A lump sum payment is a one-time payment that is taxed and reported differently to your salary and wage income. You include lump sum payments as assessable income in your tax return in the income year you receive the payment.
You may receive a lump sum payment:
when you leave a job, such as
an employment termination payment (ETP)
genuine redundancy payment
early retirement scheme payment that exceeds the tax-free limit
for unused annual leave, long service leave or special leave you may have been entitled to when you leave a job
in arrears (known as back pay or lump sum payments in arrears) for money, your employer owes you from an earlier income year.
How to create a new lump-sum payment?
Step 1 - Click on "Settings" > "Payroll" > "Earnings"
Step 2 - Click on "Add New"
Step 3 - Click on "Lump-Sum"
Step 4 - Enter the name of the Lump-Sum payment and select the type "ATO Category" of the lump-sum payment
Note
1. "Taxable " box will be enabled for all the lump-sum type payments.
2. For Lump-sum Payment "D", there won't be any taxes applicable and
"Taxable" box will be disabled.
3. Check the box "Show on pay slips" if you wish the earnings to not be
shown in pay slips.
Step 5 - Click on "Create"
Note: When Lump-Sum E type is selected, select the financial year of the lump sum payment
Below is the video for your reference
Below are the description of the lump-sum types select the lump-sum type which is applicable -
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.
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 (that is, other than for a genuine redundancy, invalidity or early retirement scheme reason).
Lump-Sum B: Long service leave that accrued prior to 16/08/1978 that is paid out on termination, regardless of the reason for such termination.
Lump-Sum D: This represents the tax-free amount of a genuine redundancy payment or early retirement scheme payment, up to the limit, based on the employee's years of service.
Lump-Sum E: This 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, being $1,200.
Lump-Sum W (Return to work payment): This represents an amount paid to induce an employee to resume work, such as 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 is a new payment classification introduced for Phase 2 reporting.
Check the article - How to add the Lump-Sum payments in the pay run?
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