There’s an important notice with crucial information about an upcoming change to how tax is deducted from your ACIRT claim. This change will take effect from claims received after July 1, 2025.
Why the Change? We’re Playing by the Rules.
ACIRT has always operated within the strict guidelines set by the Australian Taxation Office (ATO). Recently, the ATO clarified its position on how tax law applies to payments from severance funds like ours, particularly concerning genuine redundancy. After careful review with our professional advisers, the ACIRT Board has made necessary adjustments to ensure we comply with these new interpretation. This ensures the fund remains secure and fair for all members.
Action Required: Genuine Redundancy Claims Before June 30!
If your claim is based on genuine redundancy, and you submit it to us before 5 PM, Eastern Standard Time on Monday, June 30, 2025, it may still be eligible for the concessional tax treatment that currently applies.
New Tax Withholding Rules From July 1, 2025:
For all claims processed after July 1, 2025, tax will be deducted as follows:
Payments Within 12 Months of Ending Employment
- What it is: If you claim your ACIRT balance within 12 months of your employment ending.
- How it’s taxed: These payments are subject to Employment Termination Payment (ETP) rates.
- Under Super Preservation Age: 30% tax plus Medicare Levy.
- Over Super Preservation Age: 15% tax plus Medicare Levy.
- Note: This is subject to the ETP cap of $180,000.
Payments After 12 Months of Ending Employment
- What it is: If you claim your ACIRT balance more than 12 months after your employment ended.
- How it’s taxed: These payments are not ETPs and are assessed as ordinary assessable income. Because ACIRT cannot determine your personal marginal tax rate, we are required to use the PAYG withholding rates specified by the ATO.
These changes are vital to ensure ACIRT complies with tax law and continues to operate fairly for everyone. To do otherwise would put the fund at unacceptable risk or unfairly restrict access to benefits for members who resign voluntarily or whose employment is not due to genuine redundancy.
What Hasn’t Changed?
- You will still receive 100% of your account balance when you make a valid claim.
- You will still be eligible to receive your annual distribution, just as you have for the past 30 years.
We’re Here to Talk!
Over the next few months, our staff will be visiting worksites and Delegates’ meetings across the country. We want to further explain our decision, answer your questions, and hear your feedback. Please take the opportunity to speak with us.
Sincerely,
The ACIRT Team