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2015-16 Legislative Updates: Termination Payments

Posted by: on 6 July 2015 in Compliance

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July 6 – By Angela Lehmann
Legislation Manager – Payroll & Tax, ADP Australia and New Zealand 

It has been an anxious few weeks holding out for some key legislative measures to be passed for the financial year commencing on 1 July 2015.

Even still, some of the measures from the Federal Budget have not as yet been passed and the clock is ticking down towards the end of financial year.

ADP has summarised some of the key tax and legislative measures below to help you keep track and plan for the 2015-16 year:

1. Genuine Redundancy Tax-free limit (Lump Sum D Threshold)

The base tax-free amount increases to $9,780 plus $4,891 for each completed year of service by the employee for the 2015-16 year.

Please note that there are fairly strict guidelines around what constitutes a genuine redundancy. Only if the employer is satisfied that all criteria have been should the ETP be treated as a redundancy for tax purposes.

2.ETP Caps

The ETP cap will increase to $195,000 (currently $185,000) from 1 July 2015 as it is indexed annually. The amount up to the ETP cap will be taxed concessionally and the excess taxed at the top marginal rate.

The whole-of-income cap will remain at $180,000 as this is a non-indexed figure. The whole-of –income cap applies to some ETP’s and is calculated as the cap less any other taxable income you earn throughout that financial year. The amount up to the whole-of-income cap will be taxed concessionally and the excess taxed at the top marginal rate.

3.Preservation Age

Generally, superannuation cannot be accessed by an individual until they reach preservation age.

 

Date of Birth

Preservation Age

Before 1 July 1960

55

1 July 1960 – 30 June 1961

56

1 July 1961 – 30 June 1962

57

1 July 1962 – 30 June 1963

58

1 July 1963 – 30 June 1964

59

From 1 July 1964

60

When calculating the tax on certain taxable ETP’s, the preservation age may also determine the rate of tax to apply.

These legislative updates are current at the time of publishing, however please be aware that there are a number of Bills before Parliament as well as the White Paper on the Reform of Australia’s Tax System being undertaken that may impact you also.

We will endeavour to keep you updated on key changes as the information becomes available.

 

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TAGS: Compliance legislation payments Termination

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