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Whether the severance payments made at the end of a completed employment contract are bona fide redundancy payments for the purposes of section 27F of the Income Tax Assessment Act 1936

The severance payments made at the end of a completed employment contract are not bona fide redundancy payments for the purposes of section 27F of the Income Tax Assessment Act 1936

The facts are: * the employees are employed for a fixed-term; * the employment contract specifies the start date and finish date of the employment (the finish date can be on completion of a specific task or project); * the contract cannot be terminated by the employer other than during a probationary period or due to serious or wilful misconduct; * an employee may be entitled to a severance payment or retrenchment benefit if the contract is not renewed in certain circumstances; and * the termination of employees did not occur prior to the date on which the employee completed the particular period of service.

For an amount to be a bona fide redundancy payment it must meet the requirements set out in section 27F of the Income Tax Assessment Act 1936 . Subparagraph 27F(1)(b)(i) of the Income Tax Assessment Act 1936 requires that termination must occur before the taxpayer's employment would have terminated under the terms of employment because of the taxpayer attaining a certain age or completing a certain period of service.

As the employees' services were terminated upon the completion of their contracts the severance payment did not satisfy subparagraph 27F(1)(b)(i) of the Income Tax Assessment Act 1936 and therefore are not a bona fide redundancy payment.