For the purposes of working out the withholding amount under paragraph 12-85(b) of Schedule 1 to the Taxation Administration Act 1953 (TAA), are the lump sum payments made to staff, who worked for Members of the Legislative Assembly who lost or did not contest an election, employment termination payments?
Yes. This ruling applies for the following periods : Year ending 30 June 2025 Year ending 30 June 2026 Year ending 30 June 2027 Year ending 30 June 2028 Year ending 30 June 2029 The scheme commenced on: 1 July 2024
The Office of the Legislative Assembly provides procedural and administrative advice and support to the Assembly and its committees. A primary responsibility of the office is to provide staff to enable the Assembly and committees to operate efficiently. Section 10 of the Australian Capital Territory (Self-Government) Act 1988 , outlines the term of office of Members of the Legislative Assembly: The term of office of a member duly elected begins at the end of the day on which the election of the member is declared and, unless sooner ended by resignation or disqualification, or by dissolution of the Assembly, ends on the polling day for the next general election. The Speaker and Ministers continue to hold office until immediately before a Speaker and a Chief Minister are elected at the first meeting of the Assembly after the general election. Subsection 13 'Termination of employment' of the Legislative Assembly (Members' Staff) Act 1989 ('LAMS Act') states: 1) The employment of a person under this part terminates if the member of the Assembly by whom the person was employed - a) Dies; or b) Ceases to be a member of the Assembly The
Legislative Assembly (Member's Staff) Deemed Date of Termination of Employment of Members' Staff Direction 2020 (1) ('the Direction') provides the following: Clause 7 Class of persons to whom this applies This direction applies to the class of persons whose employment ceased, or would have ceased, by the operation of subsection 13(1) of the Act Clause 8 Termination of employment 1) The class of persons to whom this direction applies are deemed to continue in employment until the date of the declaration of the poll or the date that is four weeks after polling day, whichever date is later, where a member- (a) ceases to be a member on the polling day for a general election by virtue of section 10 of the Australian Capital Territory (Self-Government) Act 1988 ; and (b) has nominated for re-election at that general election. 2) The class of persons whom this direction applies are deemed to be on leave without pay until the date of the declaration of the poll, where - (a) their employing member ceases to be a member on polling day for a general election by virtue of section 10 of the Australian Capital Territory (Self-Government) Act 1988
and has not nominated for re-election at that general election; and (b) the person has an entitlement to a termination payment under the applicable enterprise agreement and has elected in writing to defer the payment of their termination payment. Employment arrangement for staff members: Section B 'Working in the ACT Legislative Assembly' of the ACT Legislative Assembly Members' Staff Enterprise Agreement 2023-2026 ('the Agreement') provides the following: B1 Types of Employment B1.1 - A person will be engaged under the LAMS Act in one of the following categories: • B1.1.1 Fixed term temporary employment on a full-time or regular part-time basis, engaged for a specified period of time or for a specified task, or as a trainee or cadet. • B.1.1.2 Casua l employment on an irregular and non-systematic basis. B7 Termination Payment ... B7.2 The following employees are not entitled to a termination payment under subclause B7.1: • B7.2.1 An employee whose employment is terminated by resignation or dismissal for misconduct. • B7.2.2 An employee who has a right of return to secure employment in the public sector.
• B7.2.3 An employee who is engaged for a fixed period, to fill a vacancy caused by a staff member being absent on leave. • B7.2.4 An employee who is engaged to undertake a specified project, where the project has been completed. • B7.2.5 A probationary employee. • B7.2.6 A casual employee. • B7.2.7 An employee who is immediately re-employed under the LAMS Act. • B7.3 Where an employee is entitled to be paid redundancy pay under section 119 of the Fair Work Act, any termination payment made under subclause B7.1 will be reduced by an amount equal to that redundancy payment As the fixed term employment contract of each of the staff members ceases once a Member ceases to hold office, pursuant to clause B1.1.1. of the Agreement, staff members are engaged under a new employment arrangement each time the employee works for a different Member or Office Holder, or when the Member is re-elected. Where a staff member is re-employed, the staff member enters a new employment arrangement under the Legislative Assembly (Member's Staff) Member's Hiring Arrangements Approval 2021 (No 1).
Where a staff member is immediately re-employed under the LAMS Act, per clause B7.2.7 of the Agreement, the staff member is not entitled to a termination payment. A casual employee is also not entitled to a termination payment. Assumptions We have assumed, for the purposes of this ruling, that the payments will be paid within 12 months of the termination of employment. If the payments are not made within 12 months, they will not be employment termination payments, unless it is determined (by means of a determination under subsection (5) or (7)) that paragraph 82-130(1)(b) of ITAA 1997 does not apply. We have further assumed that: • the dismissed employee is not older than the specified age limits; • the actual amount paid is not greater than the amount that could reasonably be expected had the parties been dealing at arm's length, in the event that the employer and employee are in fact not dealing at arm's length in relation to the dismissal; • there is no arrangement entered into between the employer and employee or the employer and another entity to employ the dismissed employee after the termination; and
• the payment is not in lieu of superannuation benefits.
Taxation Administration Act 1953 section 12-5 Taxation Administration Act 1953 section 12-45 of Schedule 1 Taxation Administration Act 1953 section 12-85 of Schedule 1 Income Tax Assessment Act 1997 section 995-1 Income Tax Assessment Act 1997 subsection 82-130(1) Income Tax Assessment Act 1997 section 82-135 Income Tax Assessment Act 1997 section 15-70 Summary The lump sum payments are employment termination payments. No part of the lump sum payments received by staff constitute a tax-free part of a genuine redundancy payment under section 83-170 of the ITAA 1997. Detailed reasoning Section 12-45 of Schedule 1 to the Taxation Administration Act 1953 (TAA) imposes an obligation on the paying entity to withhold an amount from salary, wages, commission, bonuses or allowances it pays to an in