The Guides to Social Policy Law is a collection of publications designed to assist decision makers administering social policy law. The information contained in this publication is intended only as a guide to relevant legislation/policy. The information is accurate as at the date listed at the bottom of the page, but may be subject to change. To discuss individual circumstances please contact Services Australia. Description: employment termination payments (ETPs) & roll-overs for the IMP


From 1 July 2007, under changes made by the Superannuation Legislation (Amendment) Simplification Act 2007 to superannuation, eligible termination payments are now referred to as ETPs. Under these superannuation changes ETPs are not able to be rolled-over into superannuation. Transitional arrangements may apply to ETPs made between 1 July 2007 and 30 June 2012.

This topic provides information about the following:

  • ETP
  • types of ETPs
  • exemptions and exclusions from ETPs
  • definition of genuine redundancy payment, and
  • transitional ETPs and roll-overs.


An ETP is generally part of a lump sum payment received when a person is:

  • made redundant
  • dismissed
  • resigns
  • retires, or
  • dies.

Types of ETPs

An ETP includes:

  • amounts for unused rostered days off
  • amounts in lieu of notice
  • a gratuity or 'golden handshake'
  • an employee's invalidity (for permanent disability, other than compensation for personal injury), and
  • certain other payments after the death of an employee.

Exemptions & exclusions from ETPs

As defined in the Income Tax Assessment Act 1997, the following payments are not considered ETPs:

  • a payment for unused annual leave or unused long service leave, or
  • the tax free part of a genuine redundancy payment or an early retirement scheme payment.

Example: The tax free amount of a genuine redundancy payment or an approved early retirement scheme payment could be 2 weeks pay or wages for each year of service.

Definition of genuine redundancy payment

A genuine redundancy payment is so much of a payment that:

  • is received by an employee who is dismissed from employment because that employee's position is genuinely redundant, and
  • exceeds the amount that would normally have been paid if a person left their work voluntarily.

Example: A person who resigns after 10 years employment could expect payment of:

  • unused annual leave
  • long service leave.

Example: A person who is made redundant may receive payments beyond their leave payments, such as 2 weeks pay or wages for each year of service.

Transitional ETPs & roll-overs

Transitional arrangements may apply to ETPs made between 1 July 2007 and 30 June 2012, if you were entitled as at 9 May 2006 to such a payment specified under:

  • a written contract
  • an Australian or foreign law (or an instrument under such law), or a workplace agreement under the Workplace Relations Act 1996.

A roll-over is a transfer of part or all of the transitional ETP which is disregarded for IMP purposes. Rolling-over means that the employer uses all of part of the transitional ETP for one of the following purposes, rather than pay the employee in cash:

  • to contribute to a complying superannuation plan
  • to purchase a superannuation annuity scheme.

Note: More detailed information on transitional ETPs and roll-overs can be found on the ATO website.

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