How is long service leave taxed when it is paid out?

Under ATO Schedule 7 (applies from 1 July 2026), unused long service leave paid on termination is taxed by when it accrued. Leave accrued before 16 August 1978: only 5% is taxed, at your marginal rate. Leave accrued from 16 August 1978 to 17 August 1993: 32% withheld whatever the reason you left. Leave accrued after 17 August 1993: 32% if you leave because of genuine redundancy, invalidity or an early retirement scheme, otherwise your marginal tax rate. The 32% is the 30% cap in ITAA 1997 s83-85 plus the 2% Medicare levy.

Do I get long service leave paid out if I resign?

Once you reach the full qualifying period (10 years in most states, 7 in Victoria and the ACT) it is paid out whatever the reason. Before that, a plain resignation only pays pro-rata in Western Australia and South Australia from 7 years (SA requires proper notice). In NSW (from 5 years), Queensland, Tasmania, the NT (from 7) and the ACT (from 5), pro-rata before the full period needs a qualifying reason such as illness, incapacity, domestic or other pressing necessity, or the employer ending the job for a reason other than serious misconduct. Victoria pays nothing before 7 years.

Is long service leave part of an ETP?

No. The ATO says payments for unused annual leave or unused long service leave are not employment termination payments. They do not use the $270,000 ETP cap and are reported as Lump Sum A or B, or as ordinary salary and wages for post-1993 leave on a normal termination.

Can I lose long service leave if I am sacked for serious misconduct?

Before the full qualifying period, yes — serious misconduct rules out pro-rata in every state. After it, NSW, Victoria, Queensland, SA, Tasmania and the ACT still pay the accrued leave. In WA (Long Service Leave Act 1958 s8) and the NT (Long Service Leave Act 1981 s10(1A)) you keep completed 10- and 5-year blocks but lose the part accrued since the last block.

Long Service Leave Payout Calculator

Find out how much long service leave you are paid when your job ends, whether the reason you are leaving qualifies for pro-rata, and how much tax comes out of it.

Last verified: 26 September 2026Jump to calculator ↓

Long service leave paid on termination is not an ETP. Leave accrued after 17 August 1993 is taxed at your marginal rate, or a flat 32% on genuine redundancy or invalidity (ATO Schedule 7, from 1 July 2026).

State or territory you work in*

The law of the state where you work when employment ends generally applies.

Start date with this employer*

First day of continuous service. Service before 18 August 1993 is taxed differently.

Last day of employment*

Include any notice period you work. Pay in lieu of notice ends employment on the day you are told.

Ordinary weekly pay (before tax)*

Base pay for your ordinary hours — no overtime or most allowances.

Why your employment is ending*

Before the full qualifying period, the reason decides whether anything is paid. For tax, redundancy and invalidity get a flat 32% on post-1993 leave.

Weeks of long service leave already taken

weeks

Leave taken at full pay. Leave at half pay counts as half the weeks.

When is long service leave paid out before the full qualifying period?

After the full qualifying period, every state pays accrued long service leave when employment ends. Before it, the pro-rata window and the reason you leave decide whether anything is paid. Serious misconduct never qualifies.

State	Pro-rata window	Plain resignation	Illness / pressing necessity	Retirement age	Redundancy	Dismissed (not serious misconduct)
NSW	5–10 yrs	No	Yes	No	Yes	Yes
VIC	None before 7 yrs	—	—	—	—	—
QLD	7–10 yrs	No	Yes	No	Yes	No
SA	7–10 yrs	Yes	Yes	Yes	Yes	Yes
WA	7–10 yrs	Yes	Yes	Yes	Yes	Yes
TAS	7–10 yrs	No	Yes	Yes	Yes	Yes
NT	7–10 yrs	No	Yes	Yes	Yes	Yes
ACT	5–7 yrs	No	Yes	Yes	Yes	Yes

Queensland: “Dismissed” means for conduct, capacity or performance, which does not qualify unless the dismissal was unfair or because of illness. Redundancy does. SA: resignation needs proper notice.

How much tax is taken from a long service leave payout?

The ATO taxes unused long service leave by the period it accrued in, then by why you left (Schedule 7, applies to payments from 1 July 2026). Your employer splits the payout by the days of service in each period.

Accrued	Resignation, dismissal, retirement	Genuine redundancy, invalidity, early retirement scheme
Before 16 Aug 1978	5% of the amount, at marginal rates	5% of the amount, at marginal rates
16 Aug 1978 – 17 Aug 1993	32%	32%
After 17 Aug 1993	Marginal rates	32%

Long service leave is not an employment termination payment, so it does not use the ETP cap. If you also get redundancy pay, a settlement or pay in lieu of notice, work out the tax on those with the ETP Tax Calculator. To check your entitlement while you are still employed, use the Long Service Leave Calculator.

Sources

ATO, Schedule 7 – Tax table for unused leave payments on termination of employment (published 17 June 2026, payments from 1 July 2026).
Income Tax Assessment Act 1997 ss 83-80 and 83-85; ATO, Withholding from unused leave payments on termination (period apportionment by days).
NSW: Long Service Leave Act 1955 s4, NSW Government long service leave FAQs. VIC: Long Service Leave Act 2018, vic.gov.au. QLD: Industrial Relations Act 2016, Business Queensland.
WA: Long Service Leave Act 1958 s8. SA: Long Service Leave Act 1987 s5. TAS: Long Service Leave Act 1976 ss 2, 8. ACT: Long Service Leave Act 1976 ss 3, 4, 11A, 11C. NT: Long Service Leave Act 1981 ss 8, 10.

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General information and estimates only — not legal, financial or tax advice. Always check your specific award, agreement or contract, or a qualified professional, before you rely on the result.