FNSACC601 - Task 8 – Termination Payments

Task 8 – Termination Payments

After five years' service, Sam, who is 35 years old, is made redundant from his place of work in 2017–18 and receives the following payments:

• redundancy pay – $40,000
• payment in lieu of notice – $1,723
• unused annual leave – $5,234
• unused long service leave – $11,423
• gratuity – $25,000

Under Sam’s workplace agreement, payment in lieu of notice and the gratuity are payable on termination of employment. Sam has five years of completed service and his redundancy meets the conditions of a genuine redundancy.

Sam also received $140,000 in salary and wages income during the year.

Required:

1. Calculate the tax-free limit on the genuine redundancy
2. Calculate the taxable component of the genuine redundancy part of the payment and indicate the applicable tax
3. Calculate the remaining ETP cap amount.
4. Calculate the whole of income cap amount, determine the lesser of the caps, and indicate the

Note: You must show all your workings and may refer to the tables on paragraph 42-270 in your Master Tax Guide.