Put your redundancy strategy in your own hands June 2015 is an Authorised Representative of RI Advice Group Pty Ltd ABN , AFSL

1 Disclaimer Important Notice The information (including taxation) provided in this presentation is general information only and does not constitute personal advice. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser., ABN, is a Corporate Authorised Representative of RI Advice Group Pty Ltd ABN , AFSL is an Authorised Representative of RI Advice Group Pty Ltd ABN , AFSL

The redundancy recovery plan at a glance 2 Coping with the upheaval Emotion What path do you want to take? Direction What financial issues require attention right now? Transition Avoid tax losses Taxation Plan ahead confidently with a little bit of help Decision

Redundancy can trigger a range of emotions… but recovery is possible 3 Grief Relief Opportunity DisappointmentFrustration Optimism

Coping strategies Try not to take it personally Seek support Move into action as soon as possible Use resources Audit your skills and polish up your resume Keep an open mind 4 What can you do to help yourself move on?

The redundancy recovery plan at a glance 5 Coping with the upheaval Emotion What path do you want to take? Direction What financial issues require attention right now? Transition Avoid tax losses Taxation Plan ahead confidently with a little bit of help Decision

What options do you have for the future? 6 Look for a similar role in another business Roll on Re-train or adapt your skills into another industry Renew Take a well earned break to consider your options Relax If age and finances permit, take early retirement Retire

The redundancy recovery plan at a glance 7 Coping with the upheaval Emotion What path do you want to take? Direction What financial issues require attention right now? Transition Avoid tax losses Taxation Plan ahead confidently with a little bit of help Decision

Action priorities for your transition phase 8 Sort out your immediate income needs Get your financial position down in black and white Take stock Don’t ignore Centrelink benefits Take entitlements Your previous employer’s super fund may have valuable continuation options for you Take insurance continuation options Seek advice to help with arranging your super, insurance and investment of your redundancy lump sum Take advice

Take stock Short term cash requirements – funds available for living expenses Budget – do you have visibility of your expenses and areas you could cut back on? Review your “balance sheet” – to have visibility of your assets and liabilities 9 What to do…

Take your Centrelink entitlements Age 22 or over but under age pension age Unemployed but willing to undertake suitable paid employment Willing to participate in approved activities and/or Job Search Those aged 55 or over may also qualify if they undertake 30 hours per fortnight of approved and suitable voluntary work Centrelink applies two tests to determine eligibility and payment level –Assets test –Income test 10 For NewStart Allowance you must be…

Take your Centrelink entitlements An Australian resident Age 65 and over Increasing to age 67 for those born after 1 January 1957 Centrelink applies two tests to determine eligibility and payment level –Assets test –Income test –Concessions available from low income or seniors health cards Structure your investments to consider Social Security entitlements 11 For Aged Pension you must be…

Take any insurance continuation options to maintain your protection Insurance under your old employer super plan may no longer be valid You may be entitled to continuation options from the old fund – BUT only for a limited time A great opportunity to make a review of your personal insurances 12

Take advice You have made it to this seminar, so that is a start! You have a lot of options and decisions in front of you – we are here to help If redundancy has not occurred yet, there may be opportunities to defer payment of redundancy benefits to improve your taxation situation, so act on getting further advice as early as possible Taking rash or ill-informed decisions could be disastrous Having the confidence to take positive steps toward your recovery plan is vital 13

The redundancy recovery plan at a glance 14 Coping with the upheaval Emotion What path do you want to take? Direction What financial issues require attention right now? Transition Avoid tax losses Taxation Plan ahead confidently with the right help Decision

Redundancy and tax 15 Examine your redundancy lump sum to diagnose the right recovery plan Some is tax free Some is taxed concessionally Some taxed at your marginal rate Some taxed at top marginal rate

What are the possible payout components? 16 Employment Termination Payment Tax free portion Annual leave & long service leave Superannuation payout/ transfer may be applicable

The components in detail Must satisfy a “genuine redundancy” test Tax free portion limited to $9,780 plus $4,891 for every year of completed service (2014/15) Example: after 10 years service, the maximum tax free component is: $9,780 + (10 x $4,891) = $58, Tax free portion

The components in detail Comprises: –unused sick leave –severance payment –a gratuity or ‘golden handshake’ –unused rostered days off –payment in lieu of notice –compensation for loss of job or wrongful dismissal Taxable portion qualifies for concessional tax treatment up to a cap of $195,000 for: –32% if under preservation age –17% if over preservation age Anything over the cap is taxed at 49% None of the ETP amount can be rolled over to super Above amounts include Medicare levy 18 Employment Termination Payment

The components in detail Unused annual leave Paid as a lump sum Taxed at 30% + Medicare levy Long service leave Pre-July 1978 – 5% is taxed at your marginal rate Balance taxed at 30% + Medicare levy Neither of the above can be rolled over to your superannuation 19 Annual leave & long service leave

The components in detail The super component of your redundancy payment may be permitted to be retained in the employer’s fund or you may elect to roll it over to your own choice of fund Rollover options include: –Public offer super fund –New employer’s super fund –Self managed super fund Other tax effective strategies may be worth considering if you are approaching retirement 20 Superannuation

The redundancy recovery plan at a glance 21 Coping with the upheaval Emotion What path do you want to take? Direction What financial issues require attention right now? Transition Avoid tax losses Taxation Plan ahead confidently with the right help Decision

Focus on the financial benefits of your redundancy 22 Should you pay down debts? Should you consolidate loans? Debts Use continuation options An opportunity to review your protection strategy Insurance An opportunity to put a strategy in place to create financial independence Investment Should you use any of the funds to boost super? Make sure your retirement strategy is on track Super

Make your recovery plan the platform for a long term financial plan 23 Gather information Identify objectives Assess where you stand Develop strategies Implementation Ongoing review

RI Advice Group Pty Ltd ABN , AFSL