I have received a redundancy payment made up of unused leave, notice in lieu, an award payment, bonus and an ex gratia payment. The notice in lieu and award payment have been paid tax free but the bonus, unused leave and ex gratia have all been taxed at 32%. I can not see where the cap for years service has been applied. I have worked their for 13 full years so I expected nearly $90K of my pay out tax free. Should this apply on top of the tax free component? According to my ATO statement they have included the bonus in salary and wages (this was part of the deed of release and therefore the redundancy), Unused leave in lump sum A, Redundancy payments in lump sum D and listed the ex gratia as a ETP R and taken withholding tax at 32%. Is this correct?
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This link explains how the tax free component of a genuine redundancy is calculated.
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This link explains how the tax free component of a genuine redundancy is calculated.
Yes, it is @Jensar
✅ Bonus to be taxed marginally, OTE therefore superable and reported in STP2 as Bonuses and Commissions
✅ Unused Annual Leave, Leave Loading and Long Service Leave is taxed at 32%, not OTE therefore not superable and reported in STP2 as Lump Sum A Type R
✅ Severance component (# wks pay per completed yr of service), if it does not exceed the threshold, is not taxed, not OTE therefore not superable and reported in STP2 as Lump Sum D. Note: they have also included the PILON , (payment in lieu of notice) in Lump Sum D but it is OTE and therefore superable
✅ Ex-gratia payment is an ETP Type R and if it is taxed at 32%, then I assume you are under the preservation age and the amount paid does not exceed the ETP cap
Although generally people think that "redundancy payment" means all of the payments you receive when you are made redundant, that is not the legal definition. The legal definition is limited to the severance component. Unused AL, LL and LSL is not part of the "redundancy payment" - it is your leave entitlement and you would receive that no matter the termination reason. Bonus is a standard payment for reward or incentives and not part of the "redundancy payment". Any other payments are ETPs and taxed accordingly.
Deanne
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