How to switch payroll providers in Australia
Reviewed by Mellow Editorial Team, HR & payroll content team
Switching payroll providers in Australia is straightforward if you plan the timing carefully and make sure your data, compliance obligations and employee records transfer without gaps. The main risks are duplicate or missed pay runs, broken Single Touch Payroll reporting, and superannuation payments falling through the cracks — all of which are avoidable with a structured approach.
Choose your timing carefully
The cleanest time to switch is at the start of a new financial year (1 July), because year-to-date figures reset to zero and your STP finalisation for the previous year is already done. Switching mid-year is perfectly legal, but it requires you to carry forward year-to-date earnings, tax withheld, and super figures for every employee so both systems reconcile correctly.
If you are mid-year, aim to cut over at the start of a pay period — never mid-cycle. Paying employees partly in one system and partly in another creates reconciliation headaches and increases the chance of a payroll error.
Complete your obligations in the old system first
Before you decommission your current provider, tick off the following:
- Run all outstanding pay cycles and confirm every employee has been paid correctly.
- Pay any outstanding superannuation to employees' complying funds. Super must be paid on time regardless of a system change; the ATO does not accept a provider switch as a reason for a late super payment.
- Lodge any pending STP pay events. Under Single Touch Payroll, every pay event must be reported to the ATO at or before the time of payment. Confirm your outgoing provider has lodged all events and that none are sitting in a draft or error state.
- Request a full data export — employee details, year-to-date payroll figures, leave balances, tax file numbers, and super fund details. Keep this export on file even after the migration; you may need it for audits or disputes years later.
If the switch falls after 30 June, also confirm that your previous provider has submitted STP finalisation by 14 July. This is the deadline to finalise payment summaries (income statements) for each employee so they can lodge their tax returns. If you have already switched systems by that date, check which provider is responsible for submitting finalisation — get this in writing.
Set up your new system correctly
Loading employee data into the new platform is where errors most often occur. For each employee, verify:
- Tax file number and residency status, which determine how PAYG withholding is calculated
- Medicare levy — the standard rate is 2%, though some employees may have a variation in place
- HECS/HELP debt indicator — if an employee has a study debt, repayments are deducted through payroll on a banded scale based on income; failing to flag this means the employee will owe money at tax time
- Super fund details and the correct rate — the Superannuation Guarantee is 12% of ordinary time earnings from 2025/26 onward; confirm your new system is applying this rate and directing contributions to each employee's chosen complying fund
- Leave balances — annual leave accruals must carry over; under the National Employment Standards, employees are entitled to four weeks' annual leave per year, and that accrual does not reset because you changed software
- Award or enterprise agreement settings, which affect pay rates, penalty rates and allowances
Run a parallel payroll for at least one pay cycle if your budget allows — process the pay run in both systems and compare the outputs before you pay employees from the new one.
Re-register for STP with your new provider
Your new payroll software needs to be connected to the ATO as an STP-enabled solution. Most modern providers handle this registration process for you, but you need to confirm it is complete before you run your first pay event in the new system. If you are using a payroll service bureau or a provider that acts as your STP intermediary, make sure you understand who is lodging on your behalf and that the ATO has the correct details.
Do not run a pay event from your old provider and your new provider in the same pay period. The ATO matches STP data to your ABN, and duplicate or conflicting lodgements will trigger discrepancies in your ATO account that take time to resolve.
Communicate with your employees
Employees do not need to do anything when you switch providers, but it is worth telling them what is changing and when. Let them know if the payslip format will look different, whether they will use a new employee self-service portal, and who to contact if something looks wrong on their first payslip from the new system. Prompt reporting of errors means you can correct them in the next pay cycle rather than carrying a problem forward for months.
If any employee has a HECS/HELP debt or a Medicare levy variation, ask them to confirm their details are correct once they receive their first payslip, since these settings are easy to misconfigure during a migration.
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