An employee worked for 1 year (in the previous financial year) accumulating annual leave. They took a 1 year break and was paid as without leave pay in this current financial year. They have now resigned in this current financial year & the employer will now need to pay their unused annual leave for this current financial year.
I read that 'the Unused annual leave is taxed differently to an employee's regular pay. Instead of calculating the tax on the lump sum payment of unused annual leave, it's calculated as if the employee had been paid the unused annual leave across a whole year."
but this employee has not worked this financial year so their normal gross pay for this financial year is $0.
What will the tax on unused annual leave be based upon?
is it the previous financial year when they did work?
or in this special case, it is the lump sum payment as that would be their only income for this current financial year?
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