Work out voluntary retirement compensation instantly with clear inputs, formula shown and shareable results.
Voluntary retirement compensation is conventionally the lower of three months' salary for each completed year of service and the salary that would have been earned to superannuation. Only part of it is tax-exempt, with the remainder taxed as salary income.
Basis A
Three months' pay per completed year = Monthly salary x 3 x Completed years
Basis B
Salary to superannuation = Monthly salary x Months remaining
Compensation
Compensation = min(Basis A, Basis B)
Indicative estimate. VRS formulas, exemption limits and conditions are scheme- and jurisdiction-specific. Not tax or legal advice.
Because the scheme is meant to compensate for foregone service, not to exceed what the employee would have earned by staying.
Typically the exemption can be claimed only once in a lifetime, and only where the scheme meets prescribed conditions.