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159 posts

Master Geek


#270404 7-May-2020 18:57
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So redundancy in New Zealand is: 
At the moment, lump-sum payments are treated as income in the year in which they are received, and taxed in one hit.  
Indeed you might jump TAX brackets if you are a lower earner you lucky ...... and pay more than your usual TAX.

 

Meanwhile over in the workers paradise Australia ....   TAX free up to a certain level per year ...
Gives you a bridge while you find new employment.

 

Seems our laws are a bit off ?    

 

"" From Aussie TAX website ....
Working out and reporting the tax-free amount
The tax-free limit is:

 

Base amount + (service amount × years of service)

 

The base amount and service amount are indexed annually.

 

For example, for 2019–20 the tax-free limit is equal to $10,638 (base amount), plus $5,320 (service amount) multiplied by the years of service. Therefore, for 10 years' service, the tax-free limit for the year ending 30 June 2020 is:

 

$10,638 + ($5,320 × 10) = $10,638 + $53,200 = $63,838

 

The tax-free component of a genuine redundancy or early retirement scheme payment is shown at lump sum D on the employee's PAYG payment summary – individual non-business or Income statement.
""

 

 


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  #2478902 7-May-2020 20:24
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 I got made redundant in April 2017 from VFNZ after 17 years (lucky I was on a old contract) and the Tax I paid on my payout was just nuts!




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Master Geek


  #2478950 7-May-2020 21:43
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I can understand not making golden parachutes TAX free, and Australia balances being kind by having a limit .

 

So those that most need the break, get it to help them adjust their lives.
Companies are very limited with their redundancy arrangements these days as well , so not what they used to be I gather.

 

Many being hit by this year could use a break especially, but a bit late for any lobbying changes for them.

 

Especially if their next year income skips them down a TAX bracket.
If the redundancy had just made it over to the next TAX year well it would have been a little extra in their hand.

 

 

 

 

 

 

 

 

 

 


 
 
 
 


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Uber Geek


  #2478953 7-May-2020 21:46
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Why are you shouting tax in capital letters?


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Ultimate Geek


  #2478963 7-May-2020 22:03
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Yep, this is another example of where Australia’s tax system beats ours.




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Ultimate Geek

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  #2478971 7-May-2020 22:13
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You can't just look at one aspect of tax and say they have it so much better.

 

-  They pay a higher rate of income tax on their highest bracket

 

-  They pay capital gains tax

 

 

 

In the last financial year the total Australian tax take was 559.8B with population of 24.9M people that's $22,400 per head

 

For the same financial year NZ took in 86.5B in tax on a population of 4.89M, that's $17,700 per head.

 

 

 

I'm sure someone will poke holes in my methodology but I'm sure by any measure you care to use you'll find that Australians pay more tax than Kiwi's. Its just collected in different ways.


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  #2478974 7-May-2020 22:17
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antonknee: Yep, this is another example of where Australia’s tax system beats ours.


Hahahahahahahahaha

That's hilarious.

Australias tax system is a giant rort. If pretty much every paye earner needs an accountant there is something fundamentally wrong.

956 posts

Ultimate Geek


  #2479024 8-May-2020 08:20
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Senecio:

 

You can't just look at one aspect of tax and say they have it so much better.

 

-  They pay a higher rate of income tax on their highest bracket

 

-  They pay capital gains tax

 

 

Don't forget stamp duty, that one is a real rort as the states were meant to get rid of that when GST was introduced.


 
 
 
 


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Ultimate Geek


  #2479033 8-May-2020 08:45
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Luxury car tax.





BlinkyBill


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Ultimate Geek

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  #2479040 8-May-2020 08:54
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Also, I haven't had to do a tax return any time I've been an employee for the last quarter of a century, maybe more - including when I've been made redundant (twice :().
If I was in Oz, I'd spend probably half a day maybe a whole day doing my annual return, every year, and of course the ATO have to process it too.

 

The NZ personal income tax system is a model of beautiful simplicity and extreme efficiency compared to the Australian system.

 

 

 

Mind you, one of my brothers-in-law makes a very good living in Oz from running a firm of Tax Advisors and Tax Accountants.
Much harder to earn a crust that way on this side of the ditch
LOL


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  #2479043 8-May-2020 09:00
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I must admit...whether the NZ or AU tax system is better aside...I have been lucky enough to be made redundant 4 times in my life and each time the tax taken was obscene. 

 

Always at the higher tax bracket, because that's where I was earning (never been wealthy, but for the last 15 years or so, I'd be considered a "higher earner". 

 

 

 

It's like a gut punch when you're worried about your future, you have literally just had the world fall out from under you and the "parachute" that is supposed to get you through is halved by the Govt. 

 

I've never qualified for help/handouts and to see what I could have received as opposed to what I did receive was quite painful. 

 

 

 

Not looking forward to the next time, if there ever is one - I'm getting older than is healthy in an employment sense...





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  #2479045 8-May-2020 09:04
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IIRC it was tax free up to £30,000 when I left the UK. Far more standard in contracts too - usually one month for each year of service.






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Uber Geek


  #2479050 8-May-2020 09:13
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I suspect that while many people who post to GZ may be in the privileged position of being able to negotiate a redundancy clause in their contracts, most younger people (and many older people) would get close to nothing at all - a couple of weeks pay perhaps.  (Exception perhaps if they're covered by a collective agreement and are members of a union).

 

 


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Master Geek

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  #2479057 8-May-2020 09:28
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Remember that tax returns are calculated automatically now. You will likely get any overpaid tax back.


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  #2479063 8-May-2020 09:50
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Redundancy in general in NZ seems in need of reform, and surprised the previous Labour govt never looked at it.  Also lucky enough to be on an 'old' contract too (we created a mini-Union when they tried to move us over to new contracts after a merger) otherwise its the standard one month package which the vast majority of people seem to be on.


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Ultimate Geek


  #2479174 8-May-2020 11:31
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I don't think I've ever had a redundancy clause in any of my employment contracts. I thought it was a thing of the past to be honest. I should re-read it again. 


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