I can’t seem to find an answer on google for this it looking for some financial advice… I resigned to start a new job and my employer paid out my leave which was about 3 weeks and when I got the payslip, half of it - literally 50% went to tax… is that right? Should tax just be 30%?
Paid out Leave Got Taxed 50%
mizzkitty on 21/01/2021 - 19:21
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Oh okay, thanks! I
Depends on your tax bracket. It will work out at tax return time anyway.
Yeah that’s what I’m hoping
No need to hope. That's exactly what will happen.
PAYG is only an estimate of your tax liabilities to be withheld, in which case as you've been paid a lump sum it's not a great estimate hence the highest bracket was applied. you'll get it back after you lodge your tax return, don't stress
Ah ok, thank you!
Lol idiots don't even know how termination works. neg the truth brothers.
Read it properly … I resigned after accepting a new job, I was not terminated!
30% is if you were made redundant otherwise you get taxed at the rate of pay as per the pay period when the final payment was made.
Ah okay, I think they also didn’t pay me for my last day of work ! Which was one day over the payment period ! 😕
Either OP gets paid weekly and having 4 weeks of pay crammed into the weekly tax table pushes you into the top tax bracket.
Or
You make a lot of money anyway.
Sadly not making a lot of money lol
Very common. Likely get a lot of it back on your tax return. Nothing to see here.
Think of it as saving in advance, if you might have spent it faster otherwise.
Good perspective haha - I hope I get it or at least some of it back !
Except you could be saving and earning interest on that money
Not if you spend it because of poor impulse control.
The PAYG system takes tax as though that was your normal pay. If you earned 3 weeks worth of pay in one week you'd probably be in the top tax bracket. It will all even out by the end of the tax year and they'll give you back the excess, once they know the true figure of what you made in the year
I hope so
I learned it the hard way too.
Do you know how to avoid it in future? I guess I could have taken my leave instead… I think I would have got ‘leave loading’ too.
I was told to get it out as annual leave instead paying out the leave. Not sure if the employer will be happy to do that since you are leaving for a new job and what the tax implications are
i think you get it back at the end of the year because they calculate the tax weekly i assume
Sounds like they used the standard tax table instead of the leave payout table. You’re correct, leave paid out when exiting should be taxed at 32% https://www.ato.gov.au/Rates/Schedule-7---Tax-table-for-unus…
If they used the normal tax tables it would be at the top tax bracket pretty easily (especially if you’re on weekly or fortnightly pay).
You’ll get it back at tax time (because your employer paid it to the ato who will then pay it back to you when calculating your full tax liability) but if you want it now I’d go back and question them on it.
Edit: better link, makes it clear for voluntary resignation https://www.ato.gov.au/Forms/Withholding-from-unused-leave-p…
This is common. They’ll most likely have withheld tax as if you earn that much each pay period. If you’ve been over taxed for this financial year as a whole you you’ll get it back when you lodge your tax return. If you’d prefer them to withhold less (you’re confident that you won’t under pay for this year) you could contact your payroll and ask them to pay you more/withhold less.