Salary Packaging Termination Pay

(Newbie)Newbie

1 July 2025

I have salary packaged with my employer for nearly 15 years. It has been policy to salary package termination payments. Commencing 1 April 2025 my employer outsourced salary packaging. In making arrangements for my termination pay for 4 July 2025, I have been told, by the salary packaging company, that I cannot salary package any of my termination pay. My termination pay will consist of accrued LSL only. I have a letter, dated 10 July 2024, that states that my employment will conclude on 4 July 2025. Based on these circumstances, can someone please advise if it is reasonable for me to be able to salary package my termination pay. Thank you

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PayrollDeanne

(Taxicorn)Taxicorn

1 July 2025

Hiya @ellyj04 👋

There are specific components of your termination pay that you can salary sacrifice, if you had an effective salary sacrifice arrangement in place before you accrued the leave. See the answers from the ATO on this post. That is, any unused leave on termination that accrued after the SSA was in place and any payment in lieu of notice.

Most employers don't know that, as the ATO guidance on their website doesn't mention it in the guidance to business. It is in a tax ruling, but it's not user-friendly. Maybe your outsourced payroll provide doesn't know? Many don't! It's so easy to get SG wrong when the ATO guidance is inadequate 😮

Deanne

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Salary Packaging Termination Pay

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