---
title: "Tax Adjustments | HR Terminations"
slug: "termination-tax-adjustments"
description: "Learn about Termination Tax Adjustments in Marlin HR payroll software for tyre and mechanical workshops."
updated: 2025-05-13T05:37:57Z
published: 2025-05-13T05:37:57Z
canonical: "help.megabus.com.au/termination-tax-adjustments"
---

> ## Documentation Index
> Fetch the complete documentation index at: https://help.megabus.com.au/llms.txt
> Use this file to discover all available pages before exploring further.

# Termination Tax Adjustments

**Marlin HR** includes flexible functionality for applying and adjusting tax on termination payments.

HR **automatically calculates tax** on termination payments and allowence based on the type of termination and payout:

**Standard Terminations:**

- **Payments:** Taxed at the standard tax rate, based on the tax scale set in Employee Maintenance.
- **Allowances:** Taxed according to the selected tax method for each allowance type.

**Genuine Redundancies, Invalidities, or Early Retirement Schemes:**

- **Unused Annual Leave & Long Service Leave:** Taxed at 32%, as per ATO regulations (System > Options > ATO Options).
- **All Other Payments & Allowances:** Taxed at the employee’s standard tax rate or as per the selected tax method for individual allowance types (as with standard terminations).

The type of termination is set using the **Termination Reason** drop-down, in the Employee's options window, before initialising the pay run.

However, for some payments (e.g. **golden handshakes**, **compensation payments**, etc.), tax adjustments will need to be [manually entered](/hr/docs/termination-tax-adjustments#manual-tax-adjustments) after the pay run has been initialised.

          Note

          

**As of January 2025:** the applicable tax rate for **unused annual leave** and **long service leave** payouts on a standard termination is the same as **the employee's marginal tax rate**.

## Quick Reference

[Embedded object](https://cdn.document360.io/d7282b31-60c4-41e6-bf87-3f684d4da049/Images/Documentation/HR%20%E2%80%93%20Terminations%20Quick%20Ref.pdf)

## Manual Tax Adjustments

#### Payrun > Payrun Processing > Initialise > [Employee]

Before making any manual tax adjustments, make sure to confirm the amounts of tax to be withheld with your **tax accountant**, **employer association** or the **ATO**.

To enter a **manual tax adjustment** on a [termination pay run](/hr/docs/termination-pay-runs):

- Select the **Tax** field in the employee's Pay Advice details window
- Click on the **Edit** button below

In the **Employee tax Adjustment** pop-up:

- Select either the **Add Tax** or **Reduce Tax**
- Enter the **Amount**
- Click **Ok**

Double check that the updated **Tax** amount in the employee's details window is correct (and that you did not select Add instead of Reduce Tax, or vice versa).