Overview
AUS Payroll caters for normal Employee termination when only Leave components are paid out, as follows:
Cheques can be paid out to the maximum untaxed amount in an Early Termination Payment (ETP) and the total ETP amount.
There is a Protected Earnings Amount for child support payments.
Checking ensures that a minimum amount is paid out before a deduction can happen.
The LumpSumB Tax Calculation calculates on 5 percent of the total at the marginal rates.
The Under Preservation Age field enables you to use the tax rate of 32 percent versus 17 percent for those over this age.
The Death Benefit taxes the appropriate tax for the ETP amounts.
More than one ETP is allowed for the same period for an employee.
This information is relevant to the Australian region only. It includes details about ETP processing.
Configuration
PR parameters have been set up in the Payroll module for use with ETP processing.
Parameter | Description |
PR-ETP-MAXUNTAXED | ETP maximum untaxed amount allowed |
PR-ETP-MAXAMOUNT | ETP maximum amount allowed in a year |
PR-ETP-MAX-ERRTYPE | ETP maximum untaxed amount allowed and maximum amount allowed error type (warning/error) |
PR-CHILDSUPPORT-PAYCALC | List of pay calculations denoting child support that should cater to the PEA (Protected Earnings Amount) requirement |
Lookup Code
A Lookup Code with a blank value was added to the Termination Types (TERMTYPE) Lookup Type in Payroll > Global Setup (shown in Blank Termination Type as “Non ETP”).
Blank Termination Type
Employee Termination
Entitlements Layout
When the employee Termination Type code of Blank (Non ETP) is selected, only the Leave fields are allowed to be updated in the Entitlements layout in Payroll > Employee Administration > Employee Termination > Termination Details tab. All of the ETP columns (Entitlements Layout) are disabled here (ETP Concessional, ETP Untaxed, ETP Taxed, and Total).
Entitlements Layout
Details Layout
An Under Preservation Age field is found on the Details layout in Payroll > Employee Administration > Employee Termination > Termination Details tab, as shown in Details Layout. If selected on termination, the age of the person is considered to be ‘under the preservation age’ at the end of the income year that the payment is received. The employee ETP payment is taxed at 32% up to the capped amount. If unselected, the employee is considered to be ‘of preservation age or over’ at the end of the income year, and the ETP payment is taxed at 17% up to the capped amount.
Details Layout
If the Death Benefit field is ticked, the tax rates are used as shown in the table below.
Termination Type | Up to ETP Cap | Amount Over ETP |
Non dependant (N) | 32% | 49% |
dependant (D) | NA | 49% |
Trustee (T) | NA | NA |
ETP Max and ETP Max Untaxed Amounts
The ETP process validates that the ETP Max Untaxed Amount has not been exceeded. Based on the PR-ETP-MAXUNTAXED parameter setting, a warning or error is displayed if this occurs.
Also, the Total ETP amount given to an employee should not exceed the ETP Maximum Amount allowed as set against the corresponding parameter.
For the HR Personnel record of the employee, the following are checked: all previous links of the employee number, all previous employment periods of this employee, and all companies.
The Total ETP paid to this employee is calculated over the year and compared with the value against the ETP Maximum Amount (set up in the parameter). If necessary, an appropriate warning or error is displayed.
Minimum Net Amount Cheque
The Pay Calculation for a child support payment holds the minimum Weekly PEA (Protected Earnings Amount). Verification ensures that the employee is paid a minimum of this PEA Amount before the deduction can be allowed.
The deduction should not result in the wage dropping below the PEA Amount.
If the resulting deduction is less than what is desired, an appropriate message is printed in the Payroll Calculation to indicate that the full deduction could not occur since the PEA Amount was breached.
Payroll Calculation
A Minimum Net Amount is needed before deductions are allowed during Payroll Calculations.
If this Minimum Net Amount is breached, a deduction with a lower value is created (consisting of whatever value is allowed until the Minimum Net Amount is breached), if so configured on the Pay Calculation.
An appropriate message regarding this is displayed in the Payroll Calculation Report.
Payment Summary
There can be more than one ETP in a year for the same periods for an employee. This is typically the case when there is accumulated RDO that is paid out as part of an ETP. In that case, the RDO value is paid out as a separate ETP code from the rest.