Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-40 - RULES AFFECTING EMPLOYEES AND OTHER TAXPAYERS RECEIVING PAYG WITHHOLDING PAYMENTS  

Division 83 - Other payments on termination of employment  

Subdivision 83-C - Genuine redundancy payments and early retirement scheme payments  

Operative provisions

SECTION 83-180   What is an early retirement scheme payment ?  

83-180(1)    
An early retirement scheme payment is so much of a payment received by an employee because the employee retires under an *early retirement scheme as exceeds the amount that could reasonably be expected to be received by the employee in consequence of the voluntary termination of his or her employment at the time of the retirement.

83-180(2)    
An early retirement scheme payment must satisfy the following conditions:

(a) the employee retires before the earlier of the following:

(i) the day the employee reached *pension age;

(ii) if the employee ' s employment would have terminated when he or she reached a particular age or completed a particular period of service - the day he or she would reach the age or complete the period of service (as the case may be);

(b) if the retirement is not at *arm ' s length - the payment does not exceed the amount that could reasonably be expected to be made if the retirement were at arm ' s length;

(c) at the time of the retirement, there was no *arrangement between the employee and the employer, or between the employer and another person, to employ the employee after the retirement.

83-180(3)    
A scheme is an early retirement scheme if:

(a) all the employer ' s employees who comprise such a class of employees as the Commissioner approves may participate in the scheme; and

(b) the employer ' s purpose in implementing the scheme is to rationalise or re-organise the employer ' s operations by making any change to the employer ' s operations, or the nature of the work force, that the Commissioner approves; and

(c) before the scheme is implemented, the Commissioner, by written instrument, approves the scheme as an early retirement scheme for the purposes of this section.

83-180(4)    
A scheme is also an early retirement scheme if:

(a) paragraph (3)(a) or (b) does not apply; and

(b) the Commissioner is satisfied that special circumstances exist in relation to the scheme that make it reasonable to approve the scheme; and

(c) before the scheme is implemented, the Commissioner, by written instrument, approves the scheme as an early retirement scheme for the purposes of this section.

83-180(5)    

However, an early retirement scheme payment does not include any part of the payment that was paid to the employee in lieu of *superannuation benefits to which the employee may have become entitled at the time the payment was made or at a later time.

Payments not covered

83-180(6)    
A payment is not an early retirement scheme payment if it is a payment mentioned in section 82-135 (apart from paragraph 82-135(e) ).

Note:

Paragraph 82-135(e) provides that the part of a genuine redundancy payment or an early retirement scheme payment worked out under section 83-170 is not an employment termination payment.