Document ID: chunk:federal_register_of_legislation:F2024L00664:schedule:11:p3
Version: federal_register_of_legislation:F2024L00664
Segment Type: schedule
Provision Reference: sch 11 (pt 3/4)
Character Range: 210587–213126

ETP cap. This is because the cap amount is reduced by the amount of all previous payments for the same termination.

Lump sum payments that are not ETPs may also be subject to PAYG withholding. Use the applicable tax table to work out the amount to be withheld from these payments.

Do not allow for any tax offsets or Medicare levy adjustments.

Do not withhold any amount for study and training support loans.

Death benefit ETPs

A death benefit termination payment is received by a person after another person's death, in consequence of termination of the other person's employment. The amount to withhold depends on a number of factors including whether the payment is made:
    * directly to a dependant of the deceased
    * directly to a non-dependant of the deceased
    * to the trustee of the deceased estate.
Use Table A in this schedule to work out how much to withhold.

Working out the withholding amount

An ETP can be made up of a tax-free component and taxable component. You must withhold an amount from the taxable component, including death benefit ETPs.

Do not withhold from the tax-free component of the ETP.

If your employee who is receiving an ETP has given you their tax file number (TFN) on a Tax file number declaration, use Table A in this schedule to work out how much to withhold.

A Tax file number declaration remains effective for 12 months after you make the last payment to them.

Withholding amounts calculated by applying Table A are rounded to the nearest dollar. Results ending in 50 cents are rounded upwards.

If the payment is to be made to a foreign resident, you will need to check if there is a tax treaty with their country of residence. The full list of our tax treaties is maintained by Treasury and can be found at 'Australian Tax Treaties' in your internet search engine. If the ETP is assessable only in the other country because of the treaty, then no withholding is required.

If a foreign resident's ETP is assessable in Australia, you are required to withhold from the payment. Adjust the rates set out in Table A to exclude the Medicare levy of 2%.

When a TFN has not been provided

You must withhold 47% from the taxable component of an ETP you make to a resident employee and 45% from a foreign resident employee (ignoring any cents) who has not given you their TFN.

Examples
Example 1: ETP cap

Lloyd is an employee of BigBiz Pty Ltd and is 41 years old. His preservation age is 60. He is made redundant from his position at BigBiz and receives an ETP of $45,000. This is