Death benefit termination payment
Employment termination payment
Life benefit termination payment
Post-June 1983 untaxed element
Tax free component - employment termination payment
Taxable component - employment termination payment
A death benefit termination payment is an employment termination payment made to a person after another person’s death.
The number of days of employment to which the payment relates.
An employee’s employment period commences on the day they started work and ends on the date they ceased working. The number of days is used to calculate the employment termination payment components. The employment period includes periods worked on a casual, part-time or full-time basis. It includes weekends, public holidays and periods of annual leave and long service leave. It usually does not include leave without pay.
The start date of the employment period will generally be the day employment commenced.
The end date of the employment period will generally be the date employment ceased.
Example – one continuous employment period
Trent started working for Ace Textiles on 7 March 1980 and terminated employment on 15 August 2004. The start date of the employment period is 7 March 1980 and the end date of the employment period is 15 August 2004. The number of employment days in this period is 8,928 comprising 1,211 pre 1/7/1983 days and 7,717 post 30/6/1983 days.
Example – Employment period with broken periods of employment
Selina started working for Bright Electric on 1 July 1978. She left to study overseas from 5 December 1982 to 2 January 1987. When she returned she rejoined Bright Electric. Selina is now retiring and will leave her employment on 30 November 2007.
Bright Electric is paying Selina a ‘golden handshake’ payment of two weeks wages for each year of service and has decided to count the service period before Selina’s overseas studies. The employment period for the employment termination payment is the number of calendar days from 1 July 1978 to 5 December 1982, plus the number of calendar days from 2 January 1987 to 30 November 2007.
| 01/07/1978 to 05/12/1982 | 1,619 days (Pre 1/7/83 days) |
| 02/01/1987 to 30/11/2007 | 7,638 days (Post 30/6/83 days) |
| Total employment period is: | 9,257 days |
Lump sum payment made in consequence of the termination of a person’s employment. For more information on employment termination payments refer to:
A person can receive an employment termination payment where their employment is terminated before their normal retirement date because of invalidity. The invalidity portion of the payment is known as the invalidity segment and it represents the period between termination of employment due to invalidity and the person’s last retirement date.
The employment termination payment contains an invalidity segment if:
For more information on invalidity payments, refer to Understanding invalidity payments.
This is the date the employee would have stopped working but for the invalidity. This might be a date previously agreed under a contract for employment, or it might be the date when the employee would have retired. If there is no other basis for selecting a date, use the date of the employee’s 65th birthday.
A life benefit termination payment is an employment termination payment made in consequence of a person’s termination of employment other than as a result of death.
The post-June 1983 untaxed element represents that part of the employee’s employment termination payment that relates to the employment period that occurred after 30 June 1983. From 1 July 2007, this element is part of the taxable component of the employment termination payment.
The tax free component of an employment termination payment is so much of the payment as consists of the following:
The taxable component of an employment termination payment is the amount of the payment less the tax free component of the payment.
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