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tax to be withheld for unused annual leave payment

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Hi, there

We had an employee who has just resigned and I am working on his final pay for unused annual leave.

We pay fortnightly and his normal gross income is around $500 and no tax withheld for his fornighly pay. His unused annual leave value is around $2000. Using ATO marginal rates calculations, I found that even with ($2000/26=$76)added to his normal fortnightly pay, that amount is still tax free. 

Does that mean when I process his unused annual leave payment, no tax should be withheld? If not, how much tax should be withheld?

 

Thank you.

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ATO Community Support

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Hiya @KC20201,

 

That's correct. The reason being at $500 a fortnight, even with the extra $2000, their income would only hit $15,000 for the full year. Leaving it all tax free. (This is what that calculation works out for you)

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Most helpful response

ATO Community Support

Replies 1

Hiya @KC20201,

 

That's correct. The reason being at $500 a fortnight, even with the extra $2000, their income would only hit $15,000 for the full year. Leaving it all tax free. (This is what that calculation works out for you)

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@StephATO  Thank you so much!