EMPLOYEE TERMINATION PAYMENT Damon was born on 11 April 1961 and was 58 years of age when he was made redundant on 12 June 2019. His year to date earnings up to that date were $190,000. In addition to this and his redundancy payment of $55,000, he received an Employment Termination Payment. His PAYG Payment Summary - Employment Termination Payment showed that the employment termination payment he received was $120,000 with tax withheld of $20,400. Damon is concerned he has not had enough tax withheld and will have a tax bill in the 2019 year. What would you advise Damon?

As a high income earner, Damon should have had more tax withheld (47%, which is the top tax rate, plus Medicare). He will probably have a tax bill for the 2019 year.

As Damons ETP was paid as a result of a redundancy, and the ETP is below the concessional cap, he will be taxed at a maximum of 15% (plus Medicare). He has had sufficient tax withheld from the ETP.

As tax has been withheld from his Employment Termination Payment, he does not need to include it on his tax return, so it will have no impact on his return.

As Damons ETP was paid as a result of a redundancy, and the ETP is below the concessional cap, he will be taxed at a maximum of 30% (plus Medicare). He has not had enough tax withheld and will have a tax bill.

Hint: 1 Correct answer (s)