Why aged care matters

Posted on 7 February 2022 | by Allan Hall

It’s important to explore options whilst you can make informed decisions

The last couple of years have been tough on a lot of people with the COVID pandemic throwing the world into chaos and taking a toll on our physical, mental, financial and emotional wellbeing.

If you have had a family member in aged care over the period of lockdowns and were not able to visit them or help care for them, you were probably even more grateful to the staff who turned up day in and day out to care for the residents. This highlights, even more, the importance of having options when it comes to aged care, and getting it right for you.

Accommodation options in retirement and aged care

Own home – if you choose to remain in your own home there are a range of services that can be provided under a Home Care Package (HCP). These may include personal care, clinical support and light home duties. A HCP can be hard to secure with greater demand than supply. As at 31 March 2021 there were 183,376 people who had accessed a HCP. This is a 20.7 per cent increase since 31 March 2020¹.

There is also a Commonwealth Home Support Program which is assessed by the regional assessment service to determine the type of in-home care needed.

Retirement village – a retirement village is a residential option offering a community lifestyle designed specifically for the needs and lifestyles of people over age 55. Most retirement villages offer self-contained accommodation for independent living. They may also provide services such as meals, cleaning and personal care for an additional fee.

Aged care accommodation – residential aged care is a purpose-built facility that offers specialised care for those who need assistance with their everyday living. The services provided may include:

on-call staff for assistance
meals
basic accommodation services such as furnishings
cleaning and general laundry
bedding
maintenance of buildings and grounds.

Additional services (such as hairdressing, outings or a cafe) are offered by some aged care residential facilities at an extra cost.

Accessing accommodation packages

A conversation with an Aged Care Assessment Team (ACAT) is the key to accessing what packages are available to an individual to help determine if a home care package can be secured, or if entry to residential aged care accommodation is the more suitable option.

An ACAT assessment is done by doctors, nurses and social workers to assess the physical and mental needs of the individual.

Choosing an aged care facility

The decision on which aged care facility to choose is made by the prospective resident and their family. This decision may be largely based on accommodation cost and availability, but consideration should also be given to family circumstances, quality of the accommodation and facilities, reputation of the facility, closeness to family and friends and other personal and emotional factors.

It’s important to remember there are often long waiting lists for entry to many facilities, so it’s a matter of weighing up the urgency of entry and the availability of preferred facilities. The sooner you consider your aged care options and get onto a waitlist, the easier it is to make the transition. In saying this, you should also be prepared to move rapidly once a facility can accommodate you, as places tend to be assigned very quickly and if you take too long to decide, it may be offered to someone else.

Other considerations

This article barely scratches the surface of things you need to know when it comes to your aged care, or that of a family member or close friend. There is a lot to understand when it comes to costs, whether the family home needs to be sold or can be retained, impacts on the age pension for those in receipt of this social security payment and thought to ongoing income.

Talk to a Financial Adviser

With so much to know about this very important decision around how you, or someone you care about, will live out their final years, it’s important to get all the facts from a qualified Financial Adviser who understands the aged care system and can provide options and advice, giving consideration to your individual circumstances.

Make an appointment today to discuss aged care, it’s important to explore your options while you are of sound mind and can make informed decisions.

General Advice Warning

The information contained on this website is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.

Mark O’Connell, Robin Bell and Allan Hall Financial Planning Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323.

Source

*IOOF Survey 2020: The True Value of Advice – A study of 12,643 Australians is an Authorised Representative of Lonsdale Financial Group, ABN 76 006 637 225, AFSL No 246934. This is general advice only and does not take into account your objectives, financial situation and needs. Before acting on this advice, you should consult a financial adviser.

Financial advice helps you achieve more

Posted on 20 December 2021 | by Allan Hall

Whatever you want to do, you’re more likely to do it with the help of some sound financial advice.

