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Only available to Australian businesses using Single Touch Payroll reporting

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

ETP includes 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 and are not ETPs, see the ATO website.

ETP does not include payments for unused annual leave. For more information on paying out unused annual leave to a terminated employee, see Processing a final pay.

Setting up ETP in MYOB Essentials

Before processing your first ETP, you need to set up ETP pay items.

Setting up ETP pay items

ETPs can be made up of taxable and non-taxable earnings, and tax-withheld deductions. We'll step you through how to create all 3 pay items below, but you may not use all 3 for each ETP you pay. Please see the ATO website or speak to your accountant if you're unsure what a terminated employee is owed.

Creating the ETP taxable earning

Go to the Pay items page (Payroll > Pay items).
Click Create earning.
The Create new earning window appears.
Choose ETP from the Type dropdown box.
Enter a Name and Name for payslip. We recommend naming it ETP - Taxable or similar to easily find it in your earnings lists and identify it on the payslips.
In the Rate dropdown, choose Fixed.
Enter an amount in the Amount $ field.
Note that you can change the amount when you process an ETP pay run.
In the Tax field, choose Taxable.
The ATO reporting category is automatically set to ETP - taxable.
The earning details will look similar to this:
Click Save.

Creating the ETP non-taxable earning

Go to the Pay items page (Payroll > Pay items).
Click Create earning.
The Create new earning window appears.
Choose ETP from the Type dropdown box.
Enter a Name and Name for payslip. We recommend naming it ETP - non-taxable or similar to easily find it in your earnings lists and identify it on the payslips.
In the Rate dropdown, choose Fixed.
Enter an amount in the Amount $ field.
Note that you can change the amount when you process an ETP pay run.
In the Tax field, choose Non-Taxable.
The ATO reporting category is automatically set to ETP - Non-taxable.
The earning details will look similar to this:
Click Save.

Create the ETP tax-withheld deduction

Go to the Pay items page (Payroll > Pay items).
Click Create deduction.
The Create new deduction window appears.
Choose ETP from the Type dropdown box.
After choosing ETP, the Tax field is automatically set to After tax, and the ATO reporting category is automatically set to ETP - Tax withheld
Enter a Name and Name for payslip. We recommend naming it ETP - Tax withheld or similar to easily find it in your earnings lists and identify it on the payslips.
Enter an amount in the Amount $ field.
Note that you can change the amount when you process an ETP pay run.
The deduction details will look similar to this:
Click Save.