Dealing with a Redundancy

The restructure of a business may lead to a reduction in staff numbers and redundancies. If you are affected, you may experience a range of emotions from shock and anger to relief and hope.

Whilst a redundancy may provide you with a substantial financial windfall if you have been a long-term employee, careful consideration should be given to how best to use the redundancy payments to protect your future.

It is important to understand the payments you are receiving, the tax implications and the choices available to you. Payments received as part of a genuine redundancy program can be concessionally taxed to help your money last longer.

When you cease employment the lump sum paid by your employer may comprise a number of payments including unused Annual Leave, Long Service leave plus a Redundancy payment.

The first step is to identify which parts are included in the definition of an employment termination payment and which are not.

The next step is to calculate the tax on each payment so you can determine the net amount remaining after tax. Part of the payment may be tax-free.

Facing a redundancy is challenging, and it is important to understand your entitlements and get advice on what it means to you and your family, and to work with your Advisor to consider alternative startegies that suit you best.

Every persons situation is different and there are many questions to consider.

Can I minimise tax?

How should I invest the money? Do I need to generate income? Pay down debt? Invest?

What do I do with my super?

Is Centrelink an issue?