We all have something we’d like to be doing more of. It could be spending more time on hobbies, less time at work and more time raising a family, more time travelling the world or reducing working hours as we get closer to retirement.

One thing we all want to make sure of is that we have a steady income stream to make the most of what we really want to do – now and in retirement.

That’s where the power of financial advice has been proven to help those with a goal achieve what they want.

Of those who set goals with a financial adviser, 86% said financial advice helped them achieve their goals.*

This key insight came to light in a groundbreaking survey of over 12,000 Australians in conjunction with CoreData. It found the benefits of financial advice helped no matter your age, wealth or gender.

So, if you want to achieve your very own goal and have a comfortable life, it’s more likely to happen with some financial advice.

We can provide you with professional advice for your financial planning needs. Call us today to arrange a meeting.

General Advice Warning

Mark O’Connell, Robin Bell and Allan Hall Financial Planning Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323.

Source

infographic_five-tips-for-looking-after-household-finances

Managing Household Finances

Posted on 25 October 2021 | by Allan Hall

Five tips for looking after your household’s finances

Take the pain out of managing your family’s finances with some simple tips every family can use.

Taking care of household finances can be time consuming and boring – and often people don’t know where to start. Your local library may have some good resources if you want to do your own research, but these simple tips are ones every family can use. If you want to get more serious about your household budget, financial goals and planning your family’s financial future, a qualified Financial Adviser can work with you on something much more detailed, tailored and appropriate.

1 | Look at your current income and expenditure

Sitting down as a family and figuring out how much money is coming in and going out may help you gauge the state of your family’s finances. A clear picture of your household income and expenses could set you up to manage your cashflow better going forward.

You can make this fun by setting up a spreadsheet or large piece of paper with income and expenses categories you will use to track all expenses and income. You can even highlight different categories in different colours to make it easier to read.

2 | Consider any unnecessary expenses

Keeping expenses under control can be tough, especially if you are not used to sticking to a budget. But if you’re spending is as much, or more, than you’re earning, you might want to consider limiting your family’s discretionary costs by buying only what you can afford. If you are tracking expenses on a spreadsheet, it is much easier to see where you may have any unnecessary expenses and cut them out.

3 | Set financial goals as a family

Setting financial goals as a family may help you work towards shared aspirations instead of simply meeting current expenses. Whether it’s buying a bigger house, upgrading your car or going on a dream holiday, having a financial goal may help your family set priorities and stay on track financially.

4 | Look at what’s important to your family

There are things that will be important to your family, that you should definitely factor into your budget. But there will be other things you can do without. Protecting your family for the long term, through health and illness, is important, so talk to a professional financial adviser about factoring in personal insurance cover that will keep the family protected from unexpected accidents or illness.

5 | Build up emergency and retirement funds

Unplanned expenses such as unforeseen medical bills can put a dent in family finances. By growing your emergency fund to cover three to six months’ worth of expenses, you may be better positioned to handle unexpected events.

While it’s easy to neglect your own financial future when providing for your family, saving for retirement should not take second place. Keep in mind that the earlier you start saving, the better chance you have to grow a sufficient nest egg.

Working with a financial adviser

Managing finances need not be a painful exercise. By working alongside a financial adviser and setting financial goals as a family, handling household finances is a task you can achieve. If you are ready to take your budget to the next level with some professional help, we would love to hear from you.

General Advice Warning

Mark O’Connell, Robin Bell and Allan Hall Financial Planning Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323.

11 Tax Facts About Superannuation

Posted on 11 October 2021 | by Allan Hall

Compared to other investment structures, super is widely considered to be one of the most tax-effective investment structures available from a wealth accumulation and cash flow generation perspective.

Although not a comprehensive list, below are 11 of the top tax facts about super.

Please note: Each tax fact isn’t covered in detail (only a brief snapshot is provided), other important considerations go with each. For example, it’s important to consider things such as contribution eligibility, and conditions of release. To discuss how any of the below may be relevant to your situation, talk to your Financial Adviser.

