Employee has resigned with appropriate notice is super payable on his accrued leave and loading is it also payable on long service leave and is tax rate different on both scenarios
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45,938 views3 replies
3 replies
45,938 views
3 replies
Hi @Sunshine22
It is normal practice to include annual leave loading in OTE for employees. In which case super is payable on these payments.
In circumstances where the leave loading can be shown to compensate employees for being unable to work overtime while on leave it can be excluded from OTE.
You can read further about the superannuation on annual leave loading here.
You don't pay super on unused annual leave or long service leave upon termination of employment.
The standard withholding tax rate for unused annual leave on resignation is 32%. But there are variations depending on when the leave was accrued.
The withholding tax calculation for unused long service leave is more complex.
You can find the links to how to correctly calculate the tax to be withheld for both types of leave at this page Withholding for unused leave payments on termination of employment.
All replies
Hi @Sunshine22
It is normal practice to include annual leave loading in OTE for employees. In which case super is payable on these payments.
In circumstances where the leave loading can be shown to compensate employees for being unable to work overtime while on leave it can be excluded from OTE.
You can read further about the superannuation on annual leave loading here.
You don't pay super on unused annual leave or long service leave upon termination of employment.
The standard withholding tax rate for unused annual leave on resignation is 32%. But there are variations depending on when the leave was accrued.
The withholding tax calculation for unused long service leave is more complex.
You can find the links to how to correctly calculate the tax to be withheld for both types of leave at this page Withholding for unused leave payments on termination of employment.
Why in the legislation, it says unused annual leave is OTE?
https://www.legislation.gov.au/Details/C2021C00059
ordinary time earnings, in relation to an employee, means:
(a) the total of:
(i) earnings in respect of ordinary hours of work other than earnings consisting of a lump sum payment of any of the following kinds made to the employee on the termination of his or her employment:
(A) a payment in lieu of unused sick leave;
(B) an unused annual leave payment, or unused long service leave payment, within the meaning of the Income Tax Assessment Act 1997; and
(ii) earnings consisting of over‑award payments, shift‑loading or commission; or
In addition to this, please read this website (Part A. 10 (a)(i)(B)):
https://www.ato.gov.au/law/view.htm?DocID=SGR/SGR20092/NAT/ATO/00001
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