Final pay withholding
Estimates PAYG withholding and the STP Phase 2 reporting label for every component of an employee's final pay, covering redundancy (genuine or not), death, invalidity, resignation and dismissal, under the ATO's FY 2026–27 schedules. For Australian-resident employees who commenced employment after June 1983; not for non-residents or working holiday makers.
The rates and rules behind this calculator
- Financial year: The rates are for 2026–27, so the last day of employment needs to fall between 1 July 2026 and 30 June 2027
- Genuine redundancy tax-free amount: The first $13,598 of a genuine redundancy payment is tax-free, plus another $6,801 for every completed year of service (ATO key rates, FY 2026–27)
- ETP caps: The employment termination payment cap is $270,000. The whole-of-income cap is $180,000 and isn't indexed (ATO Schedule 11, from 1 July 2026)
- ETP tax rates: 32% for an employee under preservation age, 17% once they have reached preservation age (60) by 30 June of the year the payment is made, and 47% on anything above the caps
- Unused leave: Withheld at a flat 32%, or with the marginal method where ATO Schedule 7 (from 1 July 2026) calls for it, including the special rule for payments under $300
- Final wages: Ordinary earnings are taxed with the ATO's Schedule 1 formulas for scales 1 and 2 (from 1 July 2026), the same table a normal pay run uses
- Super guarantee: 12%, with an annual maximum contribution base of $270,830 under Payday Super (FY 2026–27)
- What we take as given: The employee has provided a TFN and no withholding variation is in place. If an ETP has already been paid for the same termination, the caps and codes change, and this tool doesn't model that
General information only. This calculator estimates withholding from the assumptions listed and doesn't consider your specific circumstances. It isn't financial, tax or BAS advice. Digit Business Advisors are registered BAS agents. talk to us before processing a termination payment, and confirm current thresholds at ato.gov.au.
Frequently asked questions
Common questions about Final Pay Withholding Calculator
For 2026-27, the first $13,598 plus $6,801 for each completed year of service is tax-free and reported as Lump Sum D. The excess is an employment termination payment withheld at 32%, or 17% once the employee has reached age 60 by 30 June of the payment year, up to the $270,000 ETP cap. Amounts above the cap are withheld at 47% under ATO Schedule 11.
Only for a genuine redundancy, invalidity or approved early retirement scheme: ATO Schedule 7 applies a flat 32% and the amount is reported as Lump Sum A. On resignation, dismissal or a non-genuine redundancy, unused annual leave is instead withheld under the marginal-rates method, which spreads the lump sum across the employee's normal pay periods.
The whole-of-income cap is $180,000, reduced by the other taxable payments the employee received in the same income year. It applies to non-excluded employment termination payments (ETP code O) such as gratuities, unused sick leave and non-genuine redundancy payments. The lower of it and the $270,000 ETP cap sets how much is taxed at the concessional rate.
Generally no. In a final pay, only ordinary earnings and pay in lieu of notice are ordinary time earnings, so the 12% superannuation guarantee applies to those components only. Lump sums for unused annual leave or long service leave, redundancy pay and other employment termination payments do not attract superannuation guarantee.