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Superannuation and termination payment

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KR_123
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Superannuation and termination payment

Hi,

I have 1 employee who is now finishing employment. I am in the process of creating their termination payment which only is to pay out owed annual leave (and leave loading). I apparently do not need to pay super guarantee for this lump sum pay out, but when I create the pay/payslip super gets automatically calculated. How can I remove the super contribution from this pay?

The help page Managing your employees' leave (section on 'Make a termination payment - AU) states 'You'll also need to make sure any superannuation amounts are removed as super is not accrued on unused leave' but does not give any instruction on how to do this...

Thanks.

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Ultimate Partner BooksInTheCloud
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BooksInTheCloud
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Re: Superannuation and termination payment

Hi KR_123

 

 

  1. Set up a wage category called unused annual leave
  2. Then go into your Superannuation Category and exempt from Superannuation calculations. 
  3. I always process the final normal pay first.  This will calculate the final leave accrual for the last pay period.
  4. I then tick on the unused annual leave category in the employee card file
  5. I check entitlement balances in the card file and I write down the leave balances accrued to date
  6. I then create the final termination pay and put the hours in the unused leave category and superannuation is not calculated.    Of course I check the PAYG against tax scales etc. 
  7. Once payroll is processed at bank an the employee has received final payslips I wait a week or so (in case there is any queries), then I go into the employee card file and put in the termination date and this clears out all balances and the final step inactivate employee.

 

Of course can probably do all this manually and override but I have found this method works best, is clear for employee and I rarely have any queries from employees when I treat the termination this way.

 

Hope this helps

Regards

Renae

 

 


If I am responding to your query and I have helped you please kindly mark my post as a solution to assist others in the future.
Warm Regards
Renae

@renae2peas
Ultimate Partner DuncanS
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Re: Superannuation and termination payment

@KR_123 @BooksInTheCloud

 

KR,

 

Renae gave you a good answer.

 

The ATO reference is SGR 2009/2.

 

Duncan

Duncan Smith
Business Advice + Tax
Helping business owners build a better business since 1998
E expressgst@optusnet.com.au T 02 9904 3672 7 days
KR_123
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KR_123
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Re: Superannuation and termination payment

Thank you Renae, that worked!

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