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Item 4 - Employment termination payments (ETP)

This item is supported by the Employment Termination Payment schedule PY. A separate PY must be completed for each ETP PAYG payment summary received. Press [Enter] at any of the fields at item 4, to open this worksheet. Refer to Employment termination payment for individuals schedule (PY) for a description of the fields and for information on when the schedule will be lodged with the return.

Click this link for Item 4 Employment Termination Payments on the ATO website.

Click the relevant link on the Special circumstances and glossary page on the ATO website for more information.

If the taxpayer was to have received an ETP and did not receive a PAYG payment summary-employment termination payment, or if the taxpayer has lost it and the employer has not replaced it, the taxpayer will be required to complete a Statutory Declaration (NAT 4135).

Employment termination payment for individuals schedule (PY)

To complete item 4 use the schedule PY. The PY is a multiple worksheet which must be completed to conform to PLS requirements for lodging that schedule.

This schedule can be pre-filled. Note that Tax offset (T2) must be entered manually. For more information about pre-filling a tax return, see Pre-fill Manager.

Tax Pre-fill is dependant on available ATO data. Validate the Tax return by pressing [F3] before lodgment.

Number of ETP schedules completed:

  • Where only 1 ETP schedule is completed, the relevant details default to the labels in the main return and the PY will NOT be transmitted to the ATO via PLS.

  • Where there is more than 1 ETP schedule completed, on integration an 'M' for multiple will be integrated to the code box at item 4, and the sum of Taxable component will integrate to label I and all instances of PY will be lodged via PLS.

Payment Details

Enter the Payment details as disclosed on the ETP Payment Summary:

  • Date of payment

  • Total tax withheld amount

  • Total taxable component

  • Payment type

  • Payer's ABN

On integration to the main return, Tax applies the code accordingly.

Only the Taxable component of an ETP is included as income in the Tax Return. The other fields are required to correctly calculate any ETP offset due and to collect amounts over the cap that are to be taxed at top marginal rates.

Tax-free components are non-assessable, non-exempt income and are NOT to be included at any item in the return.

Click this link for information on the ATO website describing Employment termination payments.

Tax Offset

The taxpayer's age is relevant in calculating any tax offsets for which he or she may be eligible. Where applicable Tax will calculate the amount of tax offset to ensure that the taxpayer pays no more tax than required.

Taxpayer DOB is missing

If the Taxpayer DOB is missing, MYOB Tax now calculates the ETP on the basis of the taxpayer being under 55 years. This safeguards the taxpayer by understating the offset where this condition exists.

By validating the return before preparing the Estimate Tax will advise where a Date of birth is missing.

CCH References

14-000 Taxation of superannuation and termination payments

14-600 Employment termination payments - overview

14-610 What is an employment termination payment

14-620 Taxation of life benefit termination payments

14-630 Pre-July 83 segment

14-640 Invalidity segment

14-680 Death benefit termination payments

14-700 Genuine redundancy payments

14-710 Early retirement scheme payments

14-720 Unused annual leave payments

14-730 Unused long service leave payments

14-740 Foreign termination payments

14-600 Transitional termination payments

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