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Tax on LSL

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Newbie

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I’m just wondering about how tax is calculated on a LSL payout as a result of resignation.
Does the lump sum count towards taxable income for that financial year or is it taxed differently?
I am in a situation where I plan to resign but could possibly take the long service leave on a part time basis while I work a second job. I’m wondering if this would be more beneficial tax wise than receiving the LSL owing in a lump sum on resignation (the amount would be about $25k).
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Taxicorn

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Lump sum payments for unused annual leave and long service leave are not part of the employee's ETP. They are separately recorded on the employee's PAYG payment summary – individual non-business or Income statement at lump sum A or B.

These payments may be concessionally taxed. The tax rate depends on the type of termination, date of accrual and type of leave.

 

https://www.ato.gov.au/Rates/Schedule-7---Tax-table-for-unused-leave-payments-on-termination-of-empl...

 

I believe that if you took the leave instead of just being paid out for it you would receive Superannuation on it.

 

1 REPLY 1
Highlighted

Most helpful response

Taxicorn

Replies 0

Lump sum payments for unused annual leave and long service leave are not part of the employee's ETP. They are separately recorded on the employee's PAYG payment summary – individual non-business or Income statement at lump sum A or B.

These payments may be concessionally taxed. The tax rate depends on the type of termination, date of accrual and type of leave.

 

https://www.ato.gov.au/Rates/Schedule-7---Tax-table-for-unused-leave-payments-on-termination-of-empl...

 

I believe that if you took the leave instead of just being paid out for it you would receive Superannuation on it.