Lump sum payments for unused annual leave and long service leave are not part of the employee's ETP. They are separately recorded on either the employee's:
- income statement at lump sum A or B
- PAYG payment summary – individual non-business.
These payments may be concessionally taxed. The tax rate depends on the type of termination, date of accrual and type of leave.
Next step:
- Work out the amount to withhold and which lump sum category to use – Schedule 7 – Tax table for unused leave payments on termination of employment.
For more information see:
- PAYG payment summary – individual non-business
- Single Touch Payroll Phase 1 – what you need to report
- Single Touch Payroll Phase 2 – payments you must report.