Federal Treasurer Josh Frydenberg has announced two initiatives to benefit older Australians.
The first will reform redundancy and early retirement scheme payments to ensure thousands more Australians nearing retirement will pay less tax if they receive a redundancy or an early retirement scheme payment.
Genuine redundancy payments are made when a job is abolished and early retirement scheme payments are made when a person retires early, or resigns, as part of a scheme put in place by an employer.
Mr Frydenberg said genuine redundancy and early retirement scheme payments had a tax-free component, based on the person’s length of service with their employer. However, an individual had to be aged below 65 to receive the tax-free component.
This meant people aged over 65 years paid substantially more tax on termination payments.
Under the reforms, genuine redundancy and early retirement scheme payments would be aligned with the Age Pension qualifying age from 1 July 2019. The Age Pension qualifying age will be 66 on 1 July 2019, rising to 67 by 1 July 2023.
“This change means that all individuals below the Age Pension qualifying age will be able to receive a tax-free component on their termination payment,” Mr Frydenberg said.
“For example, a 65-year-old with 10 years of service whose job is abolished receives a $100,000 redundancy payment. Currently, as they are aged over 65 years, they would not receive a tax-free component and would pay $15,000 tax. Under our reform, the individual would pay just $5,640 in tax, saving $9,360.
“Not only will this ensure older Australians keep more of the money they’ve earned, it will also support workforce participation by removing a barrier that may have prevented some from working longer.
Gold Card for Vietnam War doctors and nurses
Members of the Australian civilian surgical and medical teams who provided medical aid, training and treatment to local people during the Vietnam War will be eligible for the Department of Veterans’ Affairs (DVA) Gold Card from 1 July 2020.
Treasurer Josh Frydenberg and Minister for Veterans’ Affairs Darren Chester commended the group of men and women, who will have access to medical treatment for all conditions.
“It may have taken nearly 50 years, but justice is being done as a group of brave Australian doctors and nurses are duly recognised for their selfless contribution as members of the Southeast Asia Treaty Organization (SEATO) teams that served in Vietnam,” Mr Frydenberg said.
“Just like our soldiers, these medical personnel are Australian heroes, and it is pleasing to see their campaign for justice be successful.”