Tax Tracking for Time in Lieu of notice

Question

Hi

I am paying an employee a weeks pay in lieu of notice. I have set up a new payroll item called Time in Lieu of notice. Looking through the community and ATO website the Tax Tracking needed is O.  Looks like the only option is Post June 1983 Untaxed Element.  Do I use this tax tracking and manually check the tax tables and add in the applicable tax. I couldnt see anything under O that was taxed. If anyone has any suggestions on different tax tracking to use please let me know.

thanks

Leanne

Eric Murphy · Answer

Amazing explanation Shaz, I learnt something new today

Leanne_7663246 · Answer

perfect thanks for the explanation Shaz

cheers

Leanne

Acctd4 · Answer

Hi @Leanne_7663246

Yes, that's correct 😊

This is because the Pre … / Post … options link to the Employment Termination Payment (ETP) for STP2 reporting.

The specific amount of tax isn't calculated automatically because there are variables in the applicable rate, dependent on circumstances.  The manual calculation process is long-winded & complex so personally, I just let the system calculate it as it always calculates higher anyway, so the employee just gets extra tax back at tax time 😊