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The ETP cap reduces each time you receive a life benefit ETP in that income year, related to the same termination. This prevents splitting payments to avoid the ETP cap.
The ETP cap also reduces for any ETP received in the same income year and this is regardless of whether the payment is from the same termination or a different termination. However, if the ETP is an excluded ETP, the ETP cap is only reduced by other excluded ETPs received in the income year.
Example 10: Multiple ETPs
Lloyd's employment is terminated in June 2014 and he receives a $100,000 ETP. His final entitlements are calculated and a second payment is made in August 2014 of another $100,000 ETP. Assume both payments are excluded payments. The first payment is less than the ETP cap but the second payment exceeds the cap because earlier ETPs reduce the ETP cap amount.
First ETP paid in 2013/14 |
$100,000 |
Second ETP paid in 2014/15 |
$100,000 |
Lloyd's ETP cap in 2013-2014 is only $95,000 as it is reduced by the earlier ETP (that is, $195,000 - $100,000). Since the second ETP relates to the same termination, the ETP cap for the 2014/15 year is reduced by the first ETP even though the first ETP is not in the same year. Therefore, $5,000 (that is, $100,000 - $95,000) will be more than the reduced ETP cap and taxed at the highest marginal rate of 49%.
The whole-of-income cap only applies on a year-by-year basis (that is, the $180,000 is not reduced by any ETPs you received in earlier years).
Source:
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Topic: 40911
