|Consider Jim’s case
Jim aged 50 years old has recently been made redundant from his position at his football club. Jim had been working for the club for 3 years as the club mascot and the club decided the position was no longer required. Jim wanted to confirm the taxation treatment of his redundancy payment of $30,000.
The tax free component is calculated as follows:
Base amount + (service amount * completed years of service)
For the 2015 financial year, the Base Amount is $9,514 and the Service Amount per year of completed service is $4,758 resulting in a tax free component for Jim of $23,788.
Depending on Jim’s other income, he will be taxed at the lower of 32% or his marginal tax rate. Alternatively if Jim’s marginal tax rate is over 32% a lump sum tax offset may be available.
Please contact Andrew Marshall or Janine Orpwood at Langley McKimmie Chartered Accountants on (03) 5427 8100 to discuss further.