Create Earnings and Deduction Codes for Standard ETPs

The specific steps for making earnings and deductions codes work for standard ETPs.

These steps are only those that are specific to standard ETPs. If you need additional help
  1. In the PR Earnings Codes form, create an earnings code for each type of standard ETP. When creating the code, use the following setting:
    1. In the Addl Info tab, in the ATO Category drop-down, select ETP - Employment Termination Payment.
  2. In the PR Deductions / Liabilities form, create a deduction code for taxation purposes. When creating the code, use the following settings:
    1. In the Method field, select R-Routine.
    2. In the Routine field, enter ETPStandar.
    3. In the Addl Info tab, in the ATO Category field, select Tax Withheld ETP.
    4. In the Basis Codes tab, enter the corresponding earning(s) code.
  3. For ETPs that can be auto-generated, enter an ETP type record in the PR Auto Termination Pay form for the earnings code from step 1. For more information, see Set Up Automatic Standard ETPs.
During processing, the system calculates the tax based on the following:
  • 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 smaller of the ETP cap or the calculated whole of income cap.

    Cap amounts are derived using the ETP Cap and Whole Income Cap fields on the PR Limits and Rates form.

  • If there is an amount that exceeds the relevant cap limit, the system taxes this amount using the rate in the Excess of Cap Rate field in the PR Limits and Rates form.