General Information About Tax
The following information is of a general nature only and is current only as at September 2016. Taxation is complex and taxation laws change regularly – including retrospectively. In addition, taxation laws impact individual differently according to their own individual circumstances.
Redundancy payments made to ACIRT Members within 12 months from their termination date will be treated as Employment Termination Payments and taxed depending on whether your ETP exceeds the cap as well as your Preservation Age at the end of the income year that you receive your payment.
Where the ETP when added to other taxable income is under the cap of $180,000 (or $195,000 if the payment is from one employer) and you at or over Preservation Age you will be taxed at 15% (plus the Medicare levy). If you are under the Preservation Age, you will be taxed at 30% (plus the Medicare levy). In 2015/2016, the Medicare Levy is 2%.
The Preservation Age that applies depends on when you were born:
|Date of Birth
|Before 1 July 1960
|1 July 1960 - 30 June 1961
|1 July 1961 - 30 June 1962
|1 July 1962 - 30 June 1963
|1 July 1963 - 30 June 1964
|From 1 July 1964
The balance of the ETP in excess of the cap is taxed at ordinary tax rates.
Redundancy payments made to ACIRT Members after 12 months from their termination date are not ETP’s and are taxed as directed by the Australian Taxation Office. They are assessed as ordinary assessable income taxed at ordinary marginal rates.
ACIRT cannot determine your marginal tax rate so we use the PAYG withholding rates per the ATO publication 'NAT 1005'
We will issue you with a PAYG Payment Summary.
As they are not ETPs, annual income distributions paid to members are taxed at your marginal tax rate for that year. If you received a distribution last July, it should be included in your 2015/2016 tax return.