Long Service Leave Tax Calculator
Work out the tax withheld from long service leave paid out when your job ends, split by when the leave accrued, for payments from 1 July 2026. Ten years in NSW, Queensland, WA or Tasmania on $1,800 a week is a $15,600 payout, and $4,992 of it is withheld under ATO Schedule 7.
Your long service leave payout after tax
Enter the payout, your normal pay and why the job is ending. The defaults are 8.67 weeks at $1,800: $15,600 gross, $4,992 withheld, $10,608 in your account. If your service started before 18 August 1993, tick the box and the calculator splits the payout by date the way the ATO tells employers to.
| Component | Treatment | Gross |
|---|---|---|
| Accrued after 17 Aug 1993 | Marginal rates, Schedule 7 method Income statement: Salary and wages (type U) | $15,600 |
Show the ATO marginal-rate steps
- Withholding on normal pay: $395
- $15,600 spread over 52 pays: $300.00
- Cents dropped: $300
- Added to normal pay: $2,100
- Withholding on that: $491
- Difference: $96
- Times the pays in a year: $4,992
| If the job ends by | Withheld | You receive |
|---|---|---|
| Resignation, dismissal or retirement | $4,992 | $10,608 |
| Genuine redundancy | $4,992 | $10,608 |
$15,600 is taxed as ordinary income with your wages. Withholding assumes a full year of pay, so leaving part way through the year usually means a refund.
If your last pay also includes a normal week of $1,800, the total withheld from it is $5,387. Your employer pays no super on the payout; the same $15,600 taken as leave would carry $1,872 of super guarantee.
Amounts withheld under ATO Schedule 7 for payments from 1 July 2026. Your 2026-27 return settles the tax. For wages, annual leave and redundancy pay in the same final pay, use the final pay calculator.
Long service leave payout tax in 2026-27
A long service leave payout is taxed by when the leave accrued and why the job ended. Leave accrued after 17 August 1993 is taxed at your marginal rates on a resignation, dismissal or retirement, and at a flat 32% on a genuine redundancy, invalidity or approved early retirement scheme. Leave from 16 August 1978 to 17 August 1993 is 32% whatever the reason. Leave from before 16 August 1978 has only 5% of it taxed, at marginal rates.
That is ATO Schedule 7 (NAT 3351), published 17 June 2026 for payments from 1 July 2026. Your employer works out the first question before anything else: is this a genuine redundancy, invalidity or early retirement scheme, or not.
| Leave accrued | Resignation, dismissal or retirement | Genuine redundancy, invalidity or early retirement scheme |
|---|---|---|
| After 17 August 1993 | Marginal rates, added to salary and wages | 32% (Lump sum A, type R) |
| 16 August 1978 to 17 August 1993 | 32% (Lump sum A, type T) | 32% (Lump sum A, type R) |
| Before 16 August 1978 | 5% of the amount taxed at marginal rates (Lump sum B) | 5% of the amount taxed at marginal rates (Lump sum B) |
Retiring is a normal termination. Schedule 7 says so in as many words: "Normal termination includes voluntary resignation, employment terminated due to inefficiency or retirement." Most long service leave is paid at retirement, so this is the row most people fall in. It only moves to the 32% column if the employer ran an early retirement scheme the ATO approved in writing before it started.
Long service leave you take while still employed is not on this table. It is ordinary pay, withheld through the normal tax table with the rest of your wages. Schedule 7 only applies when the leave is paid out because the job ends. For annual leave paid in the same final pay, use the annual leave payout calculator; for the whole final pay, wages and redundancy included, use the final pay calculator.
