Foundations of Taxation Law

The income tax legislation contains special provisions that deal with the taxation of various kinds of termination, unused leave and related payments made to employees and certain other persons (eg their dependants). The special rules treat certain payments (or components thereof) as non-assessable non-exempt income and other payments (or components thereof) as assessable income. To the extent that a payment is assessable, it may be subject to a tax offset, which ensures that the rate of income tax on the payment does not exceed a specified maximum rate. The ML is also generally payable in respect of assessable payments. To prevent overlap with the FBT regime, no FBT is payable in respect of the payments discussed in this chapter as they are all expressly excluded from the definition of fringe benefit (ss 136(1)(la), (lb), (lc), (ld), (le) FBTAA).