The concessional tax rate is 17% if you've reached your preservation age and 32% if you haven't, up to the relevant cap. Amounts above the caps are taxed at 47%. In the termination wizard, to tax the Ex-Gratia payments correctly, please follow the instructions below:
Wages, Timesheet, enter all worked hours in the employee’s final pay period, and click Next to get to the Adjustment screen.
On the left, select Termination, then Add. The Termination Wizard will launch.
Click Next on the Termination Wizard. Enter the Termination Dat,e which is the employee's last working day. The TFN and Birth Date will flow through from the employee file if entered in the employee file. If you need to pay the employee Severance Pay, select the Severance Pay tick box and Next.
If the employee has resigned with sufficient notice given by the employee. The default option, ‘Sufficient Notice was Given by the Terminating Party’ will already be selected. Click Next.
Continue through the Termination Wizard, checking each screen and adjusting where necessary until you get to the Allowances and Other Items screen. Right click and select Add ETP Item.
On the Add Employment Termination Payment screen, enter a description for the payment, i.e., Ex Gratia Payment, and the value of the payment. Alternatively, hours can be entered, and either the employee’s hourly rate or an alternate rate can be used for the calculation.
Select the Exclude from whole income cap tick box if applicable - if unsure, please discuss with ATO.
Continue with the Termination Wizard until you get to the Termination Details screen, which will provide a comprehensive breakdown of the termination payment along with the tax applying to each component. This can be printed here or later printed from the employee file Employee, Edit Employee, Select the employee, Employment, Notes, Select the Termination tab.
When you click Next on the Termination Details screen, a final Summary of the payment to be made to the employee will be shown. Click Finish, then Next to preview the pay slip.
The pay slip provides the employee with information in relation to the leave balance paid out, employment cessation date, and any other details relating to the final payment.