Michael, who was born on 1 May 1972 has since 1 July 1993 worked as a sales representative (rep) with Orbital Pty Ltd (OPL), an Australian company based in Victoria selling milking machines for the dairy industry. In view of a downturn in the industry, on 1 October this year OPL offered Michael, who was the longest serving employee, the following early retirement redundancy package:

a) 200 hours unused long service leave valued at $16,000 ($80 per hour)

b) 75 hours unused annual leave valued at $6,000 ($80 per hour)

c) Golden handshake: $180,000

d) Unused Sick leave: 400 hours ($80 per hour)

At the time of the redundancy offer Michael was on a $140,000 per-annum salary that included a 10% SGC employer superannuation contribution.

Required: Advise Michael on the tax consequences in general and how these differ if he were to take the offer as a lump-sum cash payment or roll it over into his superannuation fund. Required: your answer must be supported by relevant legislation or cases or Rulings and show any relevant calculations and include any assumptions you make.

Answer rating: 100% (QA)

Answer iAssuming that Michael is a resident of NSW the tax consequences of his early retirement redu... View the full answer