The ATO has published TR 2009/2 Income tax: genuine redundancy payments.

This Ruling outlines the requirements to be satisfied before any payment made to a person whose employment is terminated qualifies for treatment as a genuine redundancy payment under section 83-175 of the Income Tax Assessment Act 1997 (ITAA 1997).

A genuine redundancy payment is one 'received by an employee who is dismissed from employment because the employee's position is genuinely redundant'.

There are four necessary components within this requirement:

• The payment being tested must be received in consequence of an employee's termination .
• That termination must involve the employee being dismissed from employment .
• That dismissal must be caused by the redundancy of the employee's position.
• The redundancy payment must be made genuinely because of a redundancy.

The Ruling discusses a range of circumstances in which a genuine redundancy can occur.