Issue
Where the taxpayer receives a termination payment after the day on which the employment actually terminated, is the date that the payment is made the relevant date for the purposes of calculating the taxpayer's termination payments surcharge liability under subsection 9(2) of the Termination Payments Tax (Assessment and Collection) Act 1997 (TPT Act)?
Decision
No. The relevant date for the purposes of calculating the taxpayer's termination payments surcharge liability under subsection 9(2) of the TPT Act is the date when the employment is terminated.
Facts
The taxpayer receives an employer eligible termination payment (ETP) in respect of the previous employment. The taxpayer then receives a termination payments surcharge assessment for the relevant income year for the amount of surcharge payable in respect of the employer ETP taken in cash. The assessed amount is calculated using a date corresponding with the date of payment of the ETP.
The ETP related information demonstrates that the employment ceased on a date prior to the date of payment of the ETP.
Reasons for Decision
Subsection 9(2) of the TPT Act provides a formula for working out that part of the termination payment that is subject to the termination payments surcharge. The formula calculates this part using 'the number of days in the period of the taxpayer's employment for which the termination payment was made that occurred after 20 August 1996'. The taxpayer's surcharge liability is properly calculated using the date the employment ceased and not the later date of payment of the ETP.