Hello All. I am the director and sole employee of my IT company. I am retiring permanently from full time work as I am 65. Am I entitled to pay myself a termination payment (using the available tax concessions) in this scenario?
Hi @bootlima,
You may be eligible for an employment termination payment (ETP) if there is a genuine termination of employment, even where a director is also an employee. In owner‑managed companies (sole director/sole employee), we will look closely at whether the payment is truly in consequence of the termination of employment. This must be satisfied before any ETP concessional treatment can apply.
You'll need to review the specific tax-free limits and caps that apply to your situation, ensure you report the payment correctly on your income statement, and consider your birth date in relation to pension age to work out the correct tax treatment.
If you need certainty for your situation, consider contacting our tailored technical assistance team or apply for a private ruling.
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