Back Pay transactions calculate the amount of Back Pay and identify the Lump Sum E value for STP reporting. When the Lump Sum E covers more than one Financial Year, you need to enter a Back Pay per Financial Year so that the Financial Year is included with the Lump Sum E value. The maximum number of Financial Years that can be reported is 10. If the back pay is for more than 10 years, group the oldest periods together. For example, if the Back Pay is from 2012 to 2024 Financial Years, you would group 2012 to 2015 in the 2015 Financial Year.
For backpays paid in the 2025/2026 Financial Year or later, there is no Lump Sum E threshold, meaning that all backpay values that are based on payments made more than 12 months before the date of the backpay will be treated as Lump Sum E. You must have upgraded MicrOpay Evo to version 9.4 SP1 or higher and have rolled the Tax Year to 2025/2026 or higher before the threshold will be removed.
Back Pays are calculated for whole periods only. If the start date for the back pay calculation falls mid-period, the back pay will apply to the entire period. Additionally, the Back Pay will include additions and deductions calculated on a Percentage or Rate. To pay partial periods or Additions based on Amount or Units, enter these through Manual Calculations.
When Calculation Details are entered, the new rates of pay are determined for the employee. These are displayed on the Rates tab, and you can update the employee's pay rates with the new values when the Back pay is processed.
To process a Back Pay with Lump Sum E:
Go to Payroll, Transactions, Processing, Back Pay.
Select Standard Back Pay as the Back Pay Type.
Enter the Employee and select either Percentage or Amount for Calculation Detail.
Untick Generate Payment to exclude the transaction from EFT Export.
On Calculation Details, enter the Start Date and End Date of the Back Pay period. This will calculate the number of Pay Periods. The transaction will be flagged as Lump Sum E when the Start Date is more than 12 months before the current period end date. Each Financial Year needs to be entered separately for Lump Sum E.
Enter the Percentage or Amount. For amounts, you also select Per Hour, Per Auto Pay or Per Year.
Click Calculate. This will calculate the Back Pay and Lump Sum E values per component.
The Rates tab will display current and new pay rates. Tick Apply new rates to employee on process if you want to update the rate details on the employee record.
Select the Transaction Details tab to review the pay components included in the Back Pay.
Hours the number of hours paid.
Value the calculated value of back pay.
Lump Sum E displays the portion of the component that is Lump Sum E. The values in this column total to the Lump Sum E amount on Calculation Details, unless this is manually overridden.
Difference shows the remainder, i.e. Value - Lump Sum E. These values are reported according to the STP reporting group for the component, e.g. Gross, Paid Leave, Allowances, etc.
Return to Calculation Details to review the Lump Sum E Details.
Change the Financial Year if required.
Tick Override if you want to enter a different Lump Sum E value. A message will appear to notify you that the component values on Transaction Details are not adjusted to reflect the change. They should be reviewed and if necessary, the Value column can be manually adjusted and the Difference will be updated by the same amount.
Click Process.
Repeat steps for each Financial Year in which the Lump Sum E needs to be reported.
Processing Lump Sum E - Manual Calculation
Alternatively, you can use Manual Calculations to enter manually calculated Lump Sum E values per Financial Year, using an Addition Before Tax that is set up with the correct Reporting Group/Reporting Subgroup on the STP Reporting tab. Financial Years, you will need to enter a separate Manual Calculation for each year.
When using Manual Calculation:
Go to Payroll, Transactions, Processing, Manual Calculation.
Select the Employee.
Click the Add radio button.
Tick Generate EFT to include the Net Pay in the EFT file.
Tick Superannuation from the Pay Calculation dropdown to calculate Super on the Lump Sum E. Note: To include the Super Earnings in the SGL Quarterly Cap you must tick Superannuation.
Select Adds Before Tax.
Click Add and select the Lump Sum E addition.
Enter the Value.
Click Bonus Calc in the bottom right-hand corner to open the Bonus Tax Calculator.
Average Normal Earnings is populated based on previous earnings. This value is used to calculate marginal tax and can be changed if required.
Enter the Number of Periods over which the Lump Sum E was earned.
Click Calculate Tax to calculate the Tax Withheld.
Click OK to accept the values.
Then click Process to save the transaction.
When you click Process, the Lump Sum E Financial Year window will display, select the Financial Year the value belongs to and click OK.
Note: Only one financial year can be selected at a time. If the payment applies to more than one year, you will need to process separate transactions for the Lump Sum E amounts accrued per year.
Pay Advices and Lump Sum E
When Lump Sum E is processed in a Standard Back Pay transaction, the Pay Advice will display:
The value of the Lump Sum E portion in the transaction.
The Financial Year applicable to the Lump Sum E.
For more information on STP2 refer to the below ATO link: