The Federal Government is proposing tax law reform that extends the age at which workers who are made redundant can receive concessional tax treatment on their redundancy payments.
Under the current law, a worker must be made redundant before age 65 in order to receive concessional treatment.
The proposed law extends this to match the Age Pension eligibility age, which will increase incrementally from 65 to 67 in 2021.
The bad news is that while this is a welcome extension of concessional tax treatment for older workers, National Seniors Australia objects to its discriminatory application.
In our view, the reform says that a worker over the Age Pension eligibility age and who is made redundant because their job has been abolished, is not regarded as a “genuine redundancy” and therefore, not subject to concessional tax treatment.
National Seniors Australia has written to Treasury saying that it is unfair that an employee made redundant one-day before Age Pension eligibility age, is taxed differently from an employee who is made redundant one-day after.
Such a system is discriminatory because it treats a person differently, based on their age.
While we support the aligning of genuine redundancy rules to changes in the pension age as a first step, we do not support having ageist legislation.
National Seniors Australia has welcomed the announcement of a review of the retirement income system by Treasurer, Josh Frydenberg.
It is hoped that the full range of issues, including those around genuine redundancy, are considered in the review.
We will participate in the review process and seek your feedback in contributing to a fair retirement income system for all Australians.
National Seniors Australia will also continue to fight hard for those on the pension who are doing it tough.
With your support, we can fix pension poverty.