New Zealander Hayden Paddon's hopes of victory have been dashed on a dramatic final morning of Rally Australia.

Placed third going into the final day, Paddon punctured on the second stage of the morning and limped through to finish ninth, 73sec down on stage winner Andreas Mikkelsen (Volkswagen).

Paddon suffered external damage on his Hyundai and shredded his left rear tyre after going wide on a turn, bumping him back to fifth place.

"We went wide, touched a bank and knocked the tyre off the rim," he said.

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The incident could be a blessing in disguise for Paddon's Hyundai team though.

It pushed Paddon's teammate Thierry Neuville into third, assuring him of second spot in the drivers' championship after the season-ending round if he holds his place.

Mikkelsen leads Rally Australia by 22.7 seconds over world champion Sebastien Ogier with two short stages remaining, after starting the day just two seconds clear of the Frenchman.

Ogier spun on the 20th stage, costing him 19.6 seconds in the race for the lead and virtually handing the rally to his teammate.