Leaving your employer due to redundancy?
You have a great opportunity to make a fresh start.
Now could be the best time for you to think about a career change, become self-employed or consider retiring if you are close to retirement. But regardless of what your next steps might be, it’s important that you:
- understand the payments you may receive from your employer and what tax treatments apply
- consider the financial issues likely to be relevant to your age and career goals, and
- speak to a financial adviser to find out how you could manage your redundancy payments effectively.
Note: The information in this article assumes you’re departing due to a genuine redundancy. This will generally be the case if you are under age 65, your employer has determined that your position no longer exists and you are not replaced by another employee.
Craig at HQB Financial Solutions knows this can be a challenging time especially when unexpected. Before embarking on your next adventure, contact Craig here or call (02) 66993649 and get the right advice the first time.
Types of payments
The types of payments you may receive in the event of a genuine redundancy include:
- A genuine redundancy payment, which is tax-free up to a limit based on your full years of service with your employer.
- An Employment Termination Payment (ETP), which is a lump sum payment you may receive when your employment arrangement has come to an end. Examples include genuine redundancy payments exceeding the tax-free limit, unused sick leave, unused rostered days off, payments in lieu of notice and golden handshakes (also known as ‘ex-gratia’ payments).
- Other payments you receive from your employer including accrued annual leave, accrued long service leave and your final pay.
Each of these payments are paid as cash, less any applicable taxes. The table in the Appendix summarises the tax treatment of these payments in the 2018/19 financial year in the event of a genuine redundancy.
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