Public Ruling No 1/2012 provides guidance on the tax treatment of compensation for loss of office.
When an employment ceases, the employer may make a lump sum payment in accordance with the terms and conditions of the contract of service.
The amount paid on the termination of an employment may be attributable to either:
- Ìý
•ÌýÌýÌýÌý compensation (eg for loss of employment such as due to redundancy)
- Ìý
•ÌýÌýÌýÌý gratuity (eg for past services of the employee)
The purpose of the lump sum payment must be established to determine the tax treatment of the payment received by the employee. Compensation for loss of office attracts tax relief as detailed in the table below:
| Reason for compensation | Tax relief |
| Compensation for loss of office |
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