I’m question is in regards to the taxation rate on a redundancy payment. I’ve just received a payment and it’s been taxed by my former employer at the highest rate (something like 45%).
I worked for this company for 33 years.
Isn’t there supposed to be a tax-free limit on genuine redundancy payments based on years of service?
G'day @Rich 👋
Yes, for those employees who haven't yet reached their age-pension age, there is a tax-free component of a genuine redundancy that's reported as Lump Sum D on your Income Statement.
Other amounts are treated as an ETP type R, and is taxed at either 17% or 32%, depending if you've reached preservation age. As you can see, 47% is only for the amount in excess of the ETP cap.
Contact your former employer for an explanation and correction of this payment and tax, as they are subject to penalties. It will impact your tax return and the employer is the source of that data.
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