Understanding Redundancy Payments Murray Wilkinson CFP Murray Wilkinson
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Understanding Redundancy Payments Murray Wilkinson CFP Murray Wilkinson & Associates Pty Ltd, ACN 011 029 379 trading as Future Gen Solutions is a Corporate Authorised Representative of Future Gen Wealth Pty Ltd, ABN 48 607 760 887, AFSL No. 481112. Murray Wilkinson & Associates Pty Ltd trading as Future Gen Solutions is a Credit Representative of Future Gen Credit Pty Ltd, ABN 48 607 890 871, ACL No. 482035.
Disclaimer and General Advice Warning The information provided is of general nature only and does not take into account your specific needs, circumstances or objectives. Before acting on any information, you should consider the appropriateness of it having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant Product Disclosure Statement or other offer document prior to acquiring any financial product. Murray Wilkinson & Associates Pty Ltd, ACN 011 029 379 trading as Future Gen Solutions is a Corporate Authorised Representative of Future Gen Wealth Pty Ltd, ABN 48 607 760 887, AFSL No. 481112. Murray Wilkinson & Associates Pty Ltd trading as Future Gen Solutions is a Credit Representative of Future Gen Credit Pty Ltd, ABN 48 607 890 871, ACL No. 482035.
A genuine redundancy occurs when: • An employee is dismissed because their job has been abolished & can include: – A payment in lieu of notice – A payment of a number of weeks pay for each year of service & – A one off gratuity (golden handshake) Murray Wilkinson & Associates Pty Ltd, ACN 011 029 379 trading as Future Gen Solutions is a Corporate Authorised Representative of Future Gen Wealth Pty Ltd, ABN 48 607 760 887, AFSL No. 481112. Murray Wilkinson & Associates Pty Ltd trading as Future Gen Solutions is a Credit Representative of Future Gen Credit Pty Ltd, ABN 48 607 890 871, ACL No. 482035.
What is NOT included in redundancy • Salary and wages owing to you for work done • Leave already taken for work completed • Lump sum payments of unused annual leave, unused long service leave or leave loadings paid on annual leave • Payments made in lieu of superannuation benefits Murray Wilkinson & Associates Pty Ltd, ACN 011 029 379 trading as Future Gen Solutions is a Corporate Authorised Representative of Future Gen Wealth Pty Ltd, ABN 48 607 760 887, AFSL No. 481112. Murray Wilkinson & Associates Pty Ltd trading as Future Gen Solutions is a Credit Representative of Future Gen Credit Pty Ltd, ABN 48 607 890 871, ACL No. 482035.
The Tax Free redundancy payment • For 2017 -18 the base limit is $10, 155 + $5, 078 for each complete year of service. • Murray started work 1 July 2008. Murray is paid 2 week’s redundancy for every year of service and his weekly earnings are $2, 000. My tax free component is $10, 155 + $4, 000 x 10 = $50, 155. The maximum cap in this example is $60, 935. Murray Wilkinson & Associates Pty Ltd, ACN 011 029 379 trading as Future Gen Solutions is a Corporate Authorised Representative of Future Gen Wealth Pty Ltd, ABN 48 607 760 887, AFSL No. 481112. Murray Wilkinson & Associates Pty Ltd trading as Future Gen Solutions is a Credit Representative of Future Gen Credit Pty Ltd, ABN 48 607 890 871, ACL No. 482035.
Employment termination payments above the Tax free amount • Above the tax free cap attracts 30% plus 2% medicare levy up to $200, 000 • above $200, 000 attracts 45% tax plus 2% medicare levy Murray Wilkinson & Associates Pty Ltd, ACN 011 029 379 trading as Future Gen Solutions is a Corporate Authorised Representative of Future Gen Wealth Pty Ltd, ABN 48 607 760 887, AFSL No. 481112. Murray Wilkinson & Associates Pty Ltd trading as Future Gen Solutions is a Credit Representative of Future Gen Credit Pty Ltd, ABN 48 607 890 871, ACL No. 482035.
How is unused annual leave treated? • Paid as a lump sum and added to your taxable income in the financial year of payment. • Tax is capped and limited to a maximum of 30% plus 2% medicare levy. • It must be paid to your bank account and CAN NOT be rolled over into super. Murray Wilkinson & Associates Pty Ltd, ACN 011 029 379 trading as Future Gen Solutions is a Corporate Authorised Representative of Future Gen Wealth Pty Ltd, ABN 48 607 760 887, AFSL No. 481112. Murray Wilkinson & Associates Pty Ltd trading as Future Gen Solutions is a Credit Representative of Future Gen Credit Pty Ltd, ABN 48 607 890 871, ACL No. 482035.
How is unused long service leave treated? • Paid as a lump sum after tax deducted and CANNOT be rolled over into super. • Taxed depending on when you started employment - from 16 August 1978 the tax rate is 30% plus 2% medicare levy. Murray Wilkinson & Associates Pty Ltd, ACN 011 029 379 trading as Future Gen Solutions is a Corporate Authorised Representative of Future Gen Wealth Pty Ltd, ABN 48 607 760 887, AFSL No. 481112. Murray Wilkinson & Associates Pty Ltd trading as Future Gen Solutions is a Credit Representative of Future Gen Credit Pty Ltd, ABN 48 607 890 871, ACL No. 482035.
Does a redundancy payment attract superannuation (SG)? • Lump sum payments or unused annual leave or long service leave do NOT attract SG because it is not considered Ordinary Time Earnings. • Payments in lieu of notice DO attract SG. Murray Wilkinson & Associates Pty Ltd, ACN 011 029 379 trading as Future Gen Solutions is a Corporate Authorised Representative of Future Gen Wealth Pty Ltd, ABN 48 607 760 887, AFSL No. 481112. Murray Wilkinson & Associates Pty Ltd trading as Future Gen Solutions is a Credit Representative of Future Gen Credit Pty Ltd, ABN 48 607 890 871, ACL No. 482035.
Other Issues • Are you in an employer fund and can you remain with your employer fund, or must you rollover to a personal superannuation fund? • If you are rolling over from an employer fund, does your life insurance have a continuation option and how many days is it active for? • If your seeking new employment are you eligible for Newstart Allowance from Centrelink? Murray Wilkinson & Associates Pty Ltd, ACN 011 029 379 trading as Future Gen Solutions is a Corporate Authorised Representative of Future Gen Wealth Pty Ltd, ABN 48 607 760 887, AFSL No. 481112. Murray Wilkinson & Associates Pty Ltd trading as Future Gen Solutions is a Credit Representative of Future Gen Credit Pty Ltd, ABN 48 607 890 871, ACL No. 482035.
Other Issues • What to do with the money? Pay of your mortgage – consider offset or redraw facilities? • How about superannuation – concessional payment to your $25, 000 cap? • Are you eligible to commence a pension from superannuation and why would you? • At times of change have you reviewed your Budget? Murray Wilkinson & Associates Pty Ltd, ACN 011 029 379 trading as Future Gen Solutions is a Corporate Authorised Representative of Future Gen Wealth Pty Ltd, ABN 48 607 760 887, AFSL No. 481112. Murray Wilkinson & Associates Pty Ltd trading as Future Gen Solutions is a Credit Representative of Future Gen Credit Pty Ltd, ABN 48 607 890 871, ACL No. 482035.
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