Adjust a Pay with Incorrect STP Reporting Settings

Overview

If an employee’s pay has been processed using a pay item, deduction item, or superannuation item that has not been set up with the correct STP Reporting Settings configuration, and the associated pay run has been submitted through STP, you will need to process an adjustment using a lump sum payment. 

To adjust for the incorrectly categorised item, you can use a single lump sum pay to reverse the original pay item amount and add the units using the new pay item instead. 

Before you Start

You will need to ensure that you use the exact same pay item and Pay Date to reverse the original pay.

You’ll also need to create a new pay, deduction, or superannuation item that has been configured with the correct STP Reporting Settings. This pay item will be used to reprocess the payment and should be used for the impacted employees moving forward, to ensure that their earnings are correctly reported through STP.

Important: When you create the new item, ensure that you give it a unique name that makes it easily identifiable from the original, incorrectly configured item. 

1. If you're making changes for a previous tax year that has been locked, go to Config > Payroll > Tax Years > untick the checkbox next to the locked tax year > Save.
2. If you're making changes for data that has been submitted in an STP Finalisation, go to Payroll > Process Payroll > STP Update > filter on the relevant financial year > tick the checkbox next to the employee's name > With Selected ... Revert Finalisation > Go

Reverse and Reprocess the Incorrect Pay/Super/Deduction Items

To reverse the pay that has used the incorrectly configured pay, deduction, or superannuation item:

1. Go to Payroll > Process Payroll > Process Payroll > select the Pay Cycle or set the Report Settings criteria > Add Lump Sum Pay.
2. Search for the employee, then complete the fields as required, ensuring that you are using the same pay item that was used when the original pay was processed. Make sure the units are entered as negative, then click Save/Add Lump Sum Pay.
3. Set the Pay Date to the same date that the original pay run was processed OR the previous financial year (no more than 350 days prior). Tick the checkbox to select the pay, then click Create Pay Run > select Recalculate Selected > edit the Pay Date > Apply.
4. Expand the employee pay in the Process Payroll report so that you can see the items that have been added. Add any other items included in the original pay by clicking +Add Pay Record. You will need to ensure that you use the same items that were used originally, as this will allow the amounts that were originally processed to be reversed. 
5. Check that the Units for each item in the employee pay are negative, as this will reverse out what was paid to the employee using the incorrect STP Report Settings. You may need to manually overwrite the tax amount to match what was taxed in the original pay. 
6. Repeat Step 4 above to add in the NEW pay item with positive units to offset the reversed amounts.
7. Add the pay/s to a Pay Run and lock it/mark as paid as per the normal process. 
8. If needed, go back to the STP Update and Regenerate, Finalise, and Submit your adjusted finalisations to the ATO. You can also lock the tax year again in config if it was unlocked.

It's expected that the negative and positive lines will net off and the pay run will be nil.

You will need to repeat the above process for each employee whose pay needs to be adjusted. We recommend including all negative adjustments in one pay run.

Moving Forward

You may like to rename the incorrectly configured item in Config to avoid any confusion between the old and new items that have been created, and ensure that the old item isn’t accidentally assigned to any other users in the future (eg ‘ZZ-Base Hourly - DO NOT USE’).

Please note that the Name field for Allowance pay items will be locked once they have been included in a pay run, so you will be unable to edit the names for these items.

You’ll also need to ensure that you check other areas of the system where the old pay, deduction, or superannuation item may be set, and replace with the newly created item, so that the incorrect item isn’t applied to future pays. This includes:

• rules and rule groups;
• Employee profile (for deductions and superannuation); or,
• on the job (for fixed pay items).