Super investment structure

Overview

When investing via super, it’s important to understand that there is an accumulation phase and a retirement phase. From a life stage perspective:

Accumulation phase generally coincides with the time in your life where contributions are being made to your super, and you are accumulating wealth via these contributions and investment earnings. Nearing retirement, some of us may commence a transition to retirement income stream (TRIS).
Retirement phase generally coincides with the time in your life where you are using the wealth you have accumulated to help fund your retirement lifestyle via either a retirement income stream, lump sum withdrawals, or a combination of both.

With the above in mind, from a tax perspective, the tax facts listed below are grouped according to their relevance to each phase. For example, the tax facts regarding contributions are underneath the title ‘Super (accumulation phase)’, as contributions can’t be made to a super account in retirement phase.

Super (accumulation phase)

Investment earnings in your super. Investment income is generally subject to a maximum of 15% tax. And, capital gains on assets held for longer than 12 months receive a 1/3 (33%) tax discount, which effectively reduces the tax rate to 10%.
Concessional (pre-tax) contributions to your super. The amount contributed is reduced by a tax of 15% (contributions tax). When considering salary sacrifice and personal deductible contributions (types of concessional contributions), this tax of 15% may be lower than your marginal tax rate. Please note:
1. If you have income and concessional contributions totalling more than $250,000, you can pay an additional 15% tax (called Division 293 tax) on some or all of your concessional contributions.
2. If you have adjusted taxable income of $37,000 or less, you may be eligible to receive the low-income super tax offset (up to $500).
3. Making concessional contributions to pay for premiums for certain insurance held through super can reduce contributions tax.
Non-concessional (after-tax) contributions to your super. The amount contributed isn’t reduced by a contributions tax. Please note:
1. If you have total income less than $54,837, you may be eligible to receive the Government co-contribution (up to $500).
2. If you make a spouse contribution (i.e. non-concessional contribution to your spouse’s super), you may be eligible to receive the spouse contribution tax offset (up to $540). The receiving spouse’s income must be less than $40,000.
Insurance in your super. Your super fund trustee can generally claim the insurance premiums as a tax deduction, reducing the tax paid by your super fund trustee on your concessional contributions and super earnings. The tax saving is often rebated to your super account, effectively reducing the premium cost by 15%.
Saving for a home deposit via your super. If you make voluntary contributions, you may be eligible to withdraw all or part of these contributions plus associated earnings for use as a deposit via the First Home Super Saver Scheme. Please note:
1. The maximum amount that can be withdrawn is $15,000 of voluntary super contributions per financial year made since 1 July 2017 (up to a total of $30,000 across all years). The amount that can be withdrawn is 100% of eligible non-concessional contributions, 85% of eligible concessional contributions, plus 85% of associated earnings. Tax is payable on the associated earnings and concessional contributions portion of the withdrawal (taxed at marginal tax rates, including the Medicare Levy, less a 30% tax offset).
Small business capital gains tax (CGT) concessions. If you are considering selling a small business or the assets it uses, you may be eligible for CGT concessions that help reduce the taxable capital gain associated with the sale, and build your super retirement nest egg in the process. Please note:
1. You may be able to contribute amounts from the CGT 15-year asset exemption and retirement exemption to your super, without using your non-concessional contributions limits.
Pension payments from your super. Pension payments from an accumulation phase transition to retirement income stream (TRIS) are generally tax-free if you are aged 60 or over. If you are under age 60, the taxable portion of pension payments is taxed at your marginal tax rate, less a 15% tax offset.

Super (retirement phase)
Investment earnings in your super. Investment income and capital gains are generally tax-exempt. Please note: The transfer balance cap, which is currently set at $1.6 million (indexed) per person, limits the amount of super benefits that can be transferred to retirement phase.
Pension payments from your super. Pension payments received from a retirement income stream (eg account-based pension or retirement phase TRIS) will be tax-free to you if you are aged 60 or over at the time of receiving the pension payment.

