Redundancies and Employment Termination Payments

Override ETP Payment Amounts

When generating an ETP payment for an employee, there are times where you may need to override the ETP values due to variances in the PAYG, Taxable components or other amounts.

This article will show you how to override ETP values within a pay run.

PAYG on termination payments

This article will explain how PAYG is calculated on termination payments.

Opening balances and ETPs

If you are migrating terminated employees' data across to this payroll system, you can include ETP data so that you only need to access one system for reporting and payment summary purposes. You are able to select the following ETP payments:

• Type R - e.g. genuine redundancy, early retirement scheme, invalidity, compensation
• Type O - other ETP payments not included in Type R
• Type S - where a Type R ETP was made in a previous financial year and another ETP is made in the current financial year relating to the same termination
• Type P - where a Type O ETP was made in a previous financial year and another ETP is made in the current financial year relating to the same termination
  
  

Take note of the field 'Generate ETP Payment Summary'. The default value is 'No' - if you leave this option as is, the employee's ETP Payment Summary will not be published and so the employee will not have access to it. If you change the value to 'Yes', the employee's ETP Payment Summary will automatically publish and they will be able to access this via their employee portal. 

Tax reporting for ETPs

STP reporting

When a pay run containing an ETP is finalised, the corresponding STP pay event will specify:

• the total taxable components;
• any tax free component
• total tax withheld
• ETP code

and report to the ATO once lodged. If there are multiple ETPs of the same type, these will be reported as one amount.

The employee is automatically marked as 'is final' within the STP pay event.

Employment termination payment summaries

Businesses which are exempt from STP reporting – ie WPN holders – must provide the employee with a 'PAYG payment summary – employment termination payment’ (ETP payment summary) within 14 days of making the payment.

Once the pay run has been finalised an ETP payment summary is generated. A separate payment summary is created for each ETP type, although multiple Type payments are reported together. The payment summary will display:

• the total taxable component;
• any tax free component
• total tax withheld
• ETP code

ETP payment summaries are available on the employee portal under ‘Documents’ > ‘Payment summaries’. Businesses can send a notification to the employee from the employee file under ‘Employee management’ > ‘Payment summaries’ or from Reports > ATO reporting > Payment summaries under the ‘Employment termination payment’ tab.

Useful ATO Resources

Payments that are ETPs

Employment termination payments worksheet

Working out the tax free component of an ETP

If you have any questions or feedback, please let us know via support@yourpayroll.com.au.