I received my final pay slip a few days after my redundancy payment.
In the termination letter I received, it was advised that I would be paid a PILON as our redundancy payment.
On my final pay slip I found some lines which didn't quite make sense to me.
My numbers are as follows:
PAYMENTS BEFORE TAX
Annual Leave: $2,881.39
Redundancy: $4,524.89
Payment in Lieu Notice: $10,180.99
TAX
Tax on unused leave: $922.00
PAYG on ETP Type O: $3,258.00
STSL Component: $0.00
SUPERANNUATION
SGC: $1,119.91
I was under the impression that PILON was included in amounts for genuine redundancy and there would be a tax-free component.
They've split my PILON into "Redundancy" and "PILON" lines and taxed the PILON line.
I've already approached my employer for clarification on whether it was a genuine redundancy or not. I was met with a "it is laid out in the redundancy letter", but there is no definitive mention of it in there. There is only one sentence in the letter that resembles the definition of a genuine redundancy provided by Fair Work. There's been no response from the employer since asking again for a definitive answer on the redundancy classification.
Can you help me understand why the PILON would be taxed even though it's counted as part of the genuine redundancy?
My thoughts were that, based on the belief that this was a genuine redundancy, the PILON and Redundancy lines combined are below the tax-free limit ( $11,985 + (1 year of service x $5994) = $17,979 ) and that sum should be put under Lump Sum D. Is this right?
I believe taxing under Code O was an error because under Code O in Schedule 11: Life benefit ETP table found in https://www.ato.gov.au/tax-rates-and-codes/payg-withholding-schedule-11-tax-table-for-employment-termination-payments#ato-TaxtreatmentofETPs includes "payment in lieu of notice".
But if PILON can be included in genuine redundancy, then I thought Code R would be the appropriate code to tax the PILON (hence the sentence "Other ETP not described by R.") Does putting the PILON down as Type O insinuate that the redundancy was non-genuine?
Alternatively, if it would make it easier for the employer, could they change the PAYG on ETP Type O to Type R and I would get the tax withheld as a refund (after paying taxes and HECS, of course) at tax time?
A part of me is worried that they will ignore me and put through the payment summary as ETP Type O. What are my options in that event?
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