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.
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.
When you report a correction to your employer-level totals (gross payment and withholding figures), you must include the correction in your activity statement reporting (for small and medium withholders) or your PAYG withholding payment, (for large withholders).
When you detect an issue that needs correcting, you may also be able to report the correction via STP. If you are a small or medium withholder and report the correction via STP this will be included in your ATO PAYG withholding pre-fill (where available).
Follow your DSP's instructions to correct your employer-level totals via STP. If available in your product, you may be able to include the correction:
- in the next regular pay-event within the same financial year, along with any employee YTD correction (where applicable)
- in an adjustment event (to increase or decrease the employer-level totals)
If the correction is for a payment made in an earlier tax period and impacts a PAYG withholding liability already recorded on your integrated client account, you may need to also correct your PAYG withholding liability.
Sometimes when you identify that you need to make a fix to your STP reporting, you may also identify that the PAYG withholding liability recorded on your integrated client account for a previous tax period was too high or too low.
When you correct information reported through STP in accordance with these guidelines, there are 2 ways you can report the correction to your PAYG withholding liability. You can:
- revise the PAYG withholding amount in your activity statement for the earlier tax period (editing any pre-filled amounts if required) 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.
Carrying forward corrections that impact your PAYG withholding liability
When you correct information reported through STP in accordance with these guidelines, in some circumstances you may choose to carry forward the correction to your reported PAYG withholding for the current tax period.
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.
Size of withholder
Total withheld per annum
Less than $100,000
$101,000 to $500,000
$500,000 to $1m
$50,000 or 0.5% of amount withheld in previous financial year
If the PAYG withholding liability reported in a 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.
Special rules apply to correcting child support information that you have reported through STP. Once you have identified that a correction is required, you must take action immediately.
You must contact the Child Support RegistrarExternal Link for authorisation to make changes to your STP reporting.
After you have received authorisation you can either:
Lodge an update event to report the correct amount.
You reported a child support amount for an incorrect employee that is not covered by a notice issued by Services Australia
Lodge an update event to correct your reporting for the incorrect employee.
If the error means you have also under-reported for the correct employee, you should include the correction for that employee in your update event as well.
If an overpayment is identified in the same financial year it was paid, the employee will only need to repay the net (gross less tax) 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.
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.
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 amounts.
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 correction moves PAYG withholding amounts between ABNs or branches you may need to review your activity statement reporting (for small and medium withholders) or your PAYG withholding payments, for large withholders.
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.