Redundancy: Labour's new tax cut
Proposed changes to redundancy laws may see redundancy payments being tax-free, as someone with a big redundancy payment that pushes them over the highest tax bracket cop a tax increase, even though they may be earning under the tax bracket both before and after the redundancy. People will be able to keep more of their redundancy to avoid " over-taxation".
In addition, what also happens when people get made redundant and they receive WFF, is that they have to pay a huge debt to IRD at the end of the financial year due to the increase in gross income - particularly if they get their redundancy payment close to the end of the financial year when it is too late to adjust WFF payments. Also, if they are in Kiwi Saver, up to 4 percent of redundancy payments will be directed to Kiwi Saver. So they won't get to keep too much more of their redundancy payments.
I would prefer redundancy payments to be taxed at the same rate as the income - particularly if these payments have an accumulated savings component. People don't usually ask to be made redundant, and if they have to repay WFF payments (on top of their tax return debt), they should be allowed to pay it off incrementally without penalty.