Switching Payroll Mid Financial Year: The Safe Way

Yes, you can switch payroll mid financial year safely. Freeze the old system, reconcile every year-to-date balance, map the new setup, test a parallel pay, then control the STP handover before going live.

The timing is not the main risk. Bad opening balances, duplicated Single Touch Payroll records and missed construction entitlements are the real traps.

Know the figures that still apply

As at October 2026:

• The super guarantee rate is 12% of ordinary time earnings for eligible payments.
• STP finalisation declarations for most employees are due by 14 July after the financial year ends.
• The STP finalisation deadline for eligible closely held payees is 30 September.
• Fair Work employee records generally need to be kept for 7 years.

Those numbers matter during a change because your new payroll must continue the same financial year records. A new system does not mean a fresh financial year.

Pick a sensible cutover date

The cleanest cutover is usually the first day of a pay period. Avoid changing halfway through a weekly or fortnightly cycle.

For example, if the old system covers work performed up to Sunday, process and reconcile that entire pay there. Start the new system from Monday. That gives you a clear line between the two systems.

Also check what else is happening around the proposed date. Avoid a cutover during:

• a public holiday period
• a shutdown or annual leave run
• an EBA or award rate change
• a large termination pay cycle
• payroll tax or workers compensation reporting
• the final pay before 14 July
• a major site mobilisation or demobilisation

Leave enough time to run at least one test pay before workers depend on the result.

Reconcile the old payroll first

Do not migrate figures you cannot explain. Reconcile the old payroll to the last completed pay run before loading anything into the new system.

At a minimum, match these control totals:

• gross earnings
• taxable earnings
• PAYG withholding
• allowances
• overtime and penalty payments
• deductions and garnishees
• employer and employee super
• leave balances
• reimbursements
• termination payments
• STP year-to-date amounts

Compare payroll reports with the general ledger, bank payment file and super records. If gross wages in payroll do not match the wage expense posted to accounts, stop and find the difference.

Run the compliance audit checklist before cutover. It is much easier to correct a known issue before opening balances are spread across two systems.

Decide what must move

A safe migration carries more than each worker's name and bank account. Construction payroll has plenty of details that can change a person's pay.

Record type	What to transfer	Main risk if missed
Employee details	Legal name, date of birth, address, tax file number status and employment basis	Failed validation or incorrect tax treatment
Employment setup	Start date, classification, award or EBA, pay rate and work pattern	Underpayment or wrong overtime calculation
Year-to-date values	Earnings, tax, allowances, deductions and super categories	Incorrect STP income statement or duplicated amounts
Leave	Accrued hours, taken hours and applicable loading	Incorrect leave payment or termination balance
Construction entitlements	RDOs, time off in lieu, fares, travel, site and industry allowances	Lost entitlements or back-pay claims
Deductions	Child support, salary sacrifice, union fees and other authorities	Missed legal or employee-authorised deductions
Costing	Project, site, phase, cost code and labour category	Wages posted to the wrong job

Keep copies of the source report and the final import file. Record who checked the figures and when they approved them.

Treat STP as a separate cutover task

STP is where a tidy-looking migration can go wrong.

Each payroll product uses a business management software identifier, commonly called a BMS ID. Moving to another product may create a new identifier. If both systems report the same year-to-date amounts without the correct transition treatment, an employee can appear to have earned twice as much.

Before lodging from the new system, agree on the STP transition method with the new provider and your payroll adviser. Depending on the software and migration method, you may need to:

1. Retain the existing BMS ID where supported.
2. Transfer year-to-date figures and update or reduce amounts reported under the old BMS ID.
3. Keep separate records under each BMS ID, with each system reporting only the payments it processed.

Do not simply copy year-to-date figures into the new payroll and press lodge. Also do not finalise the old STP record just because you are leaving the software. The right action depends on how the new system will report the rest of the year.

After the first new STP lodgment, ask several workers to check myGov. Look for duplicate income statements, unexpected employer records or amounts that do not align with the payroll register.

Rebuild construction rules carefully

Opening balances can be correct while the next pay is still wrong. That happens when pay rules are rebuilt badly.

Check ordinary hours, overtime triggers, RDO accruals, minimum engagement rules, casual loading and allowances against the applicable award, EBA or employment contract. Test workers with different arrangements, not just a standard full-time employee.

Useful test cases include:

• an apprentice who worked overtime
• a casual with weekend hours
• a worker receiving travel or site allowances
• an employee taking annual leave with leave loading
• a worker splitting time across two projects
• an employee with salary sacrifice and child support deductions
• a termination with unused leave

For more practical payroll controls, see the payroll operations hub.

Run a parallel pay

A parallel pay means processing the same timesheets in both systems without paying workers twice. Compare the results line by line.

Do not settle for matching net pay. Two systems can produce the same net amount while splitting gross earnings, tax, allowances or super incorrectly.

Compare:

• ordinary and overtime hours
• gross and taxable gross
• PAYG withholding
• superable earnings and super
• each allowance and deduction
• leave accrued and taken
• net pay
• project and cost code allocation

Set a clear rule for differences. Rounding of a cent may be explainable. A missing allowance, wrong tax result or different overtime trigger is not.

Protect access to the old system

Download records before cancelling the old subscription. Keep payroll registers, payslips, STP lodgment receipts, super reports, leave reports, employee change records and audit logs.

Make sure the files remain readable and backed up. Keeping a login is not enough if access ends when the contract does.

Finally, document the cutover. Note the last pay processed in the old system, the first pay in the new one, the opening totals, the STP method and every approved correction. If a worker questions their income statement six months later, that file will save a lot of digging.