Leave payout after resignation.

[knighto42]

Hopefully there might be some HR gurus here that can help with a question.

I've just resigned from my job, and am in the process of working out what I'm owed in unused leave. As it stands at the moment I'm paid a salary, plus a car allowance. Do I work out my payout based on the base salary only, or on the salary plus the car allowance?

[Poetic Justice]

Shouldn't it be on your payslip?

[MYVYSS]

I am in HR and its a interesting question and would depend on several issues, if you take leave you are still entitled to be paid the car allowance so I could assume you would be paid it out, HOWEVER, if you were to not get the car allowance would your salary increase for the amount that is paid to you non taxable as a car allowance?

[knighto42]

Thanks for the replies so far.

Originally Posted by MYVYSS

if you take leave you are still entitled to be paid the car allowance so I could assume you would be paid it out

That was my thought on it too.

Originally Posted by MYVYSS

if you were to not get the car allowance would your salary increase for the amount that is paid to you non taxable as a car allowance?

Yes.

[MYVYSS]

Then your leave should be paid out on your total remuneration amount which is the Salary PLUS the Car Allowance..

[knighto42]

Thanks - exactly what I needed to know.

[Taxman]

Just to correct a misconception there is no such thing as a tax free car allowance. The entire allowance goes into your tax return and then it is up to you to prove to the ATO that you have spent all or part of the allowance and as such you are entitled to a deduction.

Prior to the change to the Substantiation Rules many,many years ago, if you were paid an allowance for basically anything as a matter of practice the ATO would allow a deduction up to the amount of the allowance shown on the group certificate without query. People incorrectly assumed that there was a tax free component of the allowance.

With the introduction of self assessment, tax returns are deemed to be assessed the moment you lodge them. Each return is no longer scrutinised prior to the assessment (refund or bill) being issued. However, if audited and the return is adjusted, penalties and interest go back to the date the return was lodged, even if it was 3 or 4 years previous. As not everyone gets audited every year and because the tax return is processed as lodged this incorrect belief in non taxable allowances persists.

As the ATO increases the number of auditors and steps up its audit program more and more people will see this myth disappear. Please remember that there is only one way to deal with the ATO - receipts, receipts, receipts. Under the 'Onus of Proof' provisions the ATO does not have to prove anything if it wants to disallow anything or include anything. You as the taxpayer have to prove not only are you entitled to a deduction but what the amount of the deduction is, a mere assertion that you have spent the allowance is not sufficient. It is no longer a question of "if" you will get audited but rather "When". So please protect yourselves by keeping all tax related documentation - you can never have too much.

[Airmon]

Sorry to hear you're leaving mate, I wont be able to spy that hot looking Rapid XR6 on my way to work now :( There's nothing good ever parked out front of ARB to look at, I guess I'll just have to settle for the firetrucks now?
Best of luck with whatever you do afterwards mate.

[GT0132]

Originally Posted by MYVYSS

Then your leave should be paid out on your total remuneration amount which is the Salary PLUS the Car Allowance..

That may be so if the mileage allowance is not salary packaged. However an employer is not obliged to pay any leave balance on termnination at the grossed up amount.

i.e if my salary package is $100k p.a and I elect to salary sacrifice $20k of that into super and then leave my job, any leave payout due on termination is paid at $80k not $100k.

In any event the allowance is fully taxable and the employee must then claim a tax dedution based one one of four car expense methods...The thinking that these allowances are tax free is a huge misconception

Get some advice from your payroll person in your company as to what's been done in then past...The question as to whether or not you get the mileage allow is more to do with company policy rather than any legal obligation imposed on them

[knighto42]

Hi Guys - sorry for the delayed reply - haven't been on in a while.

Clay - thanks mate, pretty sure it's going to end up in someone else's hands unfortunately. Will have to try and join you guys on another cruise before she goes - the last 2 have been bad timing for me.

Taxman/ozmale - Thanks for the info. The problem is that the accounts person where I work is also the boss and I'm trying not to get screwed out of $$$ that I'm owed. Have booked in to see the accountant in january so hopefully he'll be able to shine some light on what to expect.

[Walkinshaw]

Originally Posted by ozmale42

However an employer is not obliged to pay any leave balance on termnination at the grossed up amount.

i.e if my salary package is $100k p.a and I elect to salary sacrifice $20k of that into super and then leave my job, any leave payout due on termination is paid at $80k not $100k.

Hrmm....This doesn't seem right. Salary sacrificing to super is part of a salary package. Your total renumeration package is still 100k, regardless of how you 'divvie' it up.

[Feathers]

To maximise what I will get paid out before leaving Woolies I've taken all my annual leave (600+ hours). So I get the holiday loading as well, instead of just the hours.

I was supposed to hand in my resignation 2 weeks ago, so I only had to return for one day (still legal), but Dad is of the impression I should hand it in when I go back, and suffer 4 weeks of the crud I so desperately want to get away from. :(

[deesun]

Originally Posted by Feathers

To maximise what I will get paid out before leaving Woolies I've taken all my annual leave (600+ hours). So I get the holiday loading as well, instead of just the hours.:(

You should have started it from the anniversary date of the next payrise then. Ha ha.