Hi, I am looking for some information in regards to BMA's early retirement scheme and how it will be taxed. One of the main points that seems unclear is the tax treatment on an Ex Gratia payment. Please see below for payment amounts as set out by BMA.
Annual Leave encashment $38,000 (Tax at marginal rates)
Sick Leave encashment $50,000 (Tax at marginal rates)
Coal Long service leave encashment $90,000 (Tax at marginal rates)
BHP long service leave encashment $0
Ex Gratia Payment $90,000
Additional equivalent payment leave $25,000 (Tax at marginal rates)
For the ex gratia payment, am I correct in assuming since the person receiving this payment is over preservation age and will exceed the whole-of-income cap, the $90k will be taxed at 47%?
Some additional information which I think could come into play is the 34 years of service. I understand that with each year of service, based on the 25FY it is $6264. This would than total $212,976. Would that mean the Ex gratia payment is completely tax free?
So many factors at play and we just want some verification as we have had multiple clients approach us for tax advice regarding these schemes.
Thank you in advance
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