Emilio is a 61-year-old former commercial pilot who retired from his job in November 2019. His taxable income from his wages in 2019–20 up to that point was $100,000. His employer paid him an ETP of $50,000, in the form of a gratuity.
How much his employer should withhold from the ETP?
Emilio’s ETP is a non-excluded ETP, so the lesser of the two caps apply.
Emilio’s whole-of-income cap is reduced from $180,000 to $80,000 because he earned $100,000 in 2019–20 . T
his is less than his ETP cap ($210,000 for 2019–20), so the calculated whole-of-income cap applies to his ETP.
Since Emilio’s ETP ($50,000) is less than his calculated whole-of-income cap ($80,000), his entire ETP is taxed at concessional rates.
Emilio has reached his preservation age, so his employer withholds tax at a rate of 17% from his ETP.
Notes: The whole-of-income cap is $180,000 for the 2018-19 year minus other taxable income you earn throughout the income year. The taxable component of your ETP is taxed at either 17% or 32% up to your whole-of-income cap. Any amounts over the whole-of-income cap are taxed at the top tax rate (47%).