Resignation, retirement or redundancy: when the 32% rate helps
The flat 32% helps when your marginal rate plus Medicare is above 32%. At $800 a week a redundancy withholds $503 more than a resignation. From $1,200 to $1,800 the two land within $52 of each other. At $4,500 a redundancy withholds $5,824 less. Here is 8.67 weeks of post-1993 leave at different weekly pay, weekly cycle, tax-free threshold claimed.
| Weekly pay | Payout | Resign or retire | Genuine redundancy | Redundancy vs resign |
|---|---|---|---|---|
| $800 | $6,933.33 | $1,716 | $2,219 | $503 more |
| $1,200 | $10,400 | $3,380 | $3,328 | $52 less |
| $1,500 | $13,000 | $4,160 | $4,160 | Same |
| $1,800 | $15,600 | $4,992 | $4,992 | Same |
| $2,500 | $21,666.67 | $8,060 | $6,933 | $1,127 less |
| $3,000 | $26,000 | $10,140 | $8,320 | $1,820 less |
| $3,500 | $30,333.33 | $13,624 | $9,707 | $3,917 less |
| $4,500 | $39,000 | $18,304 | $12,480 | $5,824 less |
The SA and NT ten-year figure of 13 weeks works the same way: $23,400 at $1,800 a week has $7,488 withheld on a resignation and $7,488 on a redundancy.
The 32% is withholding, not the final tax. At tax time a redundancy payout is taxed at your marginal rates with an income tax ceiling of 30% under s 83-85 of the Income Tax Assessment Act 1997, plus the 2% Medicare levy. On $180,000 a year, $30,000 of post-1993 leave would carry $12,700 of income tax at marginal rates. On a genuine redundancy the ceiling brings that to $9,000, plus $600 Medicare: $9,600. Resign instead and the same leave costs $13,300, which is $3,700 more.
A genuine redundancy has a legal meaning (s 83-175): you are dismissed because your position is genuinely redundant, before pension age, at arm's length, with no arrangement to be employed again afterwards. The ATO's ruling on it, TR 2009/2, is under review after a recent court decision, so check the current ruling if your case is borderline. The redundancy tax calculator works out the tax-free part of the severance pay itself.
Leave that accrued before 18 August 1993: splitting the payout by date
The payout is split by days of service in each period, not by when you took leave or what your state law says. ITAA97 ss 83-90 to 83-105 set the method, and the ATO gives employers the same three steps:
- Count your days of service before 16 August 1978, from 16 August 1978 to 17 August 1993, and after 17 August 1993. Multiply the leave accrued over the whole job by each period's share of the days. Drop the fractions and add them to the earliest period you have.
- Take off the leave you used in each period. If you used more than a period holds, the excess comes off the other later period first, then the pre-1978 period.
- Split the payout in proportion to the unused days left in each period, then apply the Schedule 7 rate to each part.
Take service from 1 July 1990 to 30 June 2027 with 130 days of leave unused and a $52,000 payout. That is 1,144 days before 18 August 1993 and 12,370 after, so 12 days and $4,800 are Lump sum A at 32%, and 118 days and $47,200 are post-1993 leave. On a resignation at $2,000 a week the employer withholds $1,536 on the first part and $16,224 on the second: $17,760. Had all $52,000 accrued after 1993 it would be $18,096, so the 1990 start saves $336. On a genuine redundancy all of it is 32%: $16,640.
The calculator reproduces every day and dollar in the ATO's own examples. This is Matt (QC19081 Example 8), who retired on 31 December 2014 after starting on 1 January 1977, with 270 days of leave and an $80,000 payout:
| Period | Service days | Leave days | Share of payout |
|---|---|---|---|
| Before 16 August 1978 | 592 | 13 | $3,852 |
| 16 August 1978 to 17 August 1993 | 5,481 | 106 | $31,407 |
| After 17 August 1993 | 7,806 | 151 | $44,741 |
Matt's step 3 dollar figures use the 2014 tax tables, so they are not repeated here; the split itself does not change with the year. Leave taken at less than full pay counts as fewer days: 100 days at $30 an hour against an entitlement of $40 is 75 days. If you moved between part-time and full-time, the ATO has the employer split the two service periods and run each separately; ask your employer for that split and enter it directly.
