Commonwealth Consolidated Acts Commonwealth Consolidated ActsApplication
(1) This section applies to a transitional termination payment you receive (except any part of the payment that is a directed termination payment) if you are your preservation age or older on the last day of the income year in which you receive the payment.
Note 1: You do not pay income tax on directed termination payments: see section 82 - 10G.
Note 2: Under section 82 - 10C, you may also be entitled to a tax offset on the taxable component of a transitional termination payment you receive in an income year before the year in which you reached your preservation age.
Tax free component
(2) The tax free component of the payment is not assessable income and is not exempt income.
Taxable component
(3) The taxable component of the payment is assessable income.
(4) You are entitled to a tax offset that ensures that the rate of income tax on the amount mentioned in subsection (6) (the low rate part ) does not exceed 15%.
(5) You are entitled to a tax offset that ensures that the rate of income tax on the amount mentioned in subsection (7) (the middle rate part ) does not exceed 30%.
Note: The remaining part is taxed at the top marginal rate in accordance with the Income Tax Rates Act 1986 .
(6) The low rate part is so much of the taxable component of the payment as does not exceed your lower cap amount under section 82 - 10B.
(7) The middle rate part is so much of the taxable component of the payment as:
(a) exceeds your low rate part (if any); and
(b) does not exceed the amount worked out as follows:
Note: If you have received another life benefit termination payment in the same income year (or in an earlier income year) that is not a transitional termination payment, your entitlement to a tax offset under this section is not affected by your entitlement (if any) to a tax concession for the other payment (under section 82 - 10 of the Income Tax Assessment Act 1997 ).