How long do you have to correct an STP error with the ATO?

The Australian Taxation Office provides a 14-day correction window from the date you detect an STP error. You can resolve the discrepancy by submitting an out-of-cycle update event within 14 days or by lodging updated year-to-date balances in your next scheduled pay event if that falls within the relevant financial year.

When should you use a Full File Replacement instead of an update event?

A Full File Replacement is only used when a pay event file is corrupted, rejected due to severe schema errors, or duplicated by software failure. The ATO strictly prohibits using Full File Replacement to reverse normal payroll mistakes or overpayments; genuine payroll errors must be corrected via an update event or subsequent pay run.

How do you correct an STP mistake after an employee's income statement is marked Tax Ready?

You must adjust the payroll records in your software and lodge an amended finalisation declaration through STP. Once lodged, the employee's myGov income statement updates to 'Not Tax Ready' while processing, then returns to 'Tax Ready'. You must notify the employee promptly, as they may need to lodge an amended individual tax return.

Can you fix an overpayment through STP without employee consent?

No, you cannot unilaterally deduct wage overpayments from future pay runs under section 324 of the Fair Work Act 2009. While you can adjust STP year-to-date tax and gross figures to reflect correct earnings, actual wage recovery requires a written repayment agreement with the employee or compliance with applicable modern award terms.

How do I correct a mistake after lodging an STP pay event?

If you discover a mistake after lodging a Single Touch Payroll (STP) pay event, the correction method generally depends on the type of error, your payroll software and whether the employee’s income statement has been finalised. Acting promptly matters because STP information reported to the ATO can

Quick answer

To correct an STP mistake after lodging, adjust your payroll software balances and report the updated year-to-date totals either in your next scheduled pay run or via an immediate update event. The ATO allows 14 days from detecting an error to lodge corrected figures, ensuring employee myGov statements and tax withholdings align.

Skill level: General guidance
Time: Varies
Trade: Bookkeeping & Cashflow
Updated: 4 November 2026

How does Single Touch Payroll (STP) correction work after lodgement?

What are the ATO rules for correcting an STP pay event error?

Many year-to-date payroll errors can be corrected in the next regular STP pay event or through an update event, depending on your software and the nature of the mistake.

If an incorrect file was lodged, a full file replacement may only be available in limited circumstances. It should not be used simply to reverse a payment or fix every type of payroll error.

Corrections should align across your payroll records, general ledger, bank transactions, PAYG withholding and superannuation obligations. Changing STP figures alone may leave your accounts inconsistent.

If the employee’s income statement has already been marked as “tax ready”, you may need to lodge an amended finalisation declaration after correcting the year-to-date information.

The ATO provides STP correction guidance, while Fair Work requirements must also be considered where the error involves wages, deductions, leave or an overpayment.

How do you identify whether to submit an update event or fix errors in the next pay run?

Whether the error involves gross wages, allowances, overtime, leave, deductions, PAYG withholding, superannuation or an incorrect employee record.

Whether the payment was actually made incorrectly or only reported incorrectly through STP.

The affected financial year, current year-to-date balances and whether finalisation has already occurred.

How your payroll platform—such as Xero, MYOB or QuickBooks—handles update events, reversals and amended finalisations.

Whether related corrections are needed in the general ledger, activity statements, superannuation records or employee payslips.

Common Costly Mistakes

Deleting or reversing a payroll transaction without understanding how the software updates year-to-date STP balances.

Lodging repeated corrections that duplicate wages, withholding or superannuation amounts.

Fixing STP but not reconciling the payroll clearing account, bank account and general ledger.

Treating an employee overpayment as a reporting-only issue without considering Fair Work rules and an appropriate repayment arrangement.

When To Get Professional Help

Professional help is sensible where the error crosses financial years, affects multiple employees, involves an overpayment, or was discovered after STP finalisation. A registered BAS agent or experienced payroll bookkeeper can review the audit trail and help ensure the payroll, accounting and ATO records are corrected consistently.

Talk To A Specialist

If you are unsure which correction method applies, consider arranging a bookkeeping health check before lodging further pay events or amendments. A specialist can review what was reported, what was actually paid and what needs to be reconciled: Talk to a bookkeeping specialist.

Frequently Asked Questions

Can I fix an STP mistake in the next pay run?

