Save
Tax sweetener announced for redundancies, early retirement
The federal government has announced changes to the current tax-free component available on genuine redundancy and early retirement scheme payments, which is good news for Australian workers and their savings plans.
Tax sweetener announced for redundancies, early retirement
The federal government has announced changes to the current tax-free component available on genuine redundancy and early retirement scheme payments, which is good news for Australian workers and their savings plans.
From 1 July 2019, the eligibility age limit for the tax-free concession on these payments will be raised to be in line with the Age Pension qualifying age.
Up until now, this tax-free component has only been available to those aged below 65 at the time employment is terminated.
As a result of the changes, all individuals younger than 66 will be able to receive the tax-free component on the payment received from their employer in the event of genuine redundancy or early retirement as of next year.
This threshold will increase again to age 67 by the year 2023.
In a statement released on Saturday, Treasurer Josh Frydenberg said the reforms will “not only ensure older Australians keep more of the money they’ve earned, it will also support workforce participation by removing a barrier that may have prevented some from working longer.”
What does this mean for you?
Liam Shorte, director of Verante financial planning, told Nest Egg he welcomes the reform.
He says he has seen clients exit the workforce earlier than desired in order to avoid paying tax on their redundancy payments.
“Until now, some clients who did not necessarily wish to take a voluntary redundancy at 62-65 when offered, had done so as they did not want to lose out on the tax-free component of any redundancy payout by waiting for another offer in later years,” Mr Shorte said.
“It may not seem like much, but to be able to still avail of the benefit up to age 66 and later 67 will mean one to three more years of additional savings for some clients.”
Mr Shorte says the change is important in promoting older individuals to stay in the workforce longer and grow their nest egg.
“These years leading up to 65, 66 or 67 are the years when people can seriously save large amounts both through salary sacrifice and non-concessional contributions to help fund their own retirement,” he said.
“Many will only realise how good this move is when they are offered a redundancy and see the tax outcome in the coming years.”
Tax saving
Why fast-tracking tax cuts won’t stimulate the economy
Treasurer Josh Frydenberg has flagged that previously legislated tax cuts could be moved forward in a bid to help stimulate the Australian economy. ...Read more
Tax saving
Last-minute items to check off before 30 June
With the end of the financial year almost here, an accounting firm has outlined key changes with tax returns this year and flagged some last-minute tax strategies to consider before 30 June. ...Read more
Tax saving
Australia’s richest owe the Tax Office $772m
Australia’s elites and private companies fell $772 million in taxes due to miscalculations and deliberate tax avoidance, the Australian Taxation Office has revealed. ...Read more
Tax saving
Do you have to pay taxes on a trust?
Trusts are usually set up for business, estate planning and investment purposes to separate the legal and beneficial ownership of assets held within the structure. ...Read more
Tax saving
Government rebuffs regional allowance and tax concession reform
A review’s findings into the viability of area tax concessions and payments for regional and remote Australians has had its recommendations shut down by the same government who requested the report...Read more
Tax saving
Penalties for tax fraud in Australia
Public taxes are used to fund government projects in relation to health, defence, infrastructure and many other national and local projects that require public funding. ...Read more
Tax saving
Disaster relief payments receive tax-exempt status
The Australian government has made disaster relief payments to bushfire-affected individuals and businesses tax-exempt while extending tax-free financial support to NSW Rural Fire Service volunteers. ...Read more
Tax saving
Are your franking credits working?
Here’s what you need to know about franking credits and how they work. ...Read more
Tax saving
Why fast-tracking tax cuts won’t stimulate the economy
Treasurer Josh Frydenberg has flagged that previously legislated tax cuts could be moved forward in a bid to help stimulate the Australian economy. ...Read more
Tax saving
Last-minute items to check off before 30 June
With the end of the financial year almost here, an accounting firm has outlined key changes with tax returns this year and flagged some last-minute tax strategies to consider before 30 June. ...Read more
Tax saving
Australia’s richest owe the Tax Office $772m
Australia’s elites and private companies fell $772 million in taxes due to miscalculations and deliberate tax avoidance, the Australian Taxation Office has revealed. ...Read more
Tax saving
Do you have to pay taxes on a trust?
Trusts are usually set up for business, estate planning and investment purposes to separate the legal and beneficial ownership of assets held within the structure. ...Read more
Tax saving
Government rebuffs regional allowance and tax concession reform
A review’s findings into the viability of area tax concessions and payments for regional and remote Australians has had its recommendations shut down by the same government who requested the report...Read more
Tax saving
Penalties for tax fraud in Australia
Public taxes are used to fund government projects in relation to health, defence, infrastructure and many other national and local projects that require public funding. ...Read more
Tax saving
Disaster relief payments receive tax-exempt status
The Australian government has made disaster relief payments to bushfire-affected individuals and businesses tax-exempt while extending tax-free financial support to NSW Rural Fire Service volunteers. ...Read more
Tax saving
Are your franking credits working?
Here’s what you need to know about franking credits and how they work. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
