Our organisation is seeking advice on Unused Annual Leave when an employee resigns.
The payroll category for this is set-up as a Wages Item in MYOB AR.
The ATO Reporting Category was set-up as Gross Payments when it was identified that Lump Sum A – Termination is incorrect for employees who have resigned and have a balance of unused annual leave to be paid out as a part of their final pay.
Despite making the above change to the ATO Reporting Category MYOB tax calculations for employees who have resigned and are required to be paid for their Unused Annual Leave are higher than the Marginal Tax Rate for Ordinary Taxable Earnings (OTE).
Our last 3 employees have PAYG Withholding deductions calculated at the rates of 39, 43 and 45% of their gross wage payments.
Transactions entered into the Unused Annual Leave category also are not included as gross payments for superannuation guarantee calculations.
Refer page 55:-https://www.ato.gov.au/Business/Super-for-employers/Paying-super-contributions/How-much-super-to-pay/List-of-payments-that-are-ordinary-time-earnings/Superannuation-on-annual-leave-loading/
"Generally, you include annual leave loading in OTE because it's related to annual
leave. "
Can you please advise me if we will need to correct the MYOB AR calculations for PAYG Tax and Superannuation Guarantee payments to be the equivalent of the value the employee would have been paid had they taken the leave.
Thank you kindly, if you can help in this regard,
Rose Alexander
Business Administrator
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