Super (accumulation or retirement phase)
Lump sum withdrawals from your super. Any lump sum withdrawals made after 60 years of age are generally tax-free. If you make a lump sum withdrawal and you are aged between preservation age and 60, the taxable component of the lump sum is taxed as follows:
1. The amount up to the low rate cap amount (currently $215,000) is tax-free.
2. The amount above the low rate cap amount is taxed at 15% (plus the Medicare Levy).
Passing away and your super:
1. A death benefit lump sum paid to a nominated beneficiary who is a tax dependant is received entirely tax-free. If the beneficiary is a tax non-dependant, then any tax-free component is tax-free, but the taxable component is taxed at 15% (taxed element) or 30% (untaxed element), plus the Medicare Levy.
2. Income payments from a reversionary death benefit income stream paid to a nominated reversionary beneficiary who is an eligible pension recipient dependant are received entirely tax-free if you or the reversionary beneficiary are aged 60 years or over at the time of your passing. If both you and the reversionary beneficiary are under 60 at the time of your passing, the pension payments from the reversionary death benefit income stream are taxed as follows:
  1. the tax-free component is tax-free, and
  2. the taxable (taxed element) component is taxed at marginal tax rate plus Medicare Levy, less 15% tax offset.

However, when the reversionary beneficiary turns 60, the pension payments from the reversionary death benefit income stream are tax-free.

Talk to us

Each tax fact outlined above isn’t covered in detail (only a brief snapshot is provided) and other important considerations go with each. For example, it’s important to consider things such as contribution eligibility, and conditions of release. To discuss how any of the 11 tax facts about superannuation may be relevant to your situation, give us a call. We would love to hear from you!

General Advice Warning

Mark O’Connell, Robin Bell and Allan Hall Financial Planning Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323.

Is Super Worth the Hype?

Posted on 27 September 2021 | by Allan Hall

As Financial Advisers we talk about superannuation a lot.

So much so that it probably becomes a fuzzy word people don’t even hear any more. And the younger you are, the less interested you probably are.

But superannuation is super important. It is likely to be the biggest investment you will have in your lifetime, unless you own a mortgage-free home.

It’s also what will keep you afloat when you retire – which for some of us is a choice, for others it’s a choice made for us due to illness, or the inability to continue to carry out our normal work duties or due to financial hardship.

Without a regular deposit of wages or salary into your bank account, how will you afford to pay your bills, buy food and clothes and keep your car running? Have you have been lucky and wise enough to establish a few back-up options during your working years?

The Association of Superannuation Funds of Australia’s (ASFA) estimate of how much money you’ll need in retirement, depending on your lifestyle is in the table below. This is how much it estimates you need to have every single year you are retired.

ASFA Retirement Standard	Annual living costs
Couple – modest	$40,829
Couple – comfortable	$62,828
Single – modest	$28,254
Single – comfortable	$44,412

Source: ASFA Retirement Standard, for those aged around 65 (March quarter 2021, national)

There are also guidelines for the lump sum couples and singles need sitting in their superannuation account upon retirement for a comfortable lifestyle. These guidelines assume that the retiree/s will draw down all their capital, and receive a part Age Pension – which not everyone is eligible for, so it’s recommended you speak to your Financial Adviser about your situation.

Category	Savings required at retirement
Couple – comfortable	$640,000
Single – comfortable	$545,000

Source: https://www.superannuation.asn.au/ArticleDocuments/269/ASFA-RetirementStandard-Summary-2018.pdf.aspx?Embed=Y All figures in today’s dollars using 2.75% AWE as a deflator and an assumed investment earning rate of 6 per cent

If you know what your superannuation balance is currently, how old you are and approximately how many working years are left, you can use the above tables to figure out how you are tracking in terms of reaching a comfortable super balance to live a comfortable retirement lifestyle. Keep in mind these are averages and estimates. You, as an individual, may have higher needs, greater expectations of your retirement lifestyle, a desire to retire early or be disadvantaged by not receiving super when you have taken time out of the workforce to have children – all of these factors will impact the amount you will need tucked away in superannuation.

