General tax information
The following information is of a general nature only and is current only as at December 2019. Taxation is complex and taxation laws change regularly – including retrospectively. In addition, taxation laws impact individuals 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 (ETP). This means they will be taxed depending on whether your ETP exceeds the cap, as well as what your preservation age is at the end of the income year that you receive your payment.
If your ETP plus your other taxable income is under the cap of $180,000 (or $195,000 if the payment is from one employer) and you are 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).
The preservation age that applies depends on when you were born:
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 in December, you will receive a Tax Statement the following June advising details including which tax year to lodge.