Redundancy Tax Free

[Paul@PFI]

Not quite a property related issue but a tax question for discussion.

Why does the Govt moan about the $600m impact on the budget attributable to redundancies yet the employer is presently entitled to a generous tax deduction to make this occur ?? And the employee gets it tax free too. In some respects its almost an incentive..Look at the flying kagarooter.

Is this truly in the public interest for taxpayers to prop up the decisions of Toyota, Holden and Ford and Qantas to wind up their operations through the payout which some employees can get if they are members of militant unions ?? But a person employed by small business gets nothing. Many of these workers could walk away with $150K tax free. (30years service)

I cant recall this deduction AND exemption for the employee has ever been "on the table" in any budget discussions. So far. Anyone understand the policy intent of taxpayers funding such generous payments provided the worker is aged under 65 ?

 

[twodogs]

As someone with 26 years of service in a company going under as I write, I don't give a rats a*** who pays my entitlements. It probably won't be the company, a small business with no money left, so if there is a government backup (FEG) I'll take what's on offer - 33 years of paying taxes and never getting a cent of public money before means no guilt there.

Anything I do get is not tax free. Limits yes, tax free no.

Oh, and nothing to do with unions either.

 

[devank]

Many of these workers could walk away with $150K tax free. (30years service)

Practically they spent their life (30 years there)! Now after spending that long it would be hard for them to find another job. I wouldn't complain too much.

 

[travelbug]

Tax free redundancies are nothing to do with company wind ups.

It's been a tax law for a while. My husband was offered a redundancy in 2006 but it was too low and he didn't want to leave.

He took one last month. (well that's the way he sees it). I'm hoping he will get some parttime or casual work. I've got him renovating at the moment.

 

[CHAOS]

Not all of the redundancy payout is tax free. Hubby's work had voluntary redundancies a few years back. We did the sums and he didn't take it. 1years pay at x amount or keep job and have 10 more years at x amount

 

[jrc]

Not quite a property related issue but a tax question for discussion.

Why does the Govt moan about the $600m impact on the budget attributable to redundancies yet the employer is presently entitled to a generous tax deduction to make this occur ?? And the employee gets it tax free too. In some respects its almost an incentive..Look at the flying kagarooter.

Is this truly in the public interest for taxpayers to prop up the decisions of Toyota, Holden and Ford and Qantas to wind up their operations through the payout which some employees can get if they are members of militant unions ?? But a person employed by small business gets nothing. Many of these workers could walk away with $150K tax free. (30years service)

I cant recall this deduction AND exemption for the employee has ever been "on the table" in any budget discussions. So far. Anyone understand the policy intent of taxpayers funding such generous payments provided the worker is aged under 65 ?

Hi Paul

I can't speak for redundancy clauses by the car companies and Qantas, but in the industry I'm in 20 weeks redundancy would be the maximum. Interesting to see that The National Employment Standards give 12 weeks for 10 years service and 16 weeks for 9 years service.

I would expect the reasoning by the government was because previously only 5 per cent of a termination payment was taxed, so if you were terminated and got $100000 then $95000 was tax free and the other $5000 was taxed at your marginal rate.

Your point is good. Maybe all redundancy payments should be taxed at say 31.5 c in the $.

I remember in the mid 70s being told Australia did not have a taxation system instead it had a system of taxes, meaning if we had a taxation system the interact ions between the individual taxes would be considered more closely

 

[jrc]

As someone with 26 years of service in a company going under as I write, I don't give a rats a*** who pays my entitlements. It probably won't be the company, a small business with no money left, so if there is a government backup (FEG) I'll take what's on offer - 33 years of paying taxes and never getting a cent of public money before means no guilt there.

Anything I do get is not tax free. Limits yes, tax free no.

Oh, and nothing to do with unions either.

That's a bummer. I worked for a company that due to loss of revenue paid out several hundred thousand dollars in redundancies over a 3 or 4 year period and then spent the next 3 years after that struggling. Fortunately after massive restructuring and gallons of blood sweat and tears the business turned around.

It would be good if the tax system enabled businesses to deduct provisions for long service leave possibly by requiring the money to be deposited in a special account. The number of people I've known over the years who have lost several months long service leave when the employer closed the doors is large.

 

[Doovalacky]

It would be good if the tax system enabled businesses to deduct provisions for long service leave possibly by requiring the money to be deposited in a special account.

http://www.myleave.wa.gov.au/

Does exist for construction in WA.