Redundancy in Australia: What You Need to Know

Redundancy in Australia: What You Need to Know

Facing redundancy can be one of the most stressful transitions in your working life. Beyond the immediate concern of job security, it often raises important financial questions: What happens to my redundancy payment? How will this affect my superannuation? What steps should I take next?

At Everest Financial Advisory, we regularly help Australians navigate these issues. Here are some general insights to keep in mind if redundancy becomes part of your journey.

1. Understanding Redundancy Payments

In Australia, redundancy payments are generally made up of:

• Severance pay (based on your years of service)

• Accrued leave entitlements (annual leave, long service leave)

• Payment in lieu of notice if applicable

Each component can be taxed differently, and in some cases, part of the payment may be tax-free up to a government-set limit.

2. Tax Implications

Redundancy payments are not taxed in the same way as ordinary income. For example:

• A genuine redundancy may include a tax-free portion based on your years of service.

• Other amounts, like unused leave, may be taxed at concessional rates.

Understanding how these rules apply to your situation is essential to avoid paying more tax than necessary.

3. Superannuation and Centrelink Considerations

Redundancy may also impact your super contributions and eligibility for Centrelink benefits. Depending on your age and circumstances, you may need to reassess:

• Whether to add part of your payment to superannuation

• Your investment and retirement savings strategy

• Short-term cash flow needs while seeking your next role

4. Planning Your Next Steps

A redundancy can be a financial shock, but it can also be an opportunity to reset your goals. Careful planning helps you:

• Manage your payout efficiently

• Reduce unnecessary tax

• Ensure your savings and investments continue working towards your long-term objectives

Professional Guidance Matters

Confidence in retirement isn’t measured by the size of your portfolio — it comes from knowing you have a plan that works. An experienced adviser can help translate complex financial structures into a clear path forward, reducing uncertainty and freeing you to focus on enjoying life.

At Everest Financial Advisory, we help Australians build retirement strategies that balance growth, stability, and purpose.

Book a conversation with our team today to start preparing for the retirement you deserve.