Tax rate for unused annual leave.
Hi . Can somebody please advise me on the correct ATO tax rate for paying out an employee at termination. The ATO tax table I downloaded equates to about 30% (with no tax free threshold) but when I g...
Forum Discussion
Sorry, I should have mentioned it's the tax rate for paying out unused long service leave and unused annual leave that I need.
Hey jojo9,
Good call flagging the gap between 30% and 42% when doing a termination pay. For the payout, tax on unused annual leave uses the ATO’s marginal rate method, which spreads the leave over a year of pays, so it can look higher than a flat rate. If the unused leave is under $300, it’s a flat 32%. You can also check this link for more info. For unused long service leave, it’s best to check with your accountant or bookkeeper for the precise tax treatment that covers both the unused annual leave and the unused long service leave.
Cheers,
Doreen
