Tax on claims
What tax do I pay on claims?
| Protect offers workers two severance account types, a Termination Account, (this is the default account type) and a Genuine Redundancy Account. It's important to know which account you have as the tax implications vary when making a severance claim. | |||||||||||||||||||||||||||||||||||
| Taxable thresholds are set by the Australian Taxation Office. The following rates are applicable for the 2018/19 financial year. | |||||||||||||||||||||||||||||||||||
| Genuine Redundancy Account | |||||||||||||||||||||||||||||||||||
| Initial GRA claims are not subject to tax, with the exception of retirement claims and members aged over 65 years. If you fall into these categories, please contact us for further claiming information. | |||||||||||||||||||||||||||||||||||
| Genuine Redundancy accounts tax free threshold for 2018/2019: $10,399 for the initial year, $5,200 for each full year of service with your employer. | |||||||||||||||||||||||||||||||||||
| Tax withheld from an initial GRA severance claim: | |||||||||||||||||||||||||||||||||||
| Under the preservation age: NIL Over the preservation age: NIL | |||||||||||||||||||||||||||||||||||
| Tax withheld from subsequent GRA severance claims: | |||||||||||||||||||||||||||||||||||
| Under preservation age: 32% Over preservation age: 17% Over ETP cap ($205,000): 47% | |||||||||||||||||||||||||||||||||||
| Termination Account | |||||||||||||||||||||||||||||||||||
| Tax withheld from initial TER severance claim | |||||||||||||||||||||||||||||||||||
| Under preservation age: 32% Over preservation age: 17% | |||||||||||||||||||||||||||||||||||
| Tax withheld from subsequent TER severance claims: | |||||||||||||||||||||||||||||||||||
| Under preservation age: 32% Over preservation age: 17% Over ETP cap ($205,000): 47% | |||||||||||||||||||||||||||||||||||
| What is my preservation age? | |||||||||||||||||||||||||||||||||||
| Your preservation age is generally the age that you can retire and access your superannuation or other retirement-related benefits. Your preservation age depends on your date of birth, as set out below: | |||||||||||||||||||||||||||||||||||
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| Additional tax information | |||||||||||||||||||||||||||||||||||
| Late termination payments | |||||||||||||||||||||||||||||||||||
| We are legally required to withold 47% tax from all severance claims made beyond 12 months of your retirement/termination date. This law does not apply to redundancy claims. | |||||||||||||||||||||||||||||||||||
| Eligible Termination Payment Cap | |||||||||||||||||||||||||||||||||||
| Concessional tax rates of 32% (or 17% if you have reached your preservation age) only apply to the first $205,000 of all Eligible Termination Payments. Beyond this cap we are required to withold 47% tax. | |||||||||||||||||||||||||||||||||||
| Deceased Claim Tax Rates | |||||||||||||||||||||||||||||||||||
| If you die, payments from your Protect severance account are generally not taxed if the beneficiaries are your financial dependents or your estate. If your beneficiaries are not your financial dependents , 32% tax will generally apply to the payment from your account. | |||||||||||||||||||||||||||||||||||
| Whole-of-Income Cap | |||||||||||||||||||||||||||||||||||
| Any payment received not resulting from redundancy may also be subject to higher taxation via your personal tax return, if your taxable income plus this payment exceeds $180,000. Please consult your financial advisor if you believe this may apply to you. |
