Calculating Lump Sum D

Lump Sum D payments, which are not taxed, are for redundancy and approved early retirement payments, but they have a limit. Whatever you pay over that limit is paid as a Lump Sum C employment termination payment (ETP), which may or may not be taxed. The resolution of Lump Sum C payments depends on the prior resolution of Lump Sum D.

The calculation rule for TERM LUMP D earning is Amount, where the amount is formula TERM FM LUMP D.

This is how the formula resolves:

  1. It first uses Australian Tax Office (ATO)-supplied, PeopleSoft-maintained, variable values, and a duration that determines an employee's complete years of service to arrive at a figure—called the calculated amount in this topic.

    The calculated amount is the limit that can be paid as Lump Sum D. The variables are TER VR LUMPD YRLY (yearly amount) and TER VR LUMPD INIT (initial amount), and the duration is TER DR TOTAL DAYS. The formula multiplies the yearly amount by the years of service, then adds the initial amount. This is the calculated amount or limit.

  2. The formula then compares the calculated amount with the balance of accumulator TER AC RED/AER (Redundancy/Approved Early Retirement).

Note:

The members of accumulator TER AC RED/AER are only ever REDUNDANCY (which is supplied) or [EARLY RETIREMENT] (which is not supplied). Both of these earnings are also members of accumulator TER AC ETP. The redundancy and early retirement earnings are not paid as such; they do not add to accumulator AUS GROSS. They exist so that you can enter their amounts as positive input and add to accumulators. The actual payment of redundancy or retirement amounts is as earning TERM LUMP D or a combination of TERM LUMP D and ETPTAX/ETP NON TAX.

Based on the results of the formula calculation, one of the following events occurs:

  • If the calculated amount is greater than the accumulator amount, the payments do not exceed the limit and the full accumulator amount becomes the Lump Sum D payment.

  • If the calculated amount is less than the accumulator amount, the payments exceed the limit, so only the calculated amount (the limit) becomes the Lump Sum D payment.

    The balance becomes the basis of ETP calculations.

The balance becomes ETP (taxed or nontaxed—to be calculated) because the redundancy and retirement amounts also add to TER AC ETP, and whatever is paid as Lump Sum D by earning TERM LUMP D subtracts from TER AC ETP. If the redundancy and retirement accumulator was less than the calculated amount, and was therefore paid as Lump Sum D in full, then the balance of redundancy and retirement in the ETP accumulator is nil.

RED/RET = TERM LUMP D so

RED/RET − TERM LUMP D = Nil

If the redundancy and retirement accumulator was more than the calculated amount, only the calculated amount would be Lump Sum D, so there would be a positive balance of redundancy and retirement payment in the ETP accumulator.

RED/RET > TERM LUMP D so

RED/RET − TERM LUMP D = +ve Bal of RED/RET