With all this information, what can you do about increasing your superannuation balance so you hit your target by retirement age? If you are currently employed you would be receiving the super guarantee from your employer which for many years was paid at 9.5% of your salary (unless you have an employer that pays above minimum, lucky you!) and rose to 10% on 1 July 2021. It is set to rise again to 10.5% on 1 July 2022.

In addition to the superannuation guarantee there are other options you can consider if you are eligible such as government co-contributions to super, spousal contributions, contribution splitting and the low-income super tax offset. Your Financial Adviser can have a conversation with you about how these strategies may help you increase your super balance.

Hopefully, this article has provided some useful information, and you’re hyped up to take greater notice of your super balance because when your working days are over, it’s going to really matter to you.

If you would like to discuss super strategies, or review your financial plan, we would love to hear from you.

General Advice Warning

Mark O’Connell, Robin Bell and Allan Hall Financial Planning Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323.

Seeking professional financial advice

Posted on 6 September 2021 | by Allan Hall

How do you know when the advice is right?

Seeking financial advice can turn your life around and put you on a path to a happier and more secure financial future.

But where do you start? Who do you trust? How do you know you are going to get value for money?

There are many questions that may pop into your head when you think about whether or not to seek professional advice. One major barrier to seeking financial advice may be that you don’t know if the advice is going to be appropriate for you. You may also wonder if the advice is something you need a professional for, or if you can figure out on your own.

Appropriate financial advice can be life-changing because you are tapping into the mind, and technical expertise, of a qualified and trained professional whose job it is to know the ins and outs of financial services and stay on top of regulatory change.

Financial advisors are required to complete 40 hours of Continuing Professional Development each year to remain qualified and compliant – ongoing learning and development is a huge part of a Financial Advisors’ value to their clients. Many Financial Advisors do not work independently, but as part of a team with experts in research, investments, insurance and the technical landscape. A broader and qualified team members may contribute to a more well-rounded and holistically considered financial plan for each individual client.

Do your own research

There are reliable websites you can use to research the qualifications and specialist areas of a Financial Advisor. These include:

The Government’s MoneySmart website has an article on choosing a Financial Advisor: https://moneysmart.gov.au/financial-advice/choosing-a-financial-adviser
You can check the ASIC register for registered Financial Advisors: https://moneysmart.gov.au/financial-advice/financial-advisers-register
You could call a few financial advice businesses in your local area with a set of standard questions such as
- Who are you employed by?
- What are your qualifications?
- How many years of experience do you have?
- What are your specialist areas of advice?
- Do you work as part of a broader team of financial specialists?
- Do you offer a fee and obligation free introduction meeting?
- How do you charge for your advice fees?

Look at the published research

In 2020, CoreData conducted a survey for IOOF with a sample size of 11,615 advised clients and 1,000 unadvised individuals across Australia. The research showed overwhelmingly that financial advice made a positive impact on the advised clients.

The research showed that:

84% of advised clients agree the value of advice outweighs the costs
91% agreed receiving advice helped them to achieve their financial goals
82% believe advice helps inspire them to work towards and reach their goals.

Don’t let uncertainty hold you back — talk with us

If you are unsure about the true value of advice but you want to explore whether it might help you reach – or exceed – your financial goals, book a conversation with a Financial Advisor about getting a plan in place.

We have the capacity to take on new clients and welcome the opportunity to meet with you.

General Advice Warning

Mark O’Connell, Robin Bell and Allan Hall Financial Planning Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323.

Do you have more than one super account?

Posted on 23 August 2021 | by Allan Hall

There is about $13.8bn lost or unclaimed super in accounts across Australia as at 30 June 2020.

