Lump Sum Payment Changes

(from the ATO's Business Implementation Guide)

• Lump Sum E must now be reported by Financial Year
• Lump Sum W added

By introducing the reporting of Lump Sum E amounts by financial year, this will streamline the IITR process for payees and remove the requirement for the Payers to issue Lump Sum E letters to Payees.

For consistency with the payments that have a special tax table, NAT 3347 Return to Work Payments are now separately itemised as Lump Sum W rather than included in Gross.

Termination Payments can be complex. If unsure how an amount should be reported, check with your tax/accounting advisor or the ATO.

Phase 2 Lump Sum Types are:

• Lump Sum A Type R – all unused annual leave or annual leave loading, and that component of long service leave that accrued from 16/08/1978, that is paid out on termination only for genuine redundancy, invalidity or early retirement scheme reasons. Services Australia categorise these payments as Lump Sum

• Lump Sum A Type T - Unused annual leave or annual leave loading that accrued before 17/08/1993, and long service leave accrued between 16/08/1978 and 17/08/1993, that is paid out on termination for normal termination (other than for a genuine redundancy, invalidity or early retirement scheme reason). Services Australia categorise these payments as Lump Sum

• Lump Sum B – long service leave that accrued prior to 16/08/1978 that is paid out on termination, no matter the cessation reason. Only 5% of this reported amount is subject to withholding. Services Australia categorise these payments as Lump Sum
  
  
• Lump Sum D - represents the tax-free amount of only a genuine redundancy payment or early retirement scheme payment, up to the limit, based on the payees years of service. Services Australia categorise these payments as Lump Sum
  
  
• Lump Sum E - represents the amount for back payment of remuneration that accrued, or was payable, more than 12 months before the date of payment and is greater than the lump sum E threshold amount ($1,200). Services Australia categorise these payments as Lump Sum
  
  
• Lump Sum W  – New - A return to work amount is paid to induce a person to resume work, for example; to end industrial action or to leave another employer. It does not matter how the payments are described or paid, or by whom they are paid. This was previously reported in Employee gross pay. Services Australia categorise these payments as Lump Sum.