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What are lump sum payments?

Some payments don't fit the normal weekly wage — they're one-off lump sums that the ATO wants reported under their own labels. The main ones are:

  • Lump Sum A — unused annual or long service leave paid out when a job ends.
  • Lump Sum B — long service leave that built up a long time ago (before 16 August 1978) and is paid out when a job ends. Most of it is tax-free.
  • Lump Sum D — the tax-free part of a genuine redundancy or early retirement payment.
  • Lump Sum E — back pay that relates to a period more than 12 months ago.

Each is reported separately so the ATO — and the employee's tax return — treats it the right way.

In one line

Lump sums are one-off payments (unused leave, redundancy, back pay) that STP reports under their own labels.

In more detail

For accountants & bookkeepers

Lump Sum A has type R (redundancy, invalidity or early retirement) and type T (normal termination). For Lump Sum B, the whole pre-1978 amount is reported and only 5% of it is subject to withholding. Lump Sum D is exempt but must still be reported, even if the payee has no other amounts that year. Lump Sum E replaces the old lump-sum-E letters — each relevant financial year is reported in the pay event, and from 1 July 2025 the $1,200 threshold is removed.

How myaccountant handles this

In the app — when you record one of these payments (for example, unused leave on termination), myaccountant reports it under the correct STP lump sum label.

→ Related: How do I terminate an employee? · Which pay item category do I use?

General information only — not tax, super or financial advice.

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