What happens at tax time: Lump sum A, Lump sum B and your return
The withholding is an estimate; your return settles the tax. Your income statement shows the payout in up to three places, and each is taxed differently:
- Lump sum A (pre-18 August 1993 leave, and post-1993 leave on a genuine redundancy, invalidity or early retirement scheme): all of it is assessable, with income tax capped at 30% under s 83-85. The return asks for type R on a redundancy, invalidity or early retirement scheme, and T otherwise.
- Lump sum B (pre-16 August 1978 leave): only 5% is assessable (s 83-80). The ATO's 2026 return instructions say to divide the total by 20 and write the answer at label H.
- Post-1993 leave on a normal termination: ordinary income, included in your salary and wages.
Leaving part way through the year usually means a refund. The Schedule 7 method spreads the payout as if you were paid for a full year. Norman, the ATO's Schedule 7 example, retires on 31 December 2026 on $1,155 a week. His taxable income for 2026-27 is $51,309: $30,030 of wages plus the post-1993 and Lump sum A leave in full and 5% of the Lump sum B. Tax and Medicare on that are $6,709 before any s 83-85 offset. His employer withheld $11,674 over the year, so he gets back at least $4,965. Run your own year in the tax refund calculator.
Working the full year changes the picture. On $93,600 a year, a $15,600 payout adds $4,680 of income tax and $312 of Medicare: $4,992, against $4,992 withheld. That slice sits wholly inside the 30% bracket, so the 30% ceiling changes nothing for a redundancy at that salary either.
A study loan is the one cost withholding misses. Nothing is withheld for HELP from the payout, but it lifts your repayment income. The same $15,600 on a $93,600 salary adds $2,340 to the 2026-27 compulsory repayment. The HECS repayment calculator shows the full figure.
Is it better to take long service leave as leave or as a payout?
Taken as leave, it carries super and keeps your annual leave building. Paid out, it carries neither. The income tax on post-1993 leave runs on the same marginal scale either way.
- Super: $15,600 taken as leave carries 12% super guarantee, which is $1,872. Paid out on termination, it carries none.
- Withholding: leave taken while employed goes through the normal tax table. 4 weeks at $1,800 has $1,580 withheld, $395 a week, the same as a working week.
- Annual leave: Fair Work says annual leave keeps accumulating while you are on long service leave.
- Timing: a payout lands in one financial year on top of that year's wages. Leave taken across two financial years spreads the income.
Cashing out long service leave while you stay in the job depends on your state's law and any agreement. Where it is allowed, the employer withholds under the back payments table (Schedule 5), not Schedule 7, and the cashed-out amount does attract super guarantee.
Is super paid on a long service leave payout?
No. The ATO's qualifying earnings table for payday super, in force from 1 July 2026, lists unused leave on termination, long service leave included, as not qualifying earnings "regardless of the reason for termination or treatment for tax purposes". Long service leave taken during employment, and long service leave cashed out in service, are qualifying earnings. Leave paid by a portable long service leave scheme administrator is not. Check your employer's figures in the super guarantee calculator.
How much long service leave you are owed: state and territory rules
Your state or territory law sets the weeks; the ATO sets the tax. Most employees get long service leave from the law where they work, though portable schemes (construction, cleaning, community services, security) and some older federal awards override it. The pro rata column is what decides whether a payout exists at all when you leave before 10 years.
