Reversing a Payroll to exclude PAYG Withholding.

Nicole_9792696

I have an employee which is now working overseas and have found out that he is exempt from PAYG Withholding. To obtain a refund from the Tax Office I need to amend his payroll entries to remove the PAYG Withholding item and send a new File replacement for STP to the ATO. Is there a way of doing this as one entry or will I need to manually adjust every payroll entry to remove the PAYG Withholding?

Acctd4

Hi Nicole

How far back do the PAYGW adjustments go ? It's not possible to create a positive PAYGW entry within a Paycheque itself. You would need to edit the pays in order to account for the net amount to pay back to the employee.

The other alternative is adjusting the PAYGW (via Adjust Payroll Liabilities - selecting this specific employee - under Employees > Payroll Taxes & Liabilities) However, this will make paying the shortfall to the employee now, tricky to process.

Either way, you'll still need to submit an STP Update Event (& possibly redo the Finalise Year also, if affecting 2022 as well)

NOTE: Don't forget when you adjust to remove the PAYG deducted, you will owe this to the employee as they should have received the full amount! To manage this in the payroll, I would use a clearing account eg pay the (original but amended) Paycheques from the clearing account. Create Write Chqs to transfer the funds from out of your bank account posting to the clearing account. This method allows you to amend the original Paycheques but still pay the employee the amounts paid as per your bank account.

Feel free to get in touch with me directly if you need any help with this 😊