Australia · 2026-27 ETP cap $270,000
Work out the tax-free redundancy amount and the tax on the ETP component of a termination payout.
ETP tax estimate
Concessional rate is 15% + 2% Medicare levy at/above preservation age, or 30% + 2% Medicare levy below it. Amounts above the $270,000 ETP cap are taxed at the top marginal rate (45% + 2% Medicare levy).
For a genuine redundancy or approved early retirement scheme payment, part of your payout is entirely tax-free: $13,598 base plus $6,801 for every completed year of service (2026-27 figures). On 8 completed years, that's $13,598 + (8 × $6,801) = $67,806 tax-free, regardless of your income or age. This tax-free amount doesn't count toward the ETP cap at all — it's removed from the payment before the ETP rules even apply.
Whatever's left after the tax-free amount is the taxable component, taxed as an employment termination payment. Up to the ETP cap ($270,000 for 2026-27), it's taxed concessionally: 15% plus the 2% Medicare levy if you're at or above your preservation age when paid, or 30% plus the Medicare levy if you're below it. Any part of the taxable component above the $270,000 cap loses the concessional treatment entirely and is taxed at the top marginal rate (45% plus the Medicare levy).
Your preservation age — broadly, the age you can first access your super — determines which concessional rate applies, and it depends on your date of birth (it's been progressively rising and is now uniformly higher than the historical age of 55 for anyone born after certain dates). Because this varies by birth date rather than a single fixed number, this calculator asks you directly whether you're at or above preservation age rather than calculating it from a birthdate — confirm your own preservation age with the ATO's preservation age table or your super fund if you're unsure.
Not every termination payment gets the tax-free redundancy treatment. A genuine redundancy requires that your job itself is being abolished (not just that you're being replaced), among other conditions set by the ATO. A payment in lieu of notice, a negotiated settlement, or a termination that doesn't meet the genuine redundancy definition is generally taxed entirely as an ETP from the first dollar, with no tax-free component — that's what the "genuine redundancy" toggle above controls.
Unused annual leave and unused long service leave paid out on termination are taxed under their own separate rules, not folded into the ETP calculation — don't include them in the amount you enter here. See the Leave, Notice & LSL Calculator for those entitlements, and the Redundancy Pay Calculator for the NES redundancy pay scale itself (how many weeks you're owed, before tax).
A $180,000 termination payment after 12 completed years of genuine redundancy service: tax-free amount is $13,598 + (12 × $6,801) = $95,210. The remaining $84,790 is the taxable ETP component, entirely within the $270,000 cap, so it's taxed concessionally. At or above preservation age, that's 15% plus 2% Medicare levy (17% total) ≈ $14,414 in tax, leaving a net payout of roughly $165,586. Below preservation age, the rate rises to 30% plus 2% (32%) ≈ $27,133 in tax, leaving roughly $152,867 — a difference of over $12,700 purely due to age at payment.
Because the concessional rate genuinely doubles (roughly) below preservation age, the payment date relative to your preservation age birthday can be worth discussing with your employer if there's any flexibility in the termination date — though this is rarely the only or the main factor in a redundancy's timing, and isn't always negotiable. Where the date is fixed regardless (a genuine business-driven redundancy), this is simply useful context for understanding your net outcome, not a lever you can necessarily pull.
This tool covers the tax on your payout. For the NES entitlement calculation (how much redundancy pay and notice you're owed before tax), see the Redundancy Pay Calculator. For your ongoing take-home pay afterward, see the Income Tax Calculator.