The AAT has ruled that a termination payment was not a “genuine redundancy payment” as the taxpayer was over age 65 when he was dismissed from his employment.
The taxpayer, aged 67, received an employment termination payment (ETP) payment in September 2011 following a restructure by his employer whereby his services as a power generation plant operator were no longer required. The Commissioner determined that the ETP was not a “genuine redundancy payment” as s 83-175(2)(a)(i) of the ITAA 1997 requires that the taxpayer must have been dismissed before turning age 65. As such, the ETP was included in the taxpayer’s assessable income for the 2011-12 year (with no tax free amount that would otherwise apply for a genuine redundancy payment). The taxpayer argued that the Commissioner had unlawfully discriminated against him by assessing his ETP on the basis of age in contravention of the Age Discrimination Act 2004.
The AAT held that the termination payment was not a genuine redundancy payment as the taxpayer could not satisfy s 83-175(2)(a)(i) as he was aged more than 65 years when he received the ETP.
The AAT also dismissed the taxpayer’s discrimination claim after ruling that s 40 of the Age Discrimination Act 2004 provides an exception that allows anything done in direct compliance with a taxation law (such as the age qualification in s 83-175 of the ITAA 1997) to prevail and not be discriminatory.
(AAT Case [2013] AATA 544, Re Harste and FCT, AAT, Ref No: 2013/0216, Ettinger SM, 2 August 2013.)
[LTN 149, 5/8/13]