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aendycott(Newbie)Newbie
29 Jan 2025

I have to process payments to employees that were terminated prior to our current payroll system and the legacy payroll system is no longer active. I have reached out to our current payroll software provider about setting these employees up in our current system, but they have advised to seek guidance from the ATO.


They have said" The issue becomes that they have to be active for at least a day to generate a payment and then will feature in all of your reporting and downstream activities such as STP etc.

Their period of activity will not be reflective of actuals if it predates your go live with your current system so it will be somewhat of an inaccurate mechanism.

 

My thinking is that you probably need to get a ruling from the ATO in regard to generating payments that are assessable income for a previous financial year where the legacy system that was present during their employment is no longer available."


Is there any ATO guidance? I have search and cannot locate anything.

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PayrollDeanne(Taxicorn)Taxicorn
29 Jan 2025

Hiya @aendycott 👋


It is very typical for employers to make additional payments to employees post-termination. If you did not migrate the terminated employee data over to your new system when you were setting it up, can you not migrate their data now?


If you don't have an active subscription to your old payroll system, you may have to activate it again just to make the additional payment now and report and finalise all of your employer obligations from the old system for this one employee.


Yes, your current payroll product provider is correct that you can't set up a "new employee" with false data such as start date and termination date, as this data is included in the STP pay event and you cannot make a false and misleading statement to the ATO.


You already have record keeping obligations for the Fair Work Ombudsman (7 years) and the ATO (5 years), so the data should be readily accessible to you.


So, it's migrate the terminated employee from your old payroll to your new payroll and pay them via your new payroll or pay them from your old payroll.


Deanne

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Most helpful reply

PayrollDeanne(Taxicorn)Taxicorn
29 Jan 2025

Hiya @aendycott 👋


It is very typical for employers to make additional payments to employees post-termination. If you did not migrate the terminated employee data over to your new system when you were setting it up, can you not migrate their data now?


If you don't have an active subscription to your old payroll system, you may have to activate it again just to make the additional payment now and report and finalise all of your employer obligations from the old system for this one employee.


Yes, your current payroll product provider is correct that you can't set up a "new employee" with false data such as start date and termination date, as this data is included in the STP pay event and you cannot make a false and misleading statement to the ATO.


You already have record keeping obligations for the Fair Work Ombudsman (7 years) and the ATO (5 years), so the data should be readily accessible to you.


So, it's migrate the terminated employee from your old payroll to your new payroll and pay them via your new payroll or pay them from your old payroll.


Deanne

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How to pay payments to ex employees where the old payroll system is not active | ATO Community