Incolink has an Australian Taxation Office (ATO) Tax Ruling that allows us to provide employment termination payments to workers in the building and construction industry. All claims are processed in accordance with ATO regulations. If a worker pays more tax than required they may be eligible to claim a refund when completing their annual tax return.
When processing claims, if there is any taxable portion of a worker’s claim, Incolink will deduct tax at the current rate determined by the ATO. It is not against the law for workers not to provide Incolink with their Tax File Number (TFN); however workers who do not provide their TFN will have tax deducted at the maximum marginal tax rate.
The following are the tax rates applicable to Incolink Employment Termination Payments both Initial and Balance of Funds claims - effective 1 July 2016.
- Claims paid out to an employee within 12 months of the date they became eligible to claim their funds and who are under the preservation age, will be taxed at 30%*.
- Claims paid out to an employee within 12 months of the date they became eligible to claim their funds and who have reached the preservation age but not yet 65 will be taxed at 15%*.
- Claims paid out to an employee more than 12 months after the date they became eligible to claim their funds, will be taxed at the highest marginal rate of 47%*.
- If a Tax File Number (TFN) is not provided on the claim form, the withholding tax rate of 47%* applies.
The preservation age is 55 years for those born prior to 1 July 1960. For those born between 1 July 1960 and 30 June 1965 the preservation age increases by 1 year for each year as follows:
|From 1 July 1960 until 30 June 1961||56|
|From 1 July 1961 until 30 June 1962||57|
|From 1 July 1962 until 30 June 1963||58|
|From 1 July 1963 until 30 June 1964||59|
|On or after 1 July 1964||60|
* This tax rate does not include the Medicare levy which is currently 2%. Tax rates are supplied by the Australian Taxation Office, and are correct at the time of printing; however they are subject to change and can be confirmed at www.ato.gov.au