Subsection 83.175(2)(a) of the Income Tax Assessment Act 1997 requires that the employee is dismissed before the day he/she turns 65 to satisfy the genuine redundancy provisions. The provision was inserted in July 2007 as part of the Tax Laws Amendment (Simplified Superannuation) Bill 2007. No mention of this provision was included in the Explanatory Memorandum, nor in the second reading speeches. The earlier Treasury consultation and Final decisions report do not refer to the provision.
Given the push for Australians to work – if they wish – to a higher age and reduce reliance on the Aged Pension, the provision seems to be counterintuitive. If the 65 year age limit were to be removed, then all employees subject to genuine redundancy would be treated equally. It would also better align tax law with the principles of the Age Discrimination Act 2004.
With the Treasurer's December announcement to align this provision with the Age Pension age, further clarity around the original intent will assist to determine whether it is required at all or is simply discriminatory.