Global Daily Tax News, Australia Highlights Payroll Tax Reporting Change, (Jun 11, 2025)

The Australian Taxation Office has issued a statement highlighting changes regarding the reporting of back payments to employees accrued more than 12 months ago.

The change concerns reporting obligations regarding amounts due to employees from employers that went unpaid for a period of 12 months or more due to an oversight or delay in payment. These so-called "lump sum E payments" must be reported separately in Single Touch Payroll (STP) filings.

Currently, lump sum E amounts must be reported only if they exceed a USD1,200 threshold. The guidance highlights, however, that this threshold is being removed from July 1.

The ATO said: "Currently, if a back payment accrued more than 12 months ago and exceeds AUD1,200, you need to report this as Lump Sum E in your Single touch payroll (STP) reporting."

"From July 1, the AUD1,200 threshold will be removed. This is because the law around lump sum payments has changed."

"It means that you should report all back payments which accrued more than 12 months ago as Lump Sum E in your STP reporting, regardless of the amount."

"To work out how much to withhold on a back payment, you should continue to refer to the tax table for back payments, commissions, bonuses and similar payments. This tax table will be updated to reflect the change in June, 2025," the ATO said.