About back payment reporting
You must record back payments in a pay event when reporting under Single Touch Payroll (STP), or on your payee's payment summary if you are a non STP reporter.
For each lump sum payment accrued more than 12 months before the date of payment, include the total gross amount of the payment (including allowances) at ‘Lump sum E’.
From 1 July 2025, the previous lump sum E threshold of $1,200 no longer applies. Any amount that qualifies as a lump sum E payment must be reported at this label.
Reporting back payments in STP
All employers should now be STP reporting and transitioned to STP Phase 2 reporting unless covered by a deferral or exemption.
If the back payment you are making to an employee is a lump sum E payment, you must report this as lump sum E in STP. The previous lump sum E threshold amount of $1,200 no longer applies, so any amount that qualifies as a lump sum E payment must be reported at this label.
When reporting a lump sum E in STP Phase 2, you must also include the financial year in which the payment relates to, which will remove the need for you to provide a lump sum E letter to your employee. Your employee can access their lump sum E information in their Income Statement via ATO online services.
If you are making a back payment to an employee and it isn't lump sum E, then report it in STP as the relevant payment type (such as gross, allowances or overtime).
For more information about reporting back payments in STP, see Single Touch Payroll - Back pays.
Back payments not reported through STP
There are some back payments that can't be reported through STP, usually because they are not related to employment income such as super, compensation or welfare payments. If this is the case, payers must continue to provide payment summaries and lodge a payment summary annual report for these payments.
What payment summary you use depends on whether the back payments relate to a superannuation income stream or previous period of assessable foreign service. Use:
- PAYG payment summary – individual non-business for all back payments except those for super income streams or if they were related to a previous period of assessable foreign service
- PAYG payment summary – superannuation income stream for super income stream payments
- PAYG payment summary – foreign employment for payments related to a previous period of assessable foreign service.
For more information about payment summaries, see PAYG payment summaries: forms and guidelines.
Note: The lump sum E threshold amount of $1,200 no longer applies. Any amount that qualifies as a lump sum E payment must be reported at this label.
Completing the individual non-business payment summary
For payments accrued in the current financial year, include the total:
- gross amount of all payments at ‘Gross payments’
- amount withheld at ‘Total tax withheld’.
Salary and wage income (including allowances) accrued before the current financial year
For each payment accrued in a prior financial year, but not more than 12 months before the date of payment include the total:
- gross amount of the payment at ‘Gross payments’ or 'Allowances'
- amount withheld at ‘Total tax withheld’.
For each payment accrued more than 12 months before the date of payment, include the total:
- gross amount of the payment (including allowances) at ‘Lump sum E’
- amount withheld at ‘Total tax withheld’.
For each payment that accrued before and after 12 months, apportion the payment between the 2 periods and apply the rules above for each portion.
Other amounts accrued before the current financial year
These other amounts are described in Other payments you should use this schedule for.
For each payment accrued in a prior financial year, include the total:
- gross amount of the payment at ‘Lump sum E’
- amount withheld at ‘Total tax withheld’.
Employee letter
You must also provide your employee with a letter specifying both the:
- financial years over which the amount accrued
- gross amount that accrued each financial year.
Completing the superannuation income stream payment summary
For payments accrued in the current financial year, include the:
- component amounts at both
- ‘Taxable component’ (both taxed and untaxed elements if applicable)
- ‘Tax-free component’
- amount withheld at ‘Total tax withheld’.
For payments accrued prior to the current financial year, include the:
- component amounts at both
- ‘Lump sum in arrears – taxable component’ (both taxed and untaxed elements if applicable)
- ‘Lump sum in arrears – tax-free component’
- amount withheld at ‘Total tax withheld’.
Payee letter
You must also provide your payee with a letter specifying both the:
- financial years over which the amount accrued
- gross amount that accrued each financial year, including the split between taxed and untaxed elements and tax-free component.
Completing the foreign employment payment summary
For the foreign employment payment summary, the gross payments amount is assessable foreign employment income, which includes total allowances.
For salary and wage payments accrued in the current financial year, include the total:
- gross amount of all payments at ‘Gross payments’
- amount withheld and paid to a foreign tax jurisdiction (if applicable) at ‘Foreign tax paid’
- amount withheld for Australian tax purposes at ‘Total Australian tax withheld’.
For each salary and wage payment accrued in a prior financial year, but not more than 12 months before the date of payment, include the total:
- gross amount of the payment at ‘Gross payments’
- amount withheld and paid to a foreign tax jurisdiction (if applicable) at ‘Foreign tax paid’
- amount withheld for Australian tax purposes at ‘Total Australian tax withheld’.
For each salary and wage payment accrued more than 12 months before the date of payment, include the total:
- gross amount of the payment at ‘Lump sum E’
- amount withheld and paid to a foreign tax jurisdiction (if applicable) at ‘Foreign tax paid’
- amount withheld for Australian tax purposes at ‘Total Australian tax withheld’.
Employee letter
You must also provide your employee with a letter specifying both the:
- financial years over which the amount accrued
- gross amount that accrued each financial year.