Older Hazelwood worker to lose more of redundancy in tax, calls for change
A Hazelwood worker has labelled tax rules that stop him from qualifying for a genuine redundancy as unjust, and is calling for the rule to be reviewed.
Denis Clough, 66, will not qualify for what the Australian Tax Office (ATO) classifies as a genuine redundancy when the Hazelwood power station shuts its doors in March, because of his age.
Workers who receive a genuine redundancy do not pay tax on part of their termination payment, but payments to workers over the preservation age of 65 years — the age from which a person can access their superannuation — are called employment termination packages (ETP) and do not have the same tax benefits.
Mr Clough has worked in the industry all his life, and started work at Hazelwood 36 years ago.
Older Hazelwood workers get less
He described the moment a colleague pointed out he would pay about $80,000 of his nearly $330,000 pay-out in tax as “shocking”.
Mr Clough said although the smaller payout would not put his plans of being a self-funded retiree at risk, he was angry he was being treated differently because of his age.
“I would have retired in a couple of years and basically ended up with the same money I’ll get by going a couple of years earlier, but I would have preferred to go to work a few more years,” Mr Clough said.
“It’s really just the principle. It’s as if the ATO is being made redundant, not me.
“I’m one of the lucky ones that I could have retired anyway, but there’s people, I don’t know what they’re going to do for a job, how they’re going to pay their debts.
“My real complaint is I just think this is morally wrong, that what they’re doing taxing this as an employment termination package.
“I just would like some politician explain to me how he can morally justify it.”
Australians working longer and retiring later
Financial planner Ben Lancaster has backed Mr Clough’s call for change.
Mr Lancaster said with Australians working longer, it may be time to reconsider the age cut-off.
“It does seem unfair in terms of being over 65, all of a sudden the whole amounts to an ETP,” he said.
“The reasoning behind it would seem that it would assume that it’s not a bona fide redundancy because at 65 you might be retiring, but it does seem with Australians working longer it seems like a bit of outdated legislation.”
Mr Lancaster said there would be more over-65 redundancies as people continued to work later in life.
“The age pension age is lifting, so people will work past 65 to reach the age pension,” he said.
“It would seem logical that 65 seems a bit of an off age in today’s day and age.”
Source: ABC Gippsland
45 total views, 1 today