You have some time to correct information reported in a pay event without being liable to a penalty for making a false or misleading statement. We call this correction a 'fix'.
This only relates to situations where the information you have already reported through STP is incorrect. It does not include situations where you should have lodged an STP report but failed to do so on time.
It is important that you make timely corrections because we may share the information you report through STP with Services Australia to assist your employee if they are a Services Australia customer. If you do not make a fix within the required period, you may also be liable to a penalty.
Correcting employee information
If the employee YTD information you last reported to us doesn't reflect the information in your payroll system, you should give the updated information to us either:
- within 14 days of the need for a correction being identified
- in the next regular pay event within the same financial year where the affected employee has continuity of employment.
If we send an error message to you relating to the employee data you have reported, the same 'fix' rules apply to correcting those errors as above.
Corrections that impact your PAYGW liability
Sometimes when you identify that you need to make a fix to your STP reporting, you may also identify that the PAYG withholding you reported to us for a previous tax period was too high or too low.
When you correct employee information reported through STP in accordance with these guidelines, there are two ways you can report the correction to your PAYG withholding liability. You can:
- revise your Activity Statement for the earlier tax period to show the correct amount (or for large withholders, follow the existing process for notifying us of changes to your PAYG withholding liability in an earlier tax period)
- carry forward the correction to your reported PAYG withholding for the current tax period, subject to some limits.
If the PAYG withholding liability reported in the previous tax period was too low (meaning you've not reported and paid enough), you can only carry forward the correction if the total of all corrections for the current tax period doesn't exceed the materiality threshold.
A materiality threshold is the upper limit on the amount of corrections to your PAYG withholding liability that you can carry forward to the current tax period. It varies based on how much you withhold each year.
The materiality thresholds are outlined below.
|
Total withheld per annum |
Materiality threshold |
|---|---|---|
Small withholders |
N/A |
$2,500 |
Medium withholders |
Less than $100,000 |
$3,500 |
Between $101,000 and $500,000 |
$5,000 |
|
Between $500,000 and $1m |
$10,000 |
|
Large withholders |
N/A |
$50,000 or 0.5% of the amount withheld in the previous financial year |
If the PAYG withholding liability reported in the previous period was too high (meaning you've reported and paid too much), there is no limit on the amount you can carry forward to offset your liability in the current tax period.
When you chose to include a correction to your reported PAYG withholding liability in the current tax period, you must record your choice in writing. This is so that you have business records which demonstrate that you made the choice.
Overpayment identified within the same financial year
If an overpayment is identified in the same financial year it was paid, the employee will only need to repay the net amount of the overpayment. The net amount is the amount received by the employee.
You will need to ensure we have the correct amounts recorded (the employee's YTD values don't include details of the overpayment). You can make these fixes in either:
- the next regular pay cycle report for the employee (by reducing the employee's YTD figures and your employer-level gross payment and withholding figures)
- an update event, within 14 days of the overpayment being identified.
Misclassification with no additional payment
A misclassification is when information has previously been reported under an incorrect item. For example, a payment was reported as gross instead of as an allowance, and no additional payment is made to the employee.
You must correct your STP reporting by correcting the classification and you can make this fix in the next pay event or by lodging an update event.
Reporting under an incorrect ABN or PAYG withholding branch
You must correct your STP reporting if you have reported employees under an incorrect ABN or PAYG withholding branch. To fix this, you should:
- adjust any incorrectly reported amounts from the incorrect ABN or PAYG branch by zeroing out your YTD amounts
- report your employee under the correct ABN or PAYG withholding branch from the point you discovered the error.
To zero out your YTD amounts you should send us:
- an update event for the incorrect ABN and branch combination that shows all YTD amounts for your employees as zero. This tells us that you are making changes and that we should stop displaying your employees’ current income statement
- an STP report for your employees showing their YTD amounts against the correct combination of ABN and branch.
This will ensure we don't display duplicate income statements for your employee and that you haven't over-reported your PAYG withholding liability.
If you paid the employee and have reported through STP from one combination of ABN and branch but subsequently assign that expense to another combination of ABN and branch, then you don't need to correct your STP reporting. This is because your STP reporting should show who actually paid the employee and your original report is correct.
If the adjustment moves PAYG withholding amounts between ABNs or branches you may need to revise your reported PAYG withholding liability (either on your activity statements or, if you are a large withholder, using your existing process).
Full file replacement
Some solutions may offer functionality which gives you the ability to completely replace the latest pay event file you sent to us in error, or which contained significant corrupt data. This is called a full file replacement.
Don’t use a full file replacement for corrections.
A full file replacement:
- may only be used to replace the latest pay event
- must contain the submission identifier of the pay event to be replaced
- cannot be lodged if any employee information has subsequently been changed in a payroll or update event
- cannot replace an update event – a new update event should be lodged.
Only one full file replacement can be lodged per 24-hour period.
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