News & Blogs

You May Also Like:

• How Healthy Is Your Relationship with Money?
• Are You in the Driver's Seat Financially Speaking?
• Five Steps to Build Your Wealth for 2024

What to do When Facing Redundancy?

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.

Understanding Your Redundancy Payout Components

In Australia, redundancy payments typically include a mix of:

• Genuine redundancy payment (partially tax-free)
• Unused annual and long service leave
• Employment termination payment (ETP)

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.

What Happens If You Re-Enter Work Quickly?

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.

Strategies to Manage Tax and Cash Flow After Redundancy

Make Strategic Super Contributions

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.

Stagger the Timing of Payments

If possible, negotiate with your employer to defer some components of your payout into the next financial year to avoid income stacking.

Claim Eligible Deductions

Expenses such as self-education, financial advice, and job-seeking costs may be tax-deductible and reduce your assessable income.

Explore Investment Bonds

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.

Draft a Transitional Budget

Avoid lifestyle inflation. Even if you’re earning again, preserving part of your payout and planning around your new cash flow is wise.

Why Professional Financial Advice Matters During Redundancy

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.

A Positive Outlook: Turning Redundancy Into Opportunity

Clients who turned redundancy into a springboard have gone on to:

• Launch small businesses based on long-held passions
• Re-enter education to pivot into new industries
• Use the break to rebalance life priorities
• Transition into early or semi-retirement

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.