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Is In Lieu of notice payment part of redundancy and how is that tax?

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Hi there
Unfornately we have an employee who is made redundant due to termination of the role/COVID after with us for 5 years and 10 months. He's given 4 weeks in Lieu of notice (which he will not work up to the notice period), 10 weeks redundancy.
Can you please advise if in lieu of notice period part of redundancy and is that tax tax free?
Or how can I determine is it's a tax free or not?

And how is redundancy tax? Is that the correct tablet o use for redundancy and in lieu of notice payment?

https://www.ato.gov.au/Rates/Schedule-11---Tax-table-for-employment-termination-payments/?page=5#Tab...

 

Thanks.

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Most helpful response

ATO Community Support

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Hi @alooi,

 

I have just responded to your previous post on Employment Termination payments, you can view our response here.

 

The In Lieu of Notice component can fall under the tax free amount if it is a genuine redundancy. Examples of payments that can meet the conditions are:

  • unused rostered days off (RDOs)

  • payment in lieu of notice

  • unused sick leave

  • a gratuity or golden handshake

  • compensation for loss of job

  • compensation for wrongful dismissal, if paid within 12 months of termination.

The In Lieu of Notice component will also attract Super Guarantee (SG) whereas unused annual leave and unused long service leave do not attract the SG. You will need to use the OTE column from the link. The salary and wages column is only relevant if the SG is paid late. 

 

I hope this helps.

1 REPLY 1

Most helpful response

ATO Community Support

Replies 0

Hi @alooi,

 

I have just responded to your previous post on Employment Termination payments, you can view our response here.

 

The In Lieu of Notice component can fall under the tax free amount if it is a genuine redundancy. Examples of payments that can meet the conditions are:

  • unused rostered days off (RDOs)

  • payment in lieu of notice

  • unused sick leave

  • a gratuity or golden handshake

  • compensation for loss of job

  • compensation for wrongful dismissal, if paid within 12 months of termination.

The In Lieu of Notice component will also attract Super Guarantee (SG) whereas unused annual leave and unused long service leave do not attract the SG. You will need to use the OTE column from the link. The salary and wages column is only relevant if the SG is paid late. 

 

I hope this helps.