Calculating Lump Sum C-Employment Termination Payment

ETP payments may or may not be taxed.

The system has to determine which part of the ETP earning is taxable and which part isn't.

Payments such as payment in lieu (of notice), ex gratia, invalidity, and, sometimes, the balance of redundancy and retirement payments are included in the ETP payments.

Note:

Earnings for payment in lieu (of notice), ex gratia, and invalidity are, like redundancy and retirement earnings, not resolved and paid as such; the amounts that you enter for them as positive input do not add to accumulator AUS GROSS. They do, however, add to accumulator TER AC ETP, and formulas use that accumulator to determine if the payments are to be ETP-taxed or ETP-nontaxed. Invalidity payments have additional processing.

ETPs are categorized into two: Excluded ETP and Non Excluded ETP.

Excluded ETP

The accumulator for Excluded ETP is TER AC ETP LBP. The delivered accumulator is customary in nature. ETP ER LBP is an earning element created to facilitate contributions to TER AC ETP LBP. You can provide positive input in ETP ER LBP for earnings contributing to the LBP category and calculate the values. You can also create multiple member elements for the accumulator for customized earnings.

Calculating Taxable Excluded ETP

In Excluded ETP, the earnings from Pre83 (ETP NONTAX) are non taxable and tax is calculated only from the Post83 earnings (ETP TAX). The Lump C tax (LUMP C TAX) is calculated from the Post83 earnings.

Non Excluded ETP

The accumulator for Non Excluded ETP payments is TER AC ETP WIC. ETP ER WIC is an earning element created to facilitate contributions to TER AC ETP WIC. You can provide positive input in ETP ER WIC for earnings contributing to the WIC category and calculate the values. Like the accumulator for Excluded ETP, for this accumulator also you can create member elements for customized earnings.

Calculating Taxable Non Excluded ETP

In Non Excluded ETP, the Pre83 earnings (ETP NTAX WIC) are non taxable and tax is calculated only from the Post83 earnings (ETP TAX WIC). The Whole of Income tax (ETP WIC TAX) is calculated from the Post83 earnings of the Non Excluded ETPs.