Payroll Pitfalls, Switching Risks and Official Sources
Switching payroll software mid-year: year-to-date figures, STP, leave balances and a safe cut-over
How to switch payroll software in Australia without breaking STP year-to-date figures, leave balances or Payday Super, with a cut-over timeline, reconciliation steps and migration costs.
You can switch payroll software at any time of year, but 1 July is the cleanest point because year-to-date (YTD) figures start from zero. A mid-year switch is workable if you do four things carefully: carry over YTD figures for every employee in the right STP categories, transfer leave balances exactly, make sure the old and new systems do not both report the same pay to the ATO through STP, and keep Payday Super payments flowing without a gap. Run at least one parallel pay run in the new system and reconcile it to the cent before going live, and export all records from the old system before the contract ends.
This guide is part of payroll software pitfalls and official sources. It is general information; the ATO's STP guidance on changing software and your new provider's migration documentation are the authorities on the STP steps.
Choosing the cut-over date
| Cut-over point | Advantages | Drawbacks |
|---|---|---|
| 1 July (start of financial year) | No YTD migration; old system finalises the year | Busy period for finalisation; must be ready on time |
| Start of a quarter | Clear reporting boundary | YTD figures still needed |
| Start of any pay cycle | Flexible | Full YTD migration and careful STP handling |
| Just before a public holiday or end of year | None | Highest risk; avoid |
If you are switching because of Payday Super problems, do not wait for 1 July 2027: late super attracts the super guarantee charge for each pay day. Plan a mid-year cut-over instead.
What must move across
| Data | Why it matters | Check |
|---|---|---|
| Employee master data | Name, address, date of birth, TFN, employment basis, start date | Spot-check 10% and all TFNs |
| Pay rates, classifications, awards | Correct future pay | Compare each employee's rate |
| Tax settings | Tax-free threshold, HELP/study loan, residency, variations | Compare with TFN declarations and withholding variations |
| Super details | Fund, member number, salary sacrifice, higher contribution rates | Test a super file |
| Bank details | Net pay goes to the right account | Second person checks |
| YTD figures by STP category | Gross, PAYG, allowances, leave, overtime, super, salary sacrifice | Reconcile totals with old system |
| Leave balances | Annual, personal/carer's, long service, time off in lieu | Reconcile per employee |
| Pay history | 7-year record-keeping requirement | Export from old system |
STP when switching mid-year
The key risk is duplicate or conflicting YTD figures. Each STP report contains year-to-date amounts per employee, linked to the employer's ABN, a payroll ID or branch, and an employee payroll ID. When you change software:
- you either carry over YTD figures into the new system so its reports continue the year, or start fresh in the new system and keep the old system's figures separately — both approaches exist, and the ATO publishes guidance on how to handle changes of payroll ID and software;
- you must avoid both systems reporting the same pay;
- at year end, each set of YTD figures must be finalised correctly so employees' income statements are right.
Ask the new provider which method it supports and follow the ATO's guidance on changing payroll software. Make sure your BAS or tax agent knows the plan.
A safe cut-over timeline
| Week | Step |
|---|---|
| −6 | Sign contract, choose cut-over pay period, request data export from old system |
| −5 | Configure awards, pay items and STP mappings; set up super payment method |
| −4 | Load employee data and test |
| −3 | Load YTD figures and leave balances as at the last pay before cut-over |
| −2 | Parallel pay run 1: run the same pay in both systems and reconcile |
| −1 | Fix differences; parallel pay run 2 if needed; train managers and staff on self-service |
| 0 | First live pay in new system; old system makes no further pays |
| +1 | Check STP submission, super payments received, employee queries |
| +4 | Export full records from old system; confirm read-only access or archive |
Reconciling a parallel pay run
Compare, per employee and in total: gross pay by component, PAYG withheld, super (on qualifying earnings), salary sacrifice, deductions, net pay, and leave accrued and taken.
Illustrative result: in a 35-employee parallel run, totals match except net pay, which differs by $14.20 in total. The cause: two employees' HELP debt settings were not migrated. Without the parallel run, both would have been under-withheld for the rest of the year.
Migration costs
| Cost (illustrative) | Low | High |
|---|---|---|
| Vendor migration service | $0 (self-service) | $3,000 |
| Payroll adviser or bookkeeper | $500 | $4,000 |
| Internal time (40–100 hours at $55) | $2,200 | $5,500 |
| Overlap: old and new subscriptions for 1–2 months | $300 | $1,500 |
| Read-only access or archiving old records | $0 | $1,200 |
| Total | $3,000 | $15,200 |
Include these in the 3-year TCO when comparing a switch with staying.
Common switching mistakes
- Leave balances migrated in days when the new system uses hours (or the reverse).
- Long service leave service dates not carried over.
- Super salary sacrifice and higher employer rates missed.
- Stapled fund details not migrated for recent starters.
- Old system's auto-renewal not cancelled in time.
- Records not exported before access ended.
See leave accrual errors and contracts and data export.
Frequently asked questions
Do employees need to fill in new TFN declarations?
Generally not just because you change software; the information transfers. Check with your provider and the ATO's guidance if your employer details change.
Will employees see two income statements?
Possibly, depending on how YTD figures were handled. Explain the change to staff in advance.
Can I switch during the week of 30 June?
You can, but it is risky. Finalisation and the start of a new year in the same week leave little room for error.
How long should I keep the old system?
Until you have exported every record you must keep for 7 years and confirmed the export works.
Sources
- Australian Taxation Office — STP: changing payroll software, payroll IDs and finalisation
- Fair Work Ombudsman — record keeping for 7 years and leave entitlements
- business.gov.au — employer payroll obligations
- Australian Small Business and Family Enterprise Ombudsman — help if a vendor will not release your data
