Create Earnings and Deduction Codes for Redundancy/Early Retirement ETPs
(Australia only) Prior to processing ETPs for redundancy, you must create an earnings code as well as a deduction code for taxation purposes.
- The system removes the redundancy tax-free portion (as specified in the Redundancy Tax Free Basis field in PR Limits and Rates).
- The system removes any applicable tax-free portion based on the Redundancy Tax Free Years of Service Basis field (PR Limits and Rates) times the employee's years of service.
- The system removes any applicable non-taxable portion for the employee's term of service prior to 1 July 1983.
- The remaining amount is taxed based upon the preservation age and the ETP cap limit (ETP Cap field, PR Limits and Rates).
- If there is an amount that exceeds the ETP cap limit, the system taxes this amount using the rate in the Excess of Cap Rate field (PR Limits and Rates form).