Document ID: chunk:federal_register_of_legislation:F2024L00664:clause:11_5
Version: federal_register_of_legislation:F2024L00664
Segment Type: clause
Provision Reference: sch 11 cl 5
Character Range: 217760–219330

5     Uses table A to determine the withholding rate on amounts over the calculated whole-of-income cap of $80,000. An ETP of $100,000 less the cap amount $80,000 gives $20,000 over the cap.  47%

MediumBiz withholds $35,000 from Chris's ETP of $130,000. This is $25,600 ($80,000 × 32%) plus $9,400 ($20,000 × 47%) of Chris's taxable component of $100,000.

Example 4: ETP subject to both ETP cap and whole-of-income cap

Alec, 30, is made redundant by MacroBiz after 5 years of service and receives a termination payment of $65,678 that is part genuine redundancy ($44,678) and part gratuity ($21,000). Until his redundancy, Alec had received $140,000 in salary and wages for the income year.

In this situation, the part of the payment that is subject to the ETP cap only is always dealt with first.

Alec's employer calculates the genuine redundancy amount over the tax-free limit (see Note 2) as $834. This is calculated as follows:

  $44,678 less $43,844 due to the 5 years of service [$12,524 base limit plus $31,320 (5 × $6,264)]. The amount of $834 is an ETP.

Using Table A, his employer works out that only the ETP cap applies. Alec is under preservation age, so MacroBiz withholds $267 (32% of $834).

Using Table A and the following steps, MacroBiz then works out which cap to apply and the withholding rate on Alec's $21,000 gratuity part of the ETP.
Step  MacroBiz action                                                                                                                                                                              Result