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What is a service amount in calculating tax free redundancy payment?

Initiate

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Replies 2

Hi there

Just looking at the tax free redundancy in the below website.

https://www.ato.gov.au/business/your-workers/in-detail/taxation-of-termination-payments/?page=4

  • Base amount + (service amount × years of service)

Can you please advise where does that "service amount" come from?

Thanks.

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

ATO Community Support

Replies 1

Hello @alooi

 

When we calculate the tax free limit, the service amount is a set amount for each year of service. There is a table on our website that shows what the base and service amounts are for each income year.

 

If you have a look at the 2020-21 income year in the table, the base amount is $10,989 and the service amount is $5,496, therefore it would be calculated as follows:

 

$10,638 + ($5,320 × years of service) = tax free limit

 

Hope this makes sense. Have a great day Smiley Happy

 

 

2 REPLIES 2

Most helpful response

ATO Community Support

Replies 1

Hello @alooi

 

When we calculate the tax free limit, the service amount is a set amount for each year of service. There is a table on our website that shows what the base and service amounts are for each income year.

 

If you have a look at the 2020-21 income year in the table, the base amount is $10,989 and the service amount is $5,496, therefore it would be calculated as follows:

 

$10,638 + ($5,320 × years of service) = tax free limit

 

Hope this makes sense. Have a great day Smiley Happy

 

 

Initiate

Replies 0

Hi TonyATO

 

thank you very much for your help.  

 

Much appreciated Smiley Happy