Can employer compensation be taxed?

Question

RichATO · Accepted Answer

You say that you have spoken with us about this matter. Without knowing what advice you were given I can advise that you will have received a lump sum as an Eligible Termination Payment (ETP). ETPs really only come in 4 types: - payments for unused sick leave or unused rostered days off - payments in lieu of notice - a gratuity or 'golden handshake' - an invalidity payment for permanent disability. The use of the term 'compensation' by the FWC normally refers to a payment required to the employee. It does not imply that the payment is tax-free. Based on the information you have provided it appears that your EFT has been ordered by the FWC as the second type: payment in lieu of notice. This payment may have been taxed at a concessional rate up to the cap. If your employer has withheld more tax from the ETP than they should have then this will be refunded to you by us after you lodge your income tax return. You can read more about how your termination payments are taxed online here. I hope that helps. RichATO

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