HELP! About Employee Termination Payment.

Chole

I need some help about categorize Employee Termination Payment (ETP)

for example, A was made redundant in Jan this year, we paid him:

$2000 for payment in lieu of notice period 2 weeks
$3000 for unused annual leave
$4000 for extra 4 weeks for redundancy payment

my question is, which components are ETP, and how to calculate tax on each component?

thanks in advance!!

mickeymickey

不懂,路过打酱油帮顶

83447557

go to www.ato.gov.au, all information there

fiddlehead

4000  redundancy payment 不用交税。
如果员工小于55，unused annual leave是93年之后累计的，按员工marginal rate算。
notice pay也按marginal rate算。

不知对不对，求指点。

stevenhu

http://www.ato.gov.au/businesses ... =0&mfp=&st=


ATO ETP calculator
you only need give him/her a ETP payment summary

https://expertsystems.ato.gov.au ... File=ETP_1.htm#Lieu Of Notice

Chole

stevenhu 发表于 2013-5-9 11:20
http://www.ato.gov.au/businesses/content.aspx?doc=/content/00108848.htm&pc=001/003/019/002/011&mnu=0 ...

that is what i need to do..

stevenhu

$2000 for payment in lieu of notice period 2 weeks   -- ETP Taxable
$3000 for unused annual leave                 --            Normal wages

$4000 for extra 4 weeks for redundancy payment --- what's this for?

Chole

well, maybe i need to make my question more specific:

how to explain :

redundacy payment less than tax free limit is not ETP?

stevenhu

Chole 发表于 2013-5-9 11:28
well, maybe i need to make my question more specific:

how to explain :

$4000 for extra 4 weeks for redundancy payment --- what's this for?


that one is for genuine redundancy.

stevenhu

stevenhu 发表于 2013-5-9 11:29
$4000 for extra 4 weeks for redundancy payment --- what's this for?

you do not need to prepare individual tax return for her/him

海胆君小土匪

both in lieu of notice & redundancy severance pay should go to Lump Sum D, tax free component, depending on the years of service.

unused annual leave should go to Lump Sum A, which is taxed at employee's marginal rate.

ETP does not include unused leave & tax free part of severance payment.  

vivien75

同意LZ，绝大部分都是正确的，只是，如果是redunancy（这个case肯定是），unused annual leave should be taxed at 31.5%.
in lieu of notice & redundancy severance pay: the amount is below the threshold $8806 + 4404 x completed service year for FY12/13, it goes to lump sum D, the it's tax free.
Another factor need consider it that if the employee is over 45 years old and have been with your company more than 2 years, you need give extra one weeks notice

When you redundant an employee, the following minum entitlement you have to pay

1) Redundancy pay

The NES sets out the minimum amount of redundancy pay to be paid to an employee who is made redundant-
Period of continuous service

The NES sets out the minimum amount of redundancy pay to be paid to an employee who is made redundant-
Period of continuous service        Weeks
Less than 1 year                           Nil
1 year (less than 2 years)        4
2 years (less than 3 years)        6
3 years (less than 4 years)        7
4 years (less than 5 years)        8
5 years (less than 6 years)        10
6 years (less than 7 years)        11
7 years (less than 8 years)        13
8 years (less than 9 years)        14
9 years (less than 10 years)        16
10 years and over                            12

2) Pay in lieu of notice

Period of continuous service                                  Notice Period
1 year or less                                                     1 week
More than 1 year but not more than 3               2 weeks
More than 3 years but not more than 5               3 weeks
More than 5 years                                                     4 weeks

3) Unused Annual Leave entitlement if applicable

4) Unused Long Service Leave if applicable

vivien75

vivien75 发表于 2013-5-9 18:26
同意LZ，绝大部分都是正确的，只是，如果是redunancy（这个case肯定是），unused annual leave should be t ...

不客气，请注意今年的ETP比较麻烦的，有不少改变。有payroll问题可以再联系我。

Chole

vivien75 发表于 2013-5-12 14:22
不客气，请注意今年的ETP比较麻烦的，有不少改变。有payroll问题可以再联系我。 ...

thank you ha!

there should be no super on redundancy payment. is that right? as it it not OTE.

vivien75

Chole 发表于 2013-5-13 15:56
thank you ha!

there should be no super on redundancy payment. is that right? as it it not OTE.

On termination pay, you only need pay super on notice in lieu

Chole

vivien75 发表于 2013-5-12 14:22
不客气，请注意今年的ETP比较麻烦的，有不少改变。有payroll问题可以再联系我。 ...

so for my case above only notice in lieu is ETP, so we still need to issue a copy termination payment summary to the employee.
am I right? thanks.

vivien75

yes if you have paid any ETP (e.g. notice in lieu). you need issue ETP Payment Summary under the new code

http://www.oursteps.com.au/bbs/f ... %3D&nothumb=yes

Chole

vivien75 发表于 2013-6-27 12:38
yes if you have paid any ETP (e.g. notice in lieu). you need issue ETP Payment Summary under the new ...

what is payment in lieu is part of redundancy payment.

as for redundancy payment, payment in lieu is 0 tax

for ETP, payment in lieu is taxed at 31.5%... I am confused la

also above, it mentioned that payment in lieu is part of Lump sum D,

Sorry, first time doing payroll to help with year end report, and it is not my expertise...

thank your for your reply a.. : )