Unfortunately there seems to be a never ending stream of manufacturing job losses across the country.
The local job losses at CAT come on top of recent cuts by Electrolux and Simplot in NSW and Toyota in Victoria.
And this situation has been replicated throughout towns and cities in other western countries where a strong dollar and global competition have hurt local jobs.
For those unfortunately impacted there will likely be some form of entitlements paid.
It’s important to understand those entitlements, what you’re owed and ensure you make the most of them, especially if new employment doesn’t quickly eventuate.
Given the stress and confronting nature of the situation it’s important to not make mistakes now that might compound later on.
Tax is clearly the first issue with any payment and there’s some complexity here because no two individual situations are alike.
Here the factors that play into taxation considerations are age, the size of payment and the length of service.
Some payments may be tax free to a certain point and that’s great, but then they may impact other entitlements, such as family tax benefits.
Clearly looking to minimise tax and still maximise access to other entitlements such as Centrelink benefits is an objective.
When the severance payment arrives is when many people can really cause themselves some future trouble.
Payments are usually considered income from Centrelink and unless you have other employment to go to you’ll be expected to live off the money until a deferment period is served.
In the past some people made redundant have set themselves up for a rude shock by buying a new car or something that’s swallowed much of their payment.
Then they have a nice new car, unfortunately just no money to tide them over because they’re still serving a deferment period with Centrelink.
In this situation I’d suggest care with your financial decisions and who you take advice from.
Peter Mancell is a director of Mancell Financial Group and FYG Planners AFSL/ACL 224543, www.mfg.com.au This information is general in nature and readers should seek professional advice specific to their circumstances. Searching for the top financial adviser in Australia?
