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Processing an employment termination payment (ETP)

An employment termination payment (ETP) is a lump sum payment made to an employee because their employment has finished.

ETPs include payments for unused rostered days off, payments in lieu of notice, a gratuity or 'golden handshake', and more. For a full list of payments that are ETPs, visit the ATO website.

And because you'll be reporting your ETPs to the ATO via STP, all you need to do is set up your ETP pay items and do a pay run. Easy!

Rules, tax and other final pay headaches

Final pays can get complicated and they have specific rules and tax treatment. And no two final pays are the same. So we recommend you speak to an accounting advisor about the specifics of your final pay. They'll clarify what needs to be paid and ensure you stay in the good books with the ATO. You can also invite your accountant into your MYOB business so you can work on your books together.

To learn about tax on final pays, see this ATO information. For the rules, calculators and other final pay resources, check the Fair Work website.

What next?

If you haven't already, you'll need to pay the employee their final regular pay out any applicable leave. You'll also need to advise the ATO of the termination.

For all the details see Processing a final pay.