October 4, 2026

Changing payroll software mid-year in Australia: STP, BMS IDs and year-to-date amounts

The short answer: if you move payroll to Xero, QuickBooks Online or any other STP-enabled product part-way through an Australian financial year, decide first whether you will carry employees’ year-to-date (YTD) amounts into the new software. If you do, you must tell the ATO, either by zeroing out the old software or by reporting the previous BMS ID or Payroll IDs from the new one. If you don’t, every employee gets a second income statement and you must finalise both.

Why the ATO sees two employers when you only changed software

Under Single Touch Payroll Phase 2, the ATO groups what you report by a combination of four things: your ABN, your branch, the BMS ID (a serial-number-like identifier for the payroll software that sent the report) and each employee’s Payroll ID. Every distinct combination produces its own income statement for the employee.

A new payroll product almost always means a new BMS ID, and often new employee codes too. So when the first pay run goes out of the new system carrying January’s YTD totals, the ATO sees a new combination reporting the same money a second time. In the ATO’s own words, if you don’t tell it, “your employees will see duplicate income statements” and you are “reporting more than your true PAYG withholding liability.”

There is one exception. If the new product lets you nominate your own BMS ID and you reuse the previous one, nothing in the combination has changed and the ATO says you don’t need to notify it. Many products assign the BMS ID themselves, so check before relying on it.

Option 1: start the new software at zero (no YTD transfer)

You can simply not carry YTD amounts across. The new software starts every employee at zero, and the ATO displays a second income statement for the new combination. You don’t need to tell the ATO anything, but you must finalise STP for every combination, old and new, by 14 July.

That is where the trap sits. Finalising the old combination needs the old software. The ATO lets you finalise at any point during the year, and it tells employers to think about whether the old ABN or branch will still be active, whether they will still be authorised to report for it, and whether they will still have access to the old payroll product. If any answer is “maybe not”, finalise the old software’s employees at the point you switch, not next July. Warn employees they will see two income statements.

Option 2: transfer YTD and zero out the old software

The ATO’s preferred route when you still have the old software and it supports it. The order matters:

Before loading YTD figures into the new software, send an update event from the old software that reports every employee’s YTD amounts as zero. That tells the ATO to stop displaying the old income statement.
Load the YTD amounts into the new software and send an STP report showing the transferred figures.

Each product has its own button for step 1. MYOB Exo Payroll, for example, has Pay › Single Touch Payroll › Update using Previous BMS/Employee ID with a “Send Year To Date values as Zero” tick box, and MYOB’s help says that if you are moving to another payroll system during the financial year you must zero the STP YTD totals for all employees. Check that the zero report shows as accepted before step 2.

Option 3: transfer YTD and report the previous BMS ID or Payroll IDs

Use this when the old software is already gone (subscription cancelled, file archived) or doesn’t support zeroing, as long as the new software offers the feature and you know the old identifiers. Load the YTD amounts into the new product, then send an update event that includes the previous BMS ID, or each employee’s previous Payroll ID. The ATO then replaces the old income statement with the new one.

Two details catch people out. First, the previous IDs can only travel in an update event, never in a normal pay event, so your first pay run doesn’t do it automatically. Second, you need the old BMS ID before you lose access to the old software. Write it down along with every employee’s old payroll code while you still can log in.

The three options side by side

	No YTD transfer	Zero out	Previous ID replacement
Tell the ATO?	No	Yes, zero update event from old software	Yes, update event from new software
Needs old software	Yes, to finalise	Yes, before transfer	No, but you need its BMS ID
Income statements per employee	Two	One	One
Finalise by 14 July	Both combinations	New software	New software

A checklist for the week you switch

Pick the option before the last pay run in the old software.
From the old software, record the BMS ID, every employee’s Payroll ID, and a YTD verification report as at the final pay date.
Reconcile YTD gross and PAYG withheld to the W1 and W2 figures already lodged on activity statements.
If zeroing out, send the zero update event and confirm it was accepted before the first new pay run.
Keep the old software readable until the year is finalised. If you can’t, finalise its employees now.

If a mistake slips through, the ATO expects STP errors to be corrected within 14 days of finding them (or by the next regular pay event if your pay cycle is longer), using an update event. Once corrected and finalised, revise W1 and W2 on the affected activity statement.

The accounting side of the move has its own timing questions. Our MYOB migration timing guide covers 1 July versus mid-year cutovers, and MYOB to Xero vs MYOB to QuickBooks covers how payroll is priced in each destination.

Frequently asked questions

Do I have to tell the ATO when I change payroll software?

Only if you transfer employees’ YTD amounts into the new software under a different BMS ID or Payroll ID. If you start the new software at zero, you don’t notify the ATO, but employees get a second income statement and you must finalise both.

Can I send the previous BMS ID with my first pay run?

No. The ATO accepts the previous BMS ID or previous Payroll IDs only in an update event, not in a pay event. Send the update event separately after loading the YTD figures.

What if I have already cancelled the old payroll software?

You can’t zero out without it, so use the replacement method: load YTD in the new software and send an update event with the old BMS ID. If you don’t have the old BMS ID, the previous software provider can tell you.

When is the STP finalisation deadline?

14 July after the end of the financial year, for each combination of ABN, branch, BMS ID and Payroll ID you reported under. You can finalise earlier, at any time during the year, which is safer if you may lose access to the old software.