Lump Sum E

What is Lump Sum E?

The lump sum E threshold value is AU$1,200, and the lump sum E reflects the amount for back pay of compensation that accumulated or was payable more than 12 months prior to the date of actual payment.

Payment was underpaid in one or more prior fiscal years and was only made this fiscal year as a result of an error or delay. Lump sum E is not to be used to classify any underpayments or back payments that accumulated and were made in the current financial year.

How does it work?

The employer must additionally give the employee a letter outlining the financial years over which the amount accrued and the gross amount that accrued each financial year for any lump sum E payments reported through STP Phase 1 and/or disclosed via payment summaries.

To avoid having to give lump sum E letters to your employees, a new reporting requirement of STP Phase 2 is to indicate the financial year the lump sum E payment corresponds to. Instead, after the pay event is submitted, the lump sum E amount and the financial period(s) it belongs to will be reported directly to the ATO.

Employers will still be obligated to give employees lump sum E letters if they are not reporting through STP Phase 2 by the end of the fiscal year or are still generating payment summaries.

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