Amending Information for a Finalised Prior Financial Year

In some circumstances it may be necessary to correct information that has been submitted via STP for a prior financial year that has been finalised. This is referred to as amending a prior financial year.

Examples of situations where you may need to amend a prior financial year are:

• a payee was overpaid in the prior financial year and has since refunded the overpayment

• a payee’s name, address and personal details were reported incorrectly

• a payee’s income type (payee type) was reported incorrectly (e.g. Labour Hire instead of Individual Non Business or vice-versa)

• a payee’s tax file number or tax status was reported incorrectly

• a payment made to a payee was misclassified (e.g. an allowance that should have been itemised was reported in gross earnings, an allowance was reported as the wrong type of allowance).

The general steps for amending a prior financial year are as follows:

1. Update the Payee record to correct the affected payee’s details if necessary.

2. Process the affected payee in a balancing payment adjustment pay batch, making sure you select an adjustment period that falls into the relevant prior financial year and make any adjustments to the payee’s pay for the corresponding period or, if payments had been misclassified, negate the original pay elements and add the new, correct pay elements as required

3. Submit the balancing payments adjustment batch via STP.

Adjustments to Tax for Prior Financial Years

If you make an adjustment in a balancing payment adjustment pay batch that affects a payee’s pay amount for an adjustment period that falls into a prior finalised financial year, when the batch is submitted via STP the tax withholding amount that will be reported will be unchanged from what was reported when the financial year was finalised. That is due to an ATO requirement whereby the ATO will determine the amount of tax that the payee should have paid based on the adjusted gross earnings and will issue the payee a notice of amendment directly to the payee, thereby allowing the payee to claim a tax refund or requiring the payee to pay additional tax, depending on whether the adjustment resulted in a decreased or increased tax liability.

Therefore, the YTD Tax Withheld amount that is shown in the STP pre and post submission reports, which reflect the exact values that will be or have been submitted to the ATO for a pay batch respectively, will continue to show tax withheld amount as at the time that the financial year was finalised.

Timeframes for Prior Year Amendments

The ATO requires prior year amendments to be made to correct reporting mistakes for up to a maximum of 5 years after the end of a financial year.

If you submit a balancing payment pay batch via STP but the pay batch has a payment date that is more than 5 years in the past, the submission will be rejected by the ATO with the following error message:

However, you cannot report an amendment to a prior financial year via STP, if that financial year was not finalised via STP (i.e. a Payment Summary Annual Report (PSAR) file was submitted to the ATO to finalise that financial year). If you submit a balancing payment adjustment pay batch via STP but the pay batch has a payment date that falls into a financial year that was not finalised via STP, the submission will be rejected by the ATO with the following error message:

If a pay batch that you submit is rejected by the ATO because of either of the abovementioned errors, there is no further action that is required in terms of STP reporting. However, be aware that the STP submission status of the affected pay batch will be Rejected. If you want the submission status of the pay batch to be changed to Completed, to indicate that no further action is required via STP reporting, please contact FastTrack Customer Service and request that the submission status of the pay batch be changed.