the *ETP cap amount reduced (but not below zero) by:
 (i) if the payment is a payment of a kind referred to in subsection (6) (an excluded payment)—the amount worked out under this subsection for each *life benefit termination payment you have received earlier in the income year to the extent that it is an excluded payment; or
 (ii) if the payment is not an excluded payment—the amount worked out under this subsection for each life benefit termination payment you have received earlier in the income year;
 (b) the ETP cap amount reduced (but not below zero) by:
 (i) if the payment is an excluded payment—the amount worked out under this subsection for each life benefit termination payment you have received earlier in consequence of the same employment termination (whether in the income year or an earlier income year) to the extent that it is an excluded payment; or
 (ii) if the payment is not an excluded payment—the amount worked out under this subsection for each life benefit termination payment you have received earlier in consequence of the same employment termination (whether in the income year or an earlier income year);
 (c) if