EMPLOYMENT DISPUTES: THE IMPLICATIONS OF TAXING OF SETTLEMENT RECEIPTS AS ELIGIBLE TERMINATION PAYMENTS
In: Journal of Australian Taxation, Jg. 10 (2007-06-01), S. 1
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1. INTRODUCTION A number of decisions of the courts and Administrative Appeals Tribunal 1 have highlighted the taxation issues which can arise where a dispute relating to the termination of employment is settled or a court order is made requiring a payment by the employer to the employee. As a result of the connection between the payment and the termination, such a payment will be characterised for income tax purposes as an 'eligible termination payment' ('an ETP'). 2 In most circumstances, the ETP regime operates concessionally, allowing various components of a termination payment to be exempt from tax or subject to reduced rates. However, in the context of employment disputes, the ETP regime can effectively operate as a penalty by subjecting to tax amounts which would not be income under ordinary concepts and which would also be otherwise exempt from tax under the capital gains tax ('the CGT') regime. 3 This can be the case, for example, where the termination payment includes compensation for wrongful dismissal, defamation or unlawful discrimination. 4 This situation will be further exacerbated once the superannuation simplification tax changes previously announced by the Federal Treasurer in the 2006-07 budget take effect. 5 It is submitted that these consequences are inappropriate and legislative amendment should be considered based on a fair and coherent policy for the taxation of these payments. The taxation treatment of amounts received in relation to the termination of employment is dictated by the complex rules found in subdivision AA of Division ...
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EMPLOYMENT DISPUTES: THE IMPLICATIONS OF TAXING OF SETTLEMENT RECEIPTS AS ELIGIBLE TERMINATION PAYMENTS
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Autor/in / Beteiligte Person: | Black, Celeste M |
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Zeitschrift: | Journal of Australian Taxation, Jg. 10 (2007-06-01), S. 1 |
Veröffentlichung: | 2007 |
Medientyp: | academicJournal |
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