7. To determine the appropriate amount of tax to deduct from the assessable lump sum:

1.                            Divide the amount of the redemption calculated under sub section 30(2) or sub section 137(3), (do not include any amount calculated under  sub section 137(4)), by 52 to get a figure representing the weekly amount of income to be received by the taxpayer;
2.                            Using the employee's latest Employment Declaration find the rate of tax applicable to the weekly amount above then multiply this by 52 to give the amount of tax to be deducted from the lump sum.

The method used to calculate the amount of tax instalments to be deducted from an assessable lump sum redemption is likely to result in the employee underpaying tax. This is because the lump sum, when added to all other income received during the year, can be enough to move the employee into a higher tax bracket.

1. The paying authority can only deduct a higher rate of tax instalments from the lump sum with the written permission of the employee.  The later in the financial year they receive the lump sum, the larger the shortfall in tax instalment deductions is likely to be for the employee. Receiving a lump sum early in the financial year can minimise these implications.  Employees requesting a redemption under section 137 should have been advised to consider the best timing for requesting a lump sum payment.

7. To determine the appropriate amount of tax to deduct from the assessable lump sum:

1.                            Divide the amount of the redemption calculated under sub section 30(2) or sub section 137(3), (do not include any amount calculated under  sub section 137(4)), by 52 to get a figure representing the weekly amount of income to be received by the taxpayer;
2.                            Using the employee's latest Employment Declaration find the rate of tax applicable to the weekly amount above then multiply this by 52 to give the amount of tax to be deducted from the lump sum.

The method used to calculate the amount of tax instalments to be deducted from an assessable lump sum redemption is likely to result in the employee underpaying tax. This is because the lump sum, when added to all other income received during the year, can be enough to move the employee into a higher tax bracket.

1. The paying authority can only deduct a higher rate of tax instalments from the lump sum with the written permission of the employee.  The later in the financial year they receive the lump sum, the larger the shortfall in tax instalment deductions is likely to be for the employee. Receiving a lump sum early in the financial year can minimise these implications.  Employees requesting a redemption under section 137 should have been advised to consider the best timing for requesting a lump sum payment.

7. To determine the appropriate amount of tax to deduct from the assessable lump sum:

1.                            Divide the amount of the redemption calculated under sub section 30(2) or sub section 137(3), (do not include any amount calculated under  sub section 137(4)), by 52 to get a figure representing the weekly amount of income to be received by the taxpayer;
2.                            Using the employee's latest Employment Declaration find the rate of tax applicable to the weekly amount above then multiply this by 52 to give the amount of tax to be deducted from the lump sum.

The method used to calculate the amount of tax instalments to be deducted from an assessable lump sum redemption is likely to result in the employee underpaying tax. This is because the lump sum, when added to all other income received during the year, can be enough to move the employee into a higher tax bracket.

1. The paying authority can only deduct a higher rate of tax instalments from the lump sum with the written permission of the employee.  The later in the financial year they receive the lump sum, the larger the shortfall in tax instalment deductions is likely to be for the employee. Receiving a lump sum early in the financial year can minimise these implications.  Employees requesting a redemption under section 137 should have been advised to consider the best timing for requesting a lump sum payment.