Long Services Leave Tax Treatment

In one of our previous articles, we mentioned about the tax treatment of employee termination payment https://www.taxaccountingadelaide.com.au/tax-treatment-when-you-leave-your-job . In this article, we provide some more detail on the tax rate for the unused leave on the termination of employment, such like annual leave, long service leave, holiday pay, leave loading, leave bonuses.

Below we outline the tax treatment of long service leave which is a payment which accrues when an employee has been employed by an employer for over 8 years.

Referring to the table below, it shows that the tax rate withheld by the employer depends on the termination reason and the accrual dates.

 

Payment type	Reason	Accrual dates	Withholding rates	Payment summary label
Long service leave	Normal termination (eg voluntary resignation, employment terminated due to inefficiency, retirement)	Pre-16 August 1978	5% of the total at marginal rates	B
		16 August 1978 to 17 August 1993	32%	A
		Post-17 August 1993	Marginal rates	Include in salary/wages
	Termination because of genuine redundancy, invalidity or early retirement scheme	Pre-16 August 1978	5% of the total at marginal rates	B
		16 August 1978 to 17 August 1993	32%	A
		Post-17 August 1993	32%	A
Annual leave	Normal termination (eg voluntary resignation, employment terminated due to inefficiency, retirement)	Pre-18 August 1993	32%	A
		Post-17 August 1993	Marginal rates	Include in salary/wages
	Termination because of genuine redundancy, invalidity or early retirement scheme		32%	A
Annual leave loading	Normal termination (eg voluntary resignation, employment terminated due to inefficiency, retirement)	Pre-18 August 1993	32%	A
		Post-17 August 1993	Marginal rates	Include in salary/wages
	Termination because of genuine redundancy, invalidity or early retirement scheme		32%	A

 

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