Hi team,
Could you please confirm if there are any reporting or compliance consequences in Xero and ATO (Australia) when processing a final pay dated in the present and not within the financial year in which the employee was terminated over a year ago?
Hiya @ckjyml 👋
Employment obligations start with other regulators before the ATO: the Fair Work Ombudsman and the relevant state/territory LSL regulators.
More detail is required. For example, what are you paying upon termination: unused leave on termination and/or ETPs? Also, it's important to understand if this is the first payment in respect of the termination or a subsequent payment.
Fair Work legislation requires you to pay annual leave and leave loading "within 7 days", subject to penalties. LSL is state/territory specific, however, all the various legislation requires unused LSL on termination to be paid "on the last day of service" or similar wording. Penalties for failing to pay on the last day are hefty!
If there is a payment in lieu of notice, then employment doesn't end until you've paid it!
If you are paying an ETP, the ATO only permits the ETP tax rates if the payment is within 12 months. See ATO guidance on the 12 month rule.
I urge you to reach out to the Fair Work Ombudsman to understand your legislative obligations when employment ends.
You also have significant reporting obligations for STP when an employee leaves.
Deanne
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