Loading
This thread is archived and the information may not be up-to-date. You can't reply to this thread.
CCMM_Mel(Newbie)Newbie
23 Apr 2024

We are finalising one employee’s final payment (effective 15 April 2024) from a part-time role after 1.25 years of service. The payment will be paid in lieu of notice (4 weeks). The employee was employed at $31200 plus super and is 42 years old. 

  1. Accrued salary: $600.00 – Paid as normal payment, accrued the superannuation
  2. Unused annual leave: $369.33
  3. Payment in lieu of notices (4 weeks): $2400.00

We would appreciate it if we can get some guidance on the following:

  1. Is the payment in lieu of notice tax-free or not? If not, what would be the tax rate? 
  2. Do we have to pay super for the unused annual leave and in lieu of notice?
  3. Under single-touch payroll reporting, how do we allocate the unused annual leave and PILON? Under which category?

Thank you for the help.


1,727 views
1 replies
1,727 views
1 replies

Most helpful response

Most helpful reply

EdenATO(Community Support)Community Support
30 Apr 2024

Hello there @CCMM_Mel,


Payment in lieu of notice is what we call an employment termination payment or ETP. ETPs are taxable payments with a couple of exceptions. In your case it'll be taxable. We look at age of the employee and the type of payment made.


The payment in lieu of notice will be taxed at 32%. You can find more info about how ETP components are taxed on our website.


Super applies to ordinary time earnings. Super won't apply to the unused annual leave but will apply to in lieu of notice. Check out termination payments in the list of payments that are OTE via the link.


Payments are reported by income type. Check out our info about termination payments to help you out.

All replies

Most helpful reply

EdenATO(Community Support)Community Support
30 Apr 2024

Hello there @CCMM_Mel,


Payment in lieu of notice is what we call an employment termination payment or ETP. ETPs are taxable payments with a couple of exceptions. In your case it'll be taxable. We look at age of the employee and the type of payment made.


The payment in lieu of notice will be taxed at 32%. You can find more info about how ETP components are taxed on our website.


Super applies to ordinary time earnings. Super won't apply to the unused annual leave but will apply to in lieu of notice. Check out termination payments in the list of payments that are OTE via the link.


Payments are reported by income type. Check out our info about termination payments to help you out.

Top liked users

  1. Taxduck

    (Taxicorn)

    325 likes

  2. PayrollDeanne

    (Taxicorn)

    316 likes

  3. Bruce4Tax

    (Taxicorn)

    192 likes

  4. YellowPotato

    (Taxicorn)

    144 likes

  5. Peter_Clyne

    (Superuser)

    101 likes

Top contributors

  1. PayrollDeanne

    (Taxicorn)

    1312contributions

  2. Taxduck

    (Taxicorn)

    1306contributions

  3. YellowPotato

    (Taxicorn)

    572contributions

  4. Bruce4Tax

    (Taxicorn)

    526contributions

  5. YEP

    (Devotee)

    280contributions

Loading
Payment in lieu of notice | ATO Community