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Re: Redundancy for over 65's

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If you are over 65 and made redundant are you entitled to the same tax concessions as under 65

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ATO Certified

Anonymous

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No.  There are age related and other restrictions in regards to genuine redundancy payments, this falls falls under Section 83-175 of the Income Tax Assessment Act 1997.  https://www.ato.gov.au/law/view/document?docid=PAC/19970038/83-175

 

The ATO has a good public ruling on this matter, which I suggest you have a read of: Refer TR2009/2 para 282 and 283

https://www.ato.gov.au/law/view/document?DocID=TXR/TR20092/NAT/ATO/00001#ft25

 

Corrected and updated thanks to @macfanboy

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Best answer

ATO Certified

Anonymous

Replies 1

No.  There are age related and other restrictions in regards to genuine redundancy payments, this falls falls under Section 83-175 of the Income Tax Assessment Act 1997.  https://www.ato.gov.au/law/view/document?docid=PAC/19970038/83-175

 

The ATO has a good public ruling on this matter, which I suggest you have a read of: Refer TR2009/2 para 282 and 283

https://www.ato.gov.au/law/view/document?DocID=TXR/TR20092/NAT/ATO/00001#ft25

 

Corrected and updated thanks to @macfanboy

Taxicorn

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There are age limits on what is considered to be genuine reduncy:

 

Age-based limits

282. An employee receiving a genuine redundancy payment must, at the time of dismissal, be aged less than 65 or less than a younger age of compulsory retirement for the particular position in question. For example, if an employee in a particular position is required to retire at age 60, then the person can only receive a genuine redundancy payment if he or she is less than 60 years old when the dismissal occurs.

283. A termination payment made to a person who has reached age 65 or another age of compulsory retirement at the time of dismissal would be an employment termination payment if the conditions in section 82-130 are satisfied.

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Newbie

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I have recently read that the age limit is going to be increased, but I am not sure if this is just talk or whether it has been legislated yet. I cannot see any ratification by the ATO on their website.

The article, posted in December 2018 states "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."

Could the ATO please advise if this is the case, and where can I find reference on the website?

Regards, Leigh

Devotee

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Hi @LeighRaph,

 

Thanks for your question. It sounds like you're referring to the Treasurer's media release on 15 December 2018 about Fairer redundancy and early retirement scheme payments.

 

We can't comment on proposed changes to legislation until such time as it passes through both houses of Parliament and receives Royal Assent. If you have questions or feedback on the proposal, we'd encourage you to contact the Treasury or your local Member of Parliament - you can find their details on the Australian Government website.

Thanks.

Initiate

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Hi @AmandaE ,

 

Has this tax law now passed both houses of Parliment and has it recieved Royal Accent?

I believe that it was supposed to happen (enacted) by 1st July 2019.

 

Thanks

 

 

ATO Certified

TaxTime Support

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Hi @MeATO

 

Welcome to our Community.

 

The proposed concessional tax treatment of genuine redundancy and early retirement scheme payments changes are not law.

 

The Government has released exposure draft legislation and explanatory material for the amendments which can be viewed online.

 

If you would like to read those documents, you can access them from the genuine redundancy and early retirement scheme payments consultation page on the Treasury website.

 

We can't comment on proposed changes to legislation until such time as it passes through both houses of Parliament and receives Royal Assent.

 

Hope this helps.

 

Thanks,

 

ChrisR

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