Put your redundancy strategy in your own hands<Adviser’s Name>June 2015

<Adviser name> is an Authorised Representative of RI Advice Group Pty Ltd ABN 23 001 774 125, AFSL 238429

2

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.

<Insert company name>, ABN <insert>, is a Corporate Authorised Representative of RI Advice Group Pty Ltd ABN 23 001 774 125, AFSL 238429.

<Insert adviser name> is an Authorised Representative of RI Advice Group Pty Ltd ABN 23 001 774 125, AFSL 238429.

3

The redundancy recovery plan at a glance

• Coping with the upheavalEmotion

• What path do you want to take?Direction

• What financial issues require attention right now?Transition

• Avoid tax lossesTaxation

• Plan ahead confidently with a little bit of helpDecision

4

Redundancy can trigger a range of emotions…but recovery is possible

Grief

Relief

Opportunity

DisappointmentFrustration

Optimism

5

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

What can you do to help yourself move on?

6

The redundancy recovery plan at a glance

• Coping with the upheavalEmotion

• What path do you want to take?Direction

• What financial issues require attention right now?Transition

• Avoid tax lossesTaxation

• Plan ahead confidently with a little bit of helpDecision

7

What options do you have for the future?

• Look for a similar role in another businessRoll on

• Re-train or adapt your skills into another industryRenew

• Take a well earned break to consider your optionsRelax

• If age and finances permit, take early retirementRetire

8

The redundancy recovery plan at a glance

• Coping with the upheavalEmotion

• What path do you want to take?Direction

• What financial issues require attention right now?Transition

• Avoid tax lossesTaxation

• Plan ahead confidently with a little bit of helpDecision

9

Action priorities for your transition phase

• Sort out your immediate income needs • Get your financial position down in black and whiteTake stock

• Don’t ignore Centrelink benefitsTake 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

10

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

What to do…

11

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

For NewStart Allowance you must be…

12

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

For Aged Pension you must be…

13

Take any insurance continuation optionsto 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

14

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

15

The redundancy recovery plan at a glance

• Coping with the upheavalEmotion

• What path do you want to take?Direction

• What financial issues require attention right now?Transition

• Avoid tax lossesTaxation

• Plan ahead confidently with the right helpDecision

16

Redundancy and tax

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

17

What are the possible payout components?

Employment Termination Payment

Tax free portion

Annual leave & long service

leave

Superannuation payout/transfer maybe applicable

18

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) = $58,690Tax free

portion

19

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

Employment Termination Payment

20

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

Annual leave & long service

leave

21

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

Superannuation

22

The redundancy recovery plan at a glance

• Coping with the upheavalEmotion

• What path do you want to take?Direction

• What financial issues require attention right now?Transition

• Avoid tax lossesTaxation

• Plan ahead confidently with the right helpDecision

23

Focus on the financial benefits of your redundancy

• Should you pay down debts?• Should you consolidate loans?Debts

• Use continuation options• An opportunity to review your protection strategyInsurance

• An opportunity to put a strategy in place to create financial independenceInvestment

• Should you use any of the funds to boost super?• Make sure your retirement strategy is on trackSuper

24

Make your recovery plan the platform for a long term financial plan

Gather information

Identify objectives

Assess where you stand

Develop strategies

Implementation

Ongoing review

<Name / Job title>

RI Advice Group Pty Ltd ABN 23 001 774 125, AFSL 238429