ARTICLE · 21 MAY 2012

Australia's Budget 2012-13: Retirement income

Greenwoods & Freehills

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The Government plans to "better target" the tax concession provided in respect of employment termination payments.

AustraliaTax

ETPs

In a move which was not anticipated, the Government has decided to downsize (or to adopt the Government's euphemism, "better target") the tax concession provided in respect of employment termination payments ("ETP").

The Government has announced the ETP tax offset will only apply in respect of that part of a person's ETP which takes the person's total annual taxable income (including the ETP) to $180,000. Where it applies, the ETP tax offset ensures that the ETP is taxed at a maximum rate of 15% for those over the preservation age, and 30% for those under that age. The new "whole-of-income" cap is intended to complement the existing ETP cap ($175,000 in 2012-13, indexed).

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