Independent estimates from official sources, checked 21 October 2026.Sources checked 21 Oct 2026 · Method

LeaveCalc

Final pay and termination tax calculator

Tax withheld on termination lump sums, using ATO withholding schedules for 2026–27.

Situation
Why employment ended

Genuine redundancy: your job was abolished, you didn’t choose to leave, and you’re under age pension age.

Reached preservation age

By 30 June of the income year. It’s 60 if you were born after 30 June 1964; born earlier, you’ve reached it.

Income year
Lump sums

Gratuity, golden handshake, unused sick leave or RDOs.

Include loading if you’d get it when taking leave. The annual leave calculator applies selected awards.

This income year

Salary and wages already paid this income year.

Estimate

Add your termination payments to see tax withheld.

    Estimate only, based on the ATO’s PAYG withholding schedules 7 and 11. Your award, enterprise agreement or contract may give you more. Not legal, tax or financial advice. About these estimates

    Worked example

    Alec, genuine redundancy after 5 years

    From ATO, Schedule 11 (example 4)

    Genuine redundancy payment
    $48,000.00
    Gratuity
    $17,678.00
    Salary this year
    $140,000.00
    Preservation age
    Not reached
    1. Tax-free limit: $13,598 + 5 × $6,801 = $47,603.
    2. $48,000 − $47,603 = $397 ETP (code R), withheld at 32% = $127.
    3. Gratuity cap: $180,000 − $140,000 = $40,000. $17,678 at 32% = $5,657.
    4. Total withheld $5,784. $65,678 − $5,784 = $59,894.

    Result $59,894.00

    Questions

    What is a genuine redundancy?

    Your job was abolished, you were dismissed rather than leaving voluntarily, you were under age pension age, and there was no agreement to re-employ you. The redundancy payment, which may include payment in lieu of notice, severance or a gratuity, is then tax-free up to a limit.

    What is the 2026–27 tax-free limit?

    $13,598 plus $6,801 for each completed year of service. Anything above it is an employment termination payment (ETP) taxed concessionally up to the $270,000 ETP cap.

    What isn’t part of the tax-free amount?

    Wages owed, unused annual leave and leave loading, unused long service leave, and payments in lieu of super.

    How are other termination payments taxed?

    Golden handshakes, severance, gratuities, payment in lieu of notice, unused sick leave and RDOs are ETPs. They are capped at the smaller of the ETP cap and $180,000 less your other taxable payments this year. Up to the cap, 32% is withheld (17% from preservation age); above it, 47%.

    How is unused leave taxed?

    On genuine redundancy, invalidity or early retirement, post-1993 unused annual leave, loading and long service leave are withheld at 32%, rounded to the nearest dollar (Schedule 7). On resignation or retirement, they are taxed at marginal rates, which this calculator doesn’t estimate.

    When have I reached preservation age?

    It depends on whether you reach it by the end of the income year the payment is made in. It is 60 for everyone born after 30 June 1964; if you were born earlier, you have already reached it.

    Is this my final tax?

    No. It estimates what your employer withholds. Your tax return works out the final amount. Pre-1993 leave, death benefit ETPs and super are not covered.