Due to the COVID-19 pandemic, many people have lost jobs as a result of the business restructuring. Recently, Qantas AirWays had retrenched 6000 people, and other big brand companies like Virgin Blue, and Myers also had retrenched or sacked many of their employees. If you are one of the employees who had been sacked due to COVID-19, then it is very important to pay special attention to your PAYG summary at the time of lodging the FY2020 tax return. If the redundancy income is due to genuine redundancy, and the PAYG summary shows the correct categorization, then most likely the amount up to a limit as shown in the PAYG summary will not be taxable, but exempt from tax.
A genuine redundancy payment is a payment made to you as an employee if you’re dismissed because the job you were doing has been abolished. This means your employer has made a decision that your job no longer exists, and your employment is to be terminated.
Your genuine redundancy payment is:
- tax-free up to a limit based on your years of service
- concessionally taxed as an employment termination payment (ETP) above your tax-free limit
- taxed at your usual marginal tax rate for any amount above certain caps.
Hence if you have been retrenched sacked or made redundant income due to the COVID-19 pandemic, please come and talk to one of the most professional and specialist tax professional firms in Sydney and Adelaide. Please give us a call on 0410829900. One of our professional CPA accountants will help you maximize your tax position and aim to get a good tax refund for you.