When someone stops working for you, there are a few steps you need to take work out their final pay and entitlements.
Also, find out what to do When you're no longer hiring workers.
Payments made on termination
When your employees leave your business, they can be paid several types of 'lump sums' that are taxed and reported differently to normal income. These may include:
- employment termination payments
- unused leave payments
- tax-free and genuine redundancy payments.
For more information, see Taxation of termination payments.
Fringe benefits tax (FBT)
If you've provided an employee with fringe benefits and they are leaving your business, you'll need to:
- calculate your FBT provided to your employees, and
- include it in your FBT return at the end of each FBT year (1 April to 31 March).
For more information, see How to lodge your FBT return.
Super guarantee
You'll need to calculate and pay super guarantee (SG) on any final salary and wage payments that form part of your employee's ordinary time earnings.
To avoid paying the SG charge, you'll need to pay these SG contributions by the next quarterly due date. Find out about the SG charge.
Employment termination payments and unused leave payments don't form part of an employee's ordinary time earnings. Therefore, you don't need to calculate and pay SG on these amounts.
Finalising STP data
Let us know your STP reporting for an employee is complete by finalising your STP data.
You can finalise an employee’s STP information any time throughout the year. You will be exempt from issuing a payment summary for amounts reported and finalised through STP.
Your employees can access their ‘tax ready’ income statements in ATO online services, through myGov, when preparing to lodge their tax return.
Find out about the steps you need to take when a worker leaves your business.