How to withhold amounts from unused leave payments on termination of employment

Calculating amount to be withheld

Leaving employment because of genuine redundancy, invalidity, or an early retirement scheme

Once the component values have been calculated, specific withholding rates are applied to each, as shown in the following table.

Table: Withholding rates

Component	Withholding
Pre 16 August 1978	5% of total at marginal rate, disregarding any cents.
Post 15 August 1978	31.5%, disregarding any cents.

Leaving employment for other reason

Once the component values have been calculated, specific withholding rates are applied to each, as shown in the following table.

Table: Withholding rates

Component	Withholding
Pre16 August 1978	5% of total at marginal rate, disregarding any cents.
Post 15 August 1978	31.5%, disregarding any cents.
Post 17 August 1993	If this unused long service leave component (and unused annual leave) is less than $300, withhold the lesser of the amount worked out using the steps below or 31.5% of the payment, disregarding any cents. If this unused long service leave component (and unused annual leave) is $300.00 or more:
	Step 1	add 5% of the pre-16 August 1978 component to this component
	Step 2	divide the amount by the number of regular periods in a financial year (52 weeks, 26 fortnights or 12 months)
	Step 3	disregard any cents
	Step 4	add amount at step 3 to normal gross earnings for a single pay period.
	Step 5	using the regular PAYG withholding tax table used to calculate the amount to be withheld, obtain the amount to be withheld from the figure calculated at step 4
	Step 6	subtract the amount calculated at step 5 from the amount withheld from the payee's normal gross earnings, and
	Step 7	multiply the amount calculated at step 6 by the number of regular pay periods in a financial year.

Sections within Unused long service leave

• Genuine redundancy, invalidity or an early retirement scheme
• Leaving employment for other reasons
• Calculating payment components
• Calculating amount to be withheld
• Completing payment summaries