Processing an ETP pay in Reckon One

Learn how to process an Eligible Termination Payment (ETP) in a single pay run in Reckon One, ensuring accurate reporting to the ATO through your STP submission

What is an ETP

An Employment Termination Payment (ETP) is a lump sum your employees may receive when they leave your employment. It is taxed differently from regular income.

ETPs may include:

  • Unused sick leave or rostered days off
  • Payment in lieu of notice
  • Gratuities or ‘golden handshakes’
  • Invalidity payments for permanent disability
  • Compensation for job loss or wrongful dismissal
  • The portion of redundancy or early retirement payments above the tax-free threshold
  • Certain payments made after an employee’s death
  • Transfer of property (market value minus any payment made)

ETPs do not include:

  • Unused annual or long service lump sum leave payments
  • The tax-free part of genuine redundancy or early retirement payments
  • Superannuation benefits
  • Foreign termination payments

Some ETP components may be eligible for concessional tax rates. It’s important to ensure the correct tax amounts are applied when entering them in Reckon Payroll. See the ATO guidelines

Terminating an employee and creating a final pay run

  1. Go to Payroll, then Employees.
  2. Select the employee.
  3. Go to Options, then select Terminate employment.
  4. Enter the End date and select the Reason for termination from the drop-down list. The Reason for termination and the termination type held on the pay item used in the pay run, will determine the options for the STP reporting categories:
  1. Select Terminate employment.
  2. Select Create final pay run.
  3. If you select Cancel, you can come back to the employee profile later and create the final pay run:
    1. Go to Payroll, then Employees.
    2. Select the employee.
    3. Select the Create final pay run in the top right hand corner. A pay run drawer will open.
    4. (Optional) You can edit the Pay date or the Pay period.
    5. Select Archive employee once the pay run is marked as paid to ensure the employee is set to inactive.
    6. Select Create pay run.

Editing calculated pay details

  1. Once the final pay run has been created, you'll be on the pay runs screen. Select the pencil icon next to an employee to open the pay run drawer.
  2. If the employee's leave is set to pay on termination, the leave pay item will be calculated and the ATO reporting category displayed.
  3. Make any necessary adjustments to the termination pay. This may include editing unused leave item, updating the reporting categories, or adjusting the PAYG tax in line with Schedule 7 – Tax table for unused leave payments on termination of employment. The default STP reporting category for unused leave will depend on the selected Reason for Termination. For more details, see Processing a termination pay in Reckon One.

Adding ETP payments

  1. Select Add in the Earnings & leave section
  2. Select the appropriate pay item where the termination type has been set to "Termination" in the pay item setup.
  3. Enter the Amount of the payment
  4. Select Add
  5. Select the new link, Termination under the PAYG Tax section
  6. Select Add tax component
  7. Select the correct ETP code
  8. Enter the Taxable component and if applicable, the Tax free component
  9. Calculate the tax manually and enter in the Tax withheld field
  10. Select Add
  11. Check the details and select Done
  12. When you're finished editing and adjusting the pay run, select Close.

Marking the pay run as paid and submitting to the ATO

Learn how to mark the pay run as paid, view and email payslips and submit the pay run to the ATO.

Read more


Need more help?

Ask the Reckon Community at: https://community.reckon.com/categories/reckonone

Or log a Support Ticket: https://www.reckon.com/au/support/


Need more help?

Ask the Reckon Community at: https://community.reckon.com/categories/reckonone

Or log a Support Ticket: https://www.reckon.com/au/support/

How did we do?

Paying an employee reimbursement in Reckon One

Entering back payments, commissions, bonuses and similar payments

Related Articles

STP Phase 2 changes in Reckon GovConnect
ETP tax amounts appear on INB Payment Summary
Terminate an employee and complete final pay
Powered by HelpDocs (opens in a new tab)

Powered by HelpDocs (opens in a new tab)