ATO Rulings and Determinations
Genuine redundancy payments
23.04.2009
The Commissioner has released a final ruling which outlines the requirements to be satisfied before any payment made to a person whose employment is terminated qualifies for treatment as a genuine redundancy payment under sec 83-175 ITAA 1997 (TR 2009/2). Genuine redundancy payments are tax-free up to a limit worked out under sec 83-170 ITAA 1997.
The ruling does not deal with early retirement scheme payments (the treatment of which is provided for in sec 83-180 ITAA 1997).
Former sec 27F ITAA 1936 and other provisions in the ITAA 1936 that dealt with the treatment of bona fide redundancy payments were rewritten in sec 83-175 ITAA 1997 and other provisions in Part 2-40 ITAA 1997. Unless specifically noted, the Commissioner considers the treatment of genuine redundancy payments under the ITAA 1997 to be identical to the treatment of bona fide redundancy payments under the ITAA 1936. Taxation Ruling TR 2009/2 may, therefore, be relied upon to this extent when applying the relevant ITAA 1936 provisions to the 2006-07 income year and prior income years.
