Set Up Unfair Dismissal ETPs

Prior to processing early termination payments (ETPs) for unfair dismissal, harassment, personal injury, or discrimination, you must create an earnings code as well as a deduction code for taxation purposes.

Once you have set up these codes, you can manually process a timecard record for this type of payment.

To set up an earnings and deduction code for unfair dismissal ETPs:

  1. In the PR Earnings Codes form, create an earnings code for the unfair dismissal ETP. On the Addl Info tab, from the ATO Category drop-down, select ETPU - Employment Termination, Unfair Dismissal/Harassment/Discrimination. For more detailed information, see Set Up Earnings Codes: Australia.
  2. In the PR Deductions / Liabilities form, create a deduction code for taxation purposes. When creating the code, use the following settings:
    1. On the Info tab, from the Method field, select R-Routine and enter ETPUnfair in the Routine field.
    2. On the Addl Info tab, from the ATO Category field, select Tax Withheld ETP Unfair Dismissal.
    3. On the Info tab, from the Method field, select R-Routine and enter ETPUnfair in the Routine field.
    4. Enter the corresponding earnings code(s) on the Basis Codes tab.

    For more information, see Create Deduction and Liability Codes.

You can now manually process timecard records for unfair dismissal ETPs. When you do:
  • The system removes any applicable non-taxable portion for the employee's term of service prior to 1 July 1983.

  • Any remaining amount is taxed based upon the preservation age and the ETP cap limit (ETP Cap field, PR Limits and Rates form).

  • 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).