Is some of that yours?

Find it

Moved house? Changed jobs? Don’t know where your teenage self stashed your super? It’s easy to track it down.

Consider Combining it

Save on fees, reduce your paperwork, keep track of your hard-earned money, grow your retirement fund. But seek professional financial advice first to make sure combining is beneficial for you.

Ask your financial adviser

Many websites offer to help find and combine your super. It is quick, easy and free. You can ask your financial adviser for help, check with your known superannuation provider or the Australian Tax Office.

Grow it

A professional financial adviser can help you find an appropriate superannuation fund that will grow your hard-earned income ready for your retirement – and the sooner you get on top of this, the better!

General Advice Warning

Mark O’Connell, Robin Bell and Allan Hall Financial Planning Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323.

Understanding Aged Care Terminology

Posted on 4 August 2021 | by Allan Hall

Aged care is a complex and emotive topic

Many people don’t think about their aged care needs until the time to do something is upon them – at which point the options can be limiting.

This article explains a couple of the key areas to consider around your aged care plan.

Arranging an aged care assessment

When the time comes to move into a facility, one of the first steps is usually an assessment by a team of medical and health professionals who determine the eligibility of any government subsidised care.

You can speak to your family doctor about getting an aged care assessment, or work with a Financial Adviser who can put you in touch with an Aged Care Assessment Team (ACAT).

Understanding an RAD and RAC

If you want or need to move into an aged care facility you will need to research different facilities, compare their services and ask them about the refundable accommodation deposit (RAD) or refundable accommodation contribution (RAC) which are required to secure a place at a facility.

The RAD is a lump sum payment for accommodation in an aged care home paid by the ingoing resident. It is essentially the cost of a room, in lump sum form that you agree to pay. The RAC is applicable when part of the cost of the room is paid for by the government, leaving you to only pay the difference as a lump sum.

Whilst the RAD and RAC are paid as a lump sum to the facility, by you, they are refundable upon a permanently leaving an aged care facility. Many times this will be at the time of death, so the amount is paid to your Estate.

In some situations, a family member agrees to pay the ingoing RAD or RAC fee to a facility, perhaps because the ingoing resident does not have the liquid cash available. If this is the case, there should be sufficient documentation so that upon death the money is refunded to the rightful recipient. The facility may offer to name this family member on the contract which should give all parties comfort in arrangement.

DAP and DAC

Another acronym you will come across is the DAP or the DAC. The Daily Accommodation Payment (DAP) is an amount to be paid by permanent residents of a facility that goes towards the cost of accommodation and care. Alternatively, the cost of accommodation and care for low-means residents is the Daily Accommodation Contribution (DAC) which is a reduced amount, based on an assessment of financial means.

More information

There is a good repository of information available on the My Aged Care website. It is worth taking a look, noting anything you don’t understand or would like further information on, and talking to your Financial Adviser.

Talk to us

If you or a family member are nearing the time that an aged care plan is required, it can help to talk to a Financial Adviser who understands this complex advice area and can answer any questions you have. It is often helpful to include close family members in these discussions.

We have the capacity to take on new clients and welcome the opportunity to meet with you to discuss your aged care needs.

General Advice Warning

Mark O’Connell, Robin Bell and Allan Hall Financial Planning Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323.

Navigating your way through a redundancy

Posted on 5 July 2021 | by Allan Hall

The ABS announced a record 932,000 jobs lost between the March and June 2020 quarters in the wake of COVID-19

While the Government extended temporary economic assistance for most businesses until March 2021, it has gradually been phased back which may result in many businesses downsizing, winding up or becoming bankrupt.

This means it’s possible that more jobs may be lost in the coming months.

If you are facing a possible redundancy at work due to the aftermath of COVID-19, or a company restructure, this is considered a significant life event that may impact your career, family, mental health and financial wellbeing. For those who are ready to retire, termination payments are likely to be a welcome windfall, but for those who don’t have retirement on the near horizon, you may find redundancy stressful, as it tends to happen during an economic downturn when it may be harder to find a new job.

