Tax Implications of Redundancy

A genuine redundancy payment is made up of two components:
  1. a tax free amount and 
  2. an assessable amount==> see our post Tax Rates On Excessive Redundancy Component
Tax Free Amount:

The tax free amount is non-assessable/non-exempt income.

The tax free amount is worked out by the formula:

Base amount + (service amount × years of service)

For updates and tables with current s=and prior year tax free amounts see our post - Redundancy Payments.

Note: the base amount and the service amount are indexed annually.

Assessable amount:
The amount in excess of the tax free amount of a genuine redundancy payment is a transitional termination payment, if the payment is made under an agreement in force just before 10 May 2006 which specifies the amount of the payment to be made in the event of redundancy and the payment is made before 1 July 2012 (ID 2007/212).

Check this post to calculate the amount of tax payable on redundancy payments in excess of  the tax free component Tax Rates on Excessive Redundancy Payment.

You will also find tips, calculators and checklists to help you prepare your eTax Return (and get a better refund) right here - summary of e-tax and Assessable income and checklist of E-tax and Allowable Deductions.





For help with your eTax return see our eTax Return Checklist.

Web Based Tax Return App:

A benefit of using eZtax, our web based tax return app, is we have the genuine online tools, knowledge and experience to get the best tax refund for our clients, making it easy to complete your annual tax return online.

Our Web Based Tax Return App will step you through all the necessary questions to increase your 2014 tax refund estimate and take into account all relevant tax deductions and tax offsets. Try it now. Its FREE to get started! 

Copyright 2014. My Tax Zone.