| State | Full entitlement | Paid out on leaving before 10 years | Agency |
|---|---|---|---|
| NSW | 8.67 weeks (2 months) at 10 years, then 4.33 weeks per 5 years | From 5 years if the employer ends the job for any reason other than serious and wilful misconduct, or you resign because of illness, incapacity or pressing necessity; from 10 years for any reason | NSW rules |
| VIC | One week for every 60 weeks of continuous service, available from 7 years | Paid in full from 7 years however the job ends; nothing under 7 years | VIC rules |
| QLD | 8.6667 weeks at 10 years | From 7 years only for death, illness, pressing necessity, dismissal for reasons other than conduct, capacity or performance, or unfair dismissal; from 10 years automatically | QLD rules |
| WA | 8.667 weeks at 10 years, then 4.333 weeks per 5 years | From 7 years however the job ends, unless you are dismissed for serious misconduct | WA rules |
| SA | 13 weeks at 10 years, then 1.3 weeks a year | From 7 years at 1.3 weeks per completed year, unless terminated for serious and wilful misconduct or unlawfully | SA rules |
| TAS | 8⅔ weeks at 10 years, then 4⅓ weeks per 5 years | From 7 years on retirement age, death, or the employer ending the job other than for serious and wilful misconduct | TAS rules |
| ACT | Entitled after 7 years with one employer, accruing 1/5 of a month a year (private sector, not award-covered) | Any credit is paid when the job ends; from 5 years on illness, pressing necessity, retirement at minimum retiring age, death, or employer termination other than for serious and wilful misconduct | ACT rules |
| NT | 13 weeks at 10 years, 1.3 weeks for each year | From 7 years, completed years only, on retirement age, employer termination other than for serious misconduct, or resignation for illness, incapacity or pressing necessity | NT rules |
NSW, WA and Victoria publish calculators for the weeks owed. Take the weeks from there, multiply by your ordinary weekly pay, and put the dollar figure in the calculator above.
Is a long service leave payout part of an ETP?
No. The ATO is direct about it: employment termination payments do not include lump sum payments for unused annual leave or long service leave. Pay in lieu of notice, unused sick leave and redundancy pay above the tax-free limit are ETPs, taxed under Schedule 11 with their own caps. The long service leave runs separately under Schedule 7. Work the ETP part in the ETP calculator, or check any salary in the PAYG calculator.
Frequently asked questions
How much tax will I pay on my long service leave payout?
Is retirement treated as an early retirement scheme?
Is HECS or HELP taken out of a long service leave payout?
What if I have not given my employer my TFN?
Is tax withheld from long service leave paid after an employee dies?
Can someone born after 16 August 1978 have Lump sum B?
Is the Medicare levy added on top of the 30% cap?
Sources
Each source below was retrieved on 8 October 2026 and returned a live page.
- ATO: Schedule 7: Tax table for unused leave payments on termination of employment (NAT 3351, QC107125, published 17 June 2026). The six long service leave rows, the 32% rate, the marginal-rate method, the no-TFN rates and Norman's example.
- ATO: Unused long service leave: calculate the correct amount to withhold and Examples (QC19081). The three-step split, the excess days table and Examples 5 to 11.
- Income Tax Assessment Act 1997, ss 83-80, 83-85, 83-90 to 83-115, 83-175 and 83-180, via the ATO legal database. Assessable shares, the 30% offset, the period definitions, and genuine redundancy and early retirement schemes.
- ATO: TR 2009/2, genuine redundancy payments, flagged by the ATO as under review.
- ATO: 3 Employer lump sum payments 2026 (QC106583, last updated 30 May 2026). Lump sum A types R and T, and Lump sum B divided by 20.
- ATO: STP Phase 2 guidelines: when an employee transfers or leaves (QC66099). Reporting types U, R and T, and the Lump sum B date of birth rule.
- ATO: What payments are qualifying earnings (QC105843, last updated 2 September 2026). Super on leave taken, cashed out and paid on termination.
- ATO: Study and training support loans rates and repayment thresholds (QC16176, last updated 30 June 2026). Repayment income for 2026-27.
- ATO: Withholding from leave payments for continuing employees (QC16601). Leave cashed out in service uses Schedule 5.
- ATO: Employment termination payments for employees (QC27127, last updated 5 June 2026). Unused leave is not part of an ETP.
- Treasury: 2025-26 Tax Expenditures and Insights Statement, items A22 and A24. The 30% maximum rate excludes the Medicare levy.
- Fair Work Ombudsman: Long service leave and Annual leave. Which law sets your entitlement, and annual leave accruing during long service leave.
- State and territory agencies, linked in the table above, and the NSW Long Service Leave Guide (March 2026).