When you leave a job, the tax you pay on payments you receive for unused leave, termination of employment or redundancy may be different to the tax you pay on your normal income. The tax you pay depends on the reason for leaving the job and any unused entitlements you may have accrued, such as long service leave or sick leave.
If you receive any lump sum payments from your employer for unused annual leave or unused long service leave, these may be taxed at a lower rate than your other income. These lump sum payments will appear at either ‘Lump sum A’ or ‘Lump sum B’ on your income statement or payment summary.
If as a result of COVID-19 you are taking leave, have been stood-down or have lost your job, see Tax on employment payments for more information on payments you may receive in these circumstances.
When you leave a job, you:
- can request an income statement or payment summary from your employer
- may need to lodge a tax return early – for example, if you are leaving Australia permanently.
- Employment termination payments
- Redundancy payments
- Leaving the workforce – if you are stopping working entirely (retiring)
If your employer reports to the ATO through Single Touch Payroll (STP), they are not required to provide you with a payment summary. Payment summaries have been replaced by income statements under STP.
Your income statement shows your year-to-date salary and wages, any payments you receive in leaving your job, the tax withheld and other reported amounts such as your employer super.
Your income statement is available to you through ATO online services via myGov, your tax agent or you can contact the ATO to request a copy.
If you leave a job during the year, you can ask your employer for your payment summary at the time you leave. Otherwise, after the end of the financial year (30 June), your employer will give you a payment summary.
Your payment summary will show how much you have been paid and how much tax was withheld from these payments during the financial year.
If you are changing address or travelling, make sure you give your employer an address where they can send your payment summary.
If you need to lodge your tax return before the end of the financial year, the information from your income statement or payment summary will not be available to pre-fill your tax return. Pre-filling is not available until the end of the financial year. You will need to follow the current process for lodging your tax return early.