The immediate issue to consider is whether you have enough money to tide things over until the next job comes along. If you are working with a Financial Adviser, then they will have a good idea of what your current financial position looks like, and how long you can manage without a job. They can also advise on different options to consider when it comes to a redundancy payout.

Your Financial Adviser can discuss:

How will redundancy payments be taxed?
What other employee entitlements will be lost?
Will lump sum payments impact on entitlements to social security and family assistance?
How will payments be used?

This is a great opportunity to make a real difference to your situation during a challenging time, and, if you are the employer, you may be able to support your employees to achieve a better outcome.

Genuine redundancy payment (GRP)

Payments on termination due to redundancy attract more generous tax concessions than if the employee resigns. If you are offered and accept a redundancy, it is worth knowing about the tax concessions and the conditions that must be met to be eligible.

A GRP must satisfy the following conditions:

The employee is dismissed because the employee’s position/role no longer exists
There is no arrangement between the employer (or another entity such as a company associated with the employer) and employee to rehire the employee after dismissal
Where the relationship between the employer and employee is non-arm’s length, the payment cannot be greater than the amount that would be reasonably expected if the relationship was at arm’s length
The dismissal occurs at the earlier of the following:
- before the employee attains Age Pension age, or
- before the employee attains the age, or completes a period of employment, when employment would have terminated.

If these conditions are not met, the employee is ineligible for the tax concessions that apply to GRPs. For example, where redundancy occurs on or after Age Pension age, the employee is not eligible for a tax-free GRP.

Payments on termination

Payments that may be received by an employee who is made redundant include:

salary and wages, overtime, bonuses and allowances
unused annual leave and long service leave
severance payments
a gratuity or ‘golden handshake’
genuine redundancy or early retirement scheme payments
non-genuine redundancy payments (eg redundancy occurs after employee reaches Age Pension age)
payments in lieu of notice
unused sick leave
unused rostered days off.

Taxation of payments

Payments on termination are categorised to determine how they are taxed. If you are offered a redundancy, you can plan ahead by asking your employer for an estimate of the payments you will receive, including withholding tax amounts. Your employer can provide you with an income statement at termination or you can obtain this from the Australian Taxation Office (ATO).

Payments eligible for concessional tax treatment attract tax offsets so that the tax paid does not exceed the concessional tax rate. Tax withheld by your employer reduces the final tax payable and if too much tax was withheld the excess is refunded to you.

Your Financial Adviser can help you identify and work out:

Payments for earned income
Tax on unused annual or long service leave
non-excluded employment termination payment (ETP), the tax-free genuine redundancy payment (GRP) and the excluded ETP.

Other considerations

As well as working out any payments, your Financial Adviser can discuss other financial and personal considerations, including:

How ongoing expenses can be met and for how long
Whether you intend to retire and if not, how long it may take to find another job
Other financial resources available to you
Eligibility for social security payments and/or Family Tax Benefits
Whether your employer has the flexibility to ‘time’ the redundancy and termination payments to assist with a better tax outcome
Whether deferring taxable income (for example deferring the sale of investments with capital gains implications) will have a favourable outcome
Your capacity to make personal deductible super contributions
What you would like to do if you do decide to retire, and what your retirement lifestyle will look like given your financial situation
If you decide to return to the workforce, whether your next job can pay a similar salary or if you take a pay cut in the current economic environment.

Redundancy may be beneficial if you’re ready to retire but stressful if you need to find a new job in a challenging economic environment. Some employers may be able to offer flexible payment arrangements on termination to facilitate a better tax outcome.

A Financial Adviser will discuss both the impact of redundancy on your overall financial situation and how to achieve a favourable payment outcome.

General Advice Warning

Mark O’Connell, Robin Bell and Allan Hall Financial Planning Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323.