Change an Employee's PAYG Income Type: Australia

You can change the PAYG income type for an employee (for instance, if a working holiday maker employee becomes a permanent employee) to ensure proper tax withholding and income limits.

You can change the PAYG income type for an employee to ensure proper tax withholding and income limits, as well as proper reporting. One example is when a working holiday maker employee becomes a permanent employee.

Income types are reflected on reporting periods and payment summaries in the legacy PAYG Summary features and on submissions in the STP Phase 2 feature, where they are displayed as "Income Stream Types". To ensure the correct income type is reflected for each reporting period, we recommend that you close the current reporting period to enable the system to generate a new reporting period.

The following steps guide you through this process.

When you change the income type for an employee, you "terminate" the employee to close the reporting period and then enter a rehire date to generate the new reporting period with the new income type.
  1. From the Main Menu, select Payroll > Programs > PR Employees.
  2. In the Employee field, enter the employee.
  3. Click on the Add'l Info tab.
  4. Deselect the Active check box.
    The Termination Date field is enabled.

  5. In the Termination Date field, enter a termination date that falls after the starting date of the current reporting period.
  6. Click Save.
  7. Click on the Info tab.
  8. In the PAYG Income Type field, select the new income type.
    • S - Salary and Wages (SAW)
    • H - Working holiday maker (WHM)

  9. In the Most Recent Rehire Date field, enter an effective date that falls after the Termination Date you entered above.
  10. Click Save.

    A message displays indicating the Termination Date will be cleared.

  11. Click OK.
  12. Click on the Add'l Info tab.
  13. Select the Active check box.
  14. Click Save.

The Termination Date field is cleared, the employee's income type is updated, and a new reporting period is created.

When you run year-end summaries in the legacy PAYG Summary feature, the system will generate a summary for each reporting period, with each summary showing the income type associated with its corresponding reporting period. This ensures accurate PAYG reporting.

On the next occasion when you pay the employee and create an STP Phase 2 submission, reportable amounts for the employee will appear within the submission in records qualified by the new Income Stream Type and, if applicable, Income Stream Country (as indicated by the Country Code field in PR Employees).