If the In Lieu of Notice is to be included as part of the tax-free up-to-limit (depending on the employee's years of service), this value will need to be included in the Genuine Redundancy amount.
Including the In Lieu of Notice amount in the Genuine Redundancy total ensures it is taxed as part of the redundancy package rather than as an ETP, which could result in higher tax.
If the In Lieu of Notice amount is part of a genuine redundancy package, don't enter it as an ETP component.
See the ATO for more information on the payments you include in a genuine redundancy.
When processing a Redundancy Termination and the In Lieu of Notice has been included in the Genuine Redundancy, the superannuation value for the In Lieu of Notice will not automatically calculate. You will need to complete a separate Manual Calculation for the superannuation.
Manual Calculation for Superannuation
Go to Payroll, Transactions, Processing, Manual Calculation.
Select the Employee.
Select Add.
Untick Generate Payment, as this is for the Super.
The Pay Advice Number will default to the next one.
From Pay Summary on the left, select Employer Contribution.
The employee's active Fund(s) and Contribution type(s) will display.
If the Super details are missing, edit the employee's record to determine if their Super Fund has been terminated. If so, remove the Fund Termination Date, save the record and return to the Manual Calculation transaction.
Enter the In Lieu of Notice value in the Super Earnings field.
Enter the value of super in This Advice.
As the value entered in This Advice is yet to be processed, leave the Date Processed field blank. This will mean that the super is included in your next Super Clearing Batch or Superannuation Processing.
Note: If the Date Processed field is populated with any date, the super will be excluded from Super Clearing Batches and the Superannuation Processing Report's Contributions due column.
Click Process to save the transaction.