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Redundancy can be a fresh start. Understanding your payout and using strategies like super contributions, payment timing, and budgeting can protect wealth and reduce tax, turning a job loss into new opportunities.
Facing redundancy can feel like the rug’s been pulled out from under you. It often arrives without warning, leaving many Australians uncertain about what’s next. Redundancy doesn’t have to be the end of the road—it can be the start of something new. With the right mindset and financial guidance, it’s an opportunity to regroup, refocus, and rebuild.
Working with a financial advisor Brighton professional at Vista Financial early in the process can help you understand your options and make more confident financial decisions during this transition.
In Australia, redundancy payments typically include a mix of:
Each component is taxed differently:
Genuine redundancy payments are tax-free up to a threshold: $12,524 plus $6,264 for each full year of service (2024–25 financial year).
Unused leave entitlements are taxed at a maximum rate of 32% including the Medicare levy.
ETPs are concessionally taxed up to a cap of $245,000 for 2024–25, depending on your age and the structure of the payment.
These rules can seem complex, but they also offer opportunities to structure your payout in a way that protects your wealth and minimises tax.
While some may face extended job searches, others transition into new roles rapidly. Ironically, this can create tax complications. Additional income from a new job—on top of your redundancy payout—could push you into a higher marginal tax bracket.
Consider directing part of your payout into superannuation. Both concessional (pre-tax) and non-concessional (after-tax) contributions can improve your tax position and boost your retirement savings.
If possible, negotiate with your employer to defer some components of your payout into the next financial year to avoid income stacking.
Expenses such as self-education, financial advice, and job-seeking costs may be tax-deductible and reduce your assessable income.
These are taxed internally at a flat 30% and, if held for 10 years, can be withdrawn tax-paid—making them a potential long-term wealth strategy.
Avoid lifestyle inflation. Even if you’re earning again, preserving part of your payout and planning around your new cash flow is wise.
Seeking support froma financial advisor Brighton early can make a significant difference in how effectively you manage your payout and transition period.
A financial planner Brighton professional can help you run tailored tax scenarios, assess cash flow options, and structure your redundancy in a way that aligns with your long-term goals.
Clients who turned redundancy into a springboard have gone on to:
Redundancy might close one chapter, but it also clears the slate for something new—perhaps something even better aligned with your values and goals.
With the right support and structure, including financial planning Brighton guidance, this transition can become a strategic reset rather than a setback.
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