Hi, We are an FBT-exempt not-for-profit organisation, allowing our staff to salary package up to $15,900. We have an employee who will be terminated due to redundancy and has unused long service leave and annual leave. We have a signed salary packaging agreement which states that they can sacrifice unused leave accrued after the agreement date. When we calculating her redundancy, her unused leave will be paid out as Lump Sum A with 32% tax.
As redundancy payments are considered separate from regular income and are treated and reported differently for tax purposes, we would like to hear from the ATO perspective whether this employee can salary sacrifice her unused leave (accrued after the effective SSA). If so, there will be a discrepancy between the Lump Sum A amount and the tax as she will have some tax savings. Is this acceptable for her tax return?
Thank you
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