How to add lump sum amounts in Xero PAYG summaries

If you need to enter a lump sum into a Xero PAYG summary, read on for instructions here …

From time to time you will need to report a lump sum in a Xero payment summary.  Most commonly this will be because you have processed a genuine redundancy for an ex employee.  For more information on what each lump sum means and how you would work out which amounts are taxed as a lump sum, click here to read our blog on this.

Let’s work through an example.  Amelia Harte has been made redundant.  She was given $5,000 on account of a severance pay, all of which was tax free.  In addition, Amelia received $3,000 on account of unused holiday pay.

When you process the final pay in Xero, you can set up new payroll items to show the severance pay.  There is already a default item set up for unused holiday pay.  There is nowhere in the set up of these pay items to indicate what type of lump sum they are or where the amounts should be presented on the PAYG summary.  This is done at end of year when you are processing your PAYG summaries.

When you have done all of your checks and balances (click here to learn how to do that), you will go into the payment summary area to finalize your PAYG summaries.  On the final screen, where you check, publish and email your payment summaries the last column is called ‘Lump Sum’.  Click on the applicable employee’s box, and enter the amount in the relevant letter box for the lump sum.  Any amounts you enter here will reduce the gross payment amount.

In Amelia’s example above, you would enter $5,000 as lump sum D and $3,000 as lump sum A.

Hopefully, in the future, Xero will release further updates to automate the lump sum amount on the PAYG summaries but for now, this is how you will enter these amounts on your employee PAYG summary.