Five tips for your first meeting with a financial adviser
Every great journey starts with a first step - and your financial advice journey begins with an initial meeting with your adviser. Here's how to make sure the meeting is a successful one.
In the current economic climate, many Australians have faced unexpected redundancy, as companies look for ways to make cutbacks in costs. If you’re one of them, it’s important to remember that redundancy is never about you — it is the cutting of a position, and not of a person.
While it’s natural to be upset, try to focus on taking positive next steps for your future. That way, you can prepare yourself emotionally and financially for what lies ahead.
Will I get a redundancy payment?
When the job you are doing is no longer required and you are dismissed as a result, you may be entitled to a redundancy payment. Not everyone gets one — casual and contract staff, and people who’ve been at a company for less than 12 months, may miss out on any extra payment.1
If there is a redundancy policy set out in your employment contract, then your redundancy should follow this policy. Generally, the payment is based on how long you’ve been with your employer, and may include extra amounts for unused leave and notice periods. Your employer should give you a breakdown of how your payout has been calculated and other entitlements you receive.
If you’re not sure if you’ve been paid correctly, and you’re covered by a registered agreement, you can search for the terms of your agreement on the Fair Work Commission website.
It’s also a good idea to speak with a financial adviser, to make sure you’re getting everything you’re entitled to.
What are my tax obligations?
If you receive a redundancy payout, it may include a tax-free component. According to the Australian Taxation Office, for the 2016-17 financial year, this is a base of $9,936, plus $4,969 for every year you’ve worked. The base amount and service amount are indexed annually.
For example, if you’ve worked for 10 years and are made redundant before 30 June 2017, you won’t be taxed on the first $59,626 of your payout.
What’s left over is your employment termination payment, or ETP, which is fully taxable. In 2017–2018, ETPs up to a cap of $200,000 will attract a concessional tax rate. Any amount above this will be taxed at the highest marginal tax rate.
The taxation of redundancy payments is complex and depends on your individual circumstances — so it’s best to get professional tax advice to help you sort it out.
Start planning early
The sooner you start planning, the easier it will be to move on to the next phase of your life. Here’s how to do it:
1 Fair Work Ombudsman, 2015.