What is a genuine redundancy for tax purposes?

The ATO has issued a draft tax ruling defining what is a genuine redundancy. Genuine redundancy payments are tax-free up to a limit worked out under section 83-170 of the Income Tax Assessment Act 1997 .

The ruling makes comments about fixed term contracts:

"35. A payment made at the end of a fixed period of employment cannot normally be a genuine redundancy payment.

36. However, some rolling fixed-term contracts may, as a matter of fact, establish an ongoing employment relationship. The completion of a stipulated period of service in these circumstances does not of itself disqualify a payment made at the end of the period from being a genuine redundancy payment. It is therefore possible that a genuine redundancy payment may be paid in these types of cases. "

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