Often, yes. Many year-to-date errors can be corrected through the next normal pay event, provided your payroll records and STP totals update correctly. Some errors require an update event or another correction process, so check the ATO guidance and your software workflow before proceeding.

What if I entered the wrong pay amount but paid the employee correctly?

This is generally a reporting or payroll-record error rather than an employee overpayment. The payroll transaction and STP year-to-date figures may need correction so they match the amount actually paid, along with the relevant withholding and superannuation records.

What happens if the employee’s income statement is already tax ready?

You can generally correct the payroll information and lodge an amended finalisation declaration. The employee should be told that their income statement is being amended, particularly if they have already lodged their tax return, as they may need advice about the effect of the change.

Can I use a negative pay run to reverse an STP error?

Not automatically. A negative or reversal pay run can create additional errors if it does not reflect what was actually paid or if the software treats it incorrectly for STP, PAYG withholding or super. The appropriate method depends on the original transaction and the payroll platform.

Do contractor payments need to be corrected through STP?

Ordinary contractor invoices are generally not reported through STP in the same way as employee wages. However, the position may differ if a worker has been treated as an employee, is subject to a voluntary withholding agreement or falls under another withholding arrangement, so worker classification and ATO reporting requirements should be checked.

Important — General Information Only

This is general information only, not personal bookkeeping & cashflow advice. It does not take into account your objectives, financial situation or needs. Consider your own circumstances and seek advice from a suitably qualified registered BAS agent, bookkeeper or other licensed or registered professional before acting; BAS agent registration can be checked with the Tax Practitioners Board, while current STP and superannuation guarantee guidance is available from the ATO and employment entitlement information from Fair Work.

Frequently asked questions

Can I fix an STP mistake in the next pay run?: Often, yes. Many year-to-date errors can be corrected through the next normal pay event, provided your payroll records and STP totals update correctly. Some errors require an update event or another correction process, so check the ATO guidance and your software workflow before proceeding.
What if I entered the wrong pay amount but paid the employee correctly?: This is generally a reporting or payroll-record error rather than an employee overpayment. The payroll transaction and STP year-to-date figures may need correction so they match the amount actually paid, along with the relevant withholding and superannuation records.
What happens if the employee’s income statement is already tax ready?: You can generally correct the payroll information and lodge an amended finalisation declaration. The employee should be told that their income statement is being amended, particularly if they have already lodged their tax return, as they may need advice about the effect of the change.
Can I use a negative pay run to reverse an STP error?: Not automatically. A negative or reversal pay run can create additional errors if it does not reflect what was actually paid or if the software treats it incorrectly for STP, PAYG withholding or super. The appropriate method depends on the original transaction and the payroll platform.
Do contractor payments need to be corrected through STP?: Ordinary contractor invoices are generally not reported through STP in the same way as employee wages. However, the position may differ if a worker has been treated as an employee, is subject to a voluntary withholding agreement or falls under another withholding arrangement, so worker classification and ATO reporting requirements should be checked.
How long do you have to correct an STP error with the ATO?: The Australian Taxation Office provides a 14-day correction window from the date you detect an STP error. You can resolve the discrepancy by submitting an out-of-cycle update event within 14 days or by lodging updated year-to-date balances in your next scheduled pay event if that falls within the relevant financial year.
When should you use a Full File Replacement instead of an update event?: A Full File Replacement is only used when a pay event file is corrupted, rejected due to severe schema errors, or duplicated by software failure. The ATO strictly prohibits using Full File Replacement to reverse normal payroll mistakes or overpayments; genuine payroll errors must be corrected via an update event or subsequent pay run.
How do you correct an STP mistake after an employee's income statement is marked Tax Ready?: You must adjust the payroll records in your software and lodge an amended finalisation declaration through STP. Once lodged, the employee's myGov income statement updates to 'Not Tax Ready' while processing, then returns to 'Tax Ready'. You must notify the employee promptly, as they may need to lodge an amended individual tax return.
Can you fix an overpayment through STP without employee consent?: No, you cannot unilaterally deduct wage overpayments from future pay runs under section 324 of the Fair Work Act 2009. While you can adjust STP year-to-date tax and gross figures to reflect correct earnings, actual wage recovery requires a written repayment agreement with the employee or compliance with applicable modern award terms.

Written by Tally, the Bookkeeping & Cashflow specialist at Aus.Tools.