Excessive Annual Leave Pay out - Tax Help

dlangdale on 13/08/2020 - 09:23

Morning Oz-bargain Team,

I am going to be ending my employment at the end of October with my current long term employer and I am looking for some guidance on how to best work through my excessive Annual Leave balance and negating tax implications.

I have 400+ hours of A/L and 300+ hours of Long Service Leave currently.

This will be obviously paid out when my employment finishing and be subject to a higher taxing.

I have the ability to have my A/L to be paid out on a weekly basis over the coming weeks prior to my employment ending, would this method result in less tax being deducted?

Open to any insights as this is well out of my comfort zone and want to get maximum out of these payouts.

Thanks

Financial

Comments

    • endolphin on 15/08/2020 - 07:42

      My current AL balance is over 50 days, and that is the second time at my current place of work where that has been the case. Had a massive holiday last time.

      Work want me to use a lot of it in the next 6 months but if it was up to me, I'd just keep on accruing. Where can I go, borders are shut? I'm in QLD and can't even go to Tassie which doesn't make a lot of sense. I'm looking at Hamilton Island but that would only be a week or so.

      • Donaldhump on 15/08/2020 - 13:58

        Mt isa for a holiday, who would have thought

  • morse on 15/08/2020 - 11:17

    I’m assuming you’re not public sector, but just in case you are, some public sector agencies let you transfer your long service leave to your new agency e.g. NSW to QLD gov employers.

  • Mrgreenz on 15/08/2020 - 11:30

    It will ultimately all be squared by the time you recieve your tax return.

    Spreading the payments upto the next tax bracket per pay will get it paid to you at the quickest rate without paying extra tax.

    If the payments will bump you into a higher bracket and your new role is below the bracket you will get bumped into then you would be of net $ benefit by defering some pays into the next financial year to reduce tax, if possible, probably not with it being August now.

  • Laurana on 16/08/2020 - 10:43

    For actual advice, it makes more sense to just take the leave over the next few weeks as this would mean that you get superannuation on it.

    Whether you get it now or later, the tax implication would be the same as it all falls in the same financial year.

  • justgooddeals on 16/08/2020 - 11:07
    -2

    I see dlangdale OP. Hasn’t posted back. Best advice I could give is the old adage. The information you are given is only as valuable as what it cost you. Free advice without knowing who is giving it particularly about something as important as tax is not advice to be relied upon.
    Ask your accountant or ask the HR department or accountant at your place work. At least you will have better idea as to the competency of the accuracy of the information you are being given.

    • Mrgreenz on 16/08/2020 - 15:57

      Nonsense adage and a pointless post

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