My former employer taxed my unused annual leave at the higher rate (47%). I understand on termination/redundancy payments, it should be taxed at a lower rate (30%). How can get a refund for the over taxed amount from my former employer. Or can ATO fix this mistake on my income tax return at the end of the financial year?
G'day @rg1961 👋
Unused leave on termination should have been taxed at 32% as per the ATO tax table. Your former employer should have reported this on your Income Statement as Lump Sum A Type R.
If they reported it correctly, then yes, you may get it refunded by the ATO when you do your tax return, all things being equal 🤓
However, if your former employer didn't report it correctly, you must contact them to correct it ASAP, as per their obligations under STP2, as they are subject to a false or misleading statement penalty from the ATO.
If they are unwilling to fix it (they should correct the tax and refund the excess to you whilst they're at it), then advise you will report them to the ATO 😉
Deanne
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