My role was made redundant in September 2023.
What is the implication of to my payout (i.e. tax payable) if I return to that employer in a different role:
(1) in the same financial year- 2024?
(2) within 12 months of the redundancy?
(3) in the 2025 financial year?
My redundancy was 'real' however there is the possibility I could work part time/ contractor
Hi @hcn,
That's wonderful that they may be able to rehire you after the redundancy into a new role!
When it comes to redundancy. There are a couple of different scenarios you would need to determine. There are genuine and non-genuine redundancies.
Your genuine redundancy payment is:
• tax-free up to a limit depending on your years of service.
• concessionally taxed as an employment termination payment (ETP) above your tax-free limit.
• taxed at your usual marginal tax rate for any amount above certain caps.
Even with the tax-free limit, you may fall into a higher tax bracket. Especially if you become redundant in 2024 FY, the payment is received, and you start working again within that FY. This would depend on the timing. If you start working in the 2025 FY. The redundancy would have been reported in the prior FY and should not affect the 2025 FY.
Hi @hcn,
That's wonderful that they may be able to rehire you after the redundancy into a new role!
When it comes to redundancy. There are a couple of different scenarios you would need to determine. There are genuine and non-genuine redundancies.
Your genuine redundancy payment is:
• tax-free up to a limit depending on your years of service.
• concessionally taxed as an employment termination payment (ETP) above your tax-free limit.
• taxed at your usual marginal tax rate for any amount above certain caps.
Even with the tax-free limit, you may fall into a higher tax bracket. Especially if you become redundant in 2024 FY, the payment is received, and you start working again within that FY. This would depend on the timing. If you start working in the 2025 FY. The redundancy would have been reported in the prior FY and should not affect the 2025 FY.
Hi DanielleATO,
Thanks for taking the time to answer HCN's question but wanted to clarify something as I'm in the same boat.
I was made redundant (genuine) got my tax-free redundancy payment, which being over 10+years was quite a healthy payment! Fast forward 2 months and have been offered a role back at the company in a different department.
If i'm reading your reply right, the only potential issue is that because of the large redundancy payment it could push me in to the next tax bracket? Nothing would actually happen to that tax-free component at all?
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