The following information is of a general nature only and is current only as at February 2024. Taxation is complex and taxation laws change regularly – including retrospectively. In addition, taxation laws impact individuals differently according to their own individual circumstances.
The amount of tax we deduct depends on the circumstances of your termination of employment.
If you are close to pension age or retiring from the workforce, we recommend you seek financial advice.
Please note we are required to advise the ATO of all benefits we pay and tax we deduct.
After we pay you a benefit we will issue you with a PAYG Payment Summary.
REDUNDANCY PAYMENTS
If your employer certifies that you have been made Genuinely Redundant you won’t pay any tax up to the threshold. For the 2023/2024 tax year, the threshold for an individual is calculated using a $11,985 base plus $5,994 for each completed year of service up to a maximum cap of $235,000.
This does not apply if you have received pension age and your claim will be taxed at the appropriate rate.
Any amounts above your threshold will be taxed at the appropriate rates.
Remember you may pay tax if you have other assessable income.
TERMINATION PAYMENTS OTHER THAN REDUNDANCY
Termination payments (Other than redundancy) made to ACIRT members within 12 months from their termination date will be treated as Employment Termination Payments (ETP). This means they will be taxed depending on whether your ETP exceeds the cap, as well as what your preservation age is at the end of the income year that you receive your payment.
If your ETP plus your other taxable income is under the cap of $180,000 (or $195,000 if the payment is from one employer) and you are at or over preservation age, you will be taxed at 15% (plus the Medicare levy). If you are under the preservation age, you will be taxed at 30% (plus the Medicare levy).
The preservation age that applies depends on when you were born:
The balance of the ETP in excess of the cap is taxed at ordinary tax rates.
Redundancy payments made to ACIRT members after 12 months from their termination date are not ETP’s and are taxed as directed by the Australian Taxation Office. They are assessed as ordinary assessable income taxed at ordinary marginal rates.
ACIRT cannot determine your marginal tax rate so we use the PAYG withholding rates per the ATO publication ‘NAT 1005’.
OFF THE TOOLS CLAIMS
Off the Tools Claims date are not ETP’s and are taxed as directed by the Australian Taxation Office. They are assessed as ordinary assessable income taxed at ordinary marginal rates. ACIRT cannot determine your marginal tax rate so we use the PAYG withholding rates per the ATO publication ‘NAT 1005’.
As they are not ETPs, Annual Income Distributions paid to members are taxed at your marginal tax rate for that year. If you received a distribution in December, you will receive a Tax Statement the following June advising details including which tax year to lodge.