End of the financial year is the moment payroll errors become payroll problems. Employees checking their income statements, accountants running reconciliations, the ATO matching STP data against business activity statements, any discrepancy that has been sitting quietly in your payroll system all year suddenly becomes visible.
A thorough payroll audit before 30 June is the most effective, and most cost-efficient way to catch and correct errors before they escalate into penalties, Fair Work back-payment claims, or ATO audit activity. VeiraMal’s payroll team conducts EOFY payroll audits for Australian businesses every year. Here are the 10 areas our team works through, and why each one matters for your compliance and your bottom line.
If payroll errors are a recurring issue for your business, it may also be worth considering whether a managed payroll service would eliminate the risk entirely, rather than addressing it retrospectively each year.
Payroll Audit Checklist
1. Single Touch Payroll (STP) Reconciliation
Start here. Every STP submission made to the ATO throughout the year must reconcile exactly with your internal payroll records. Discrepancies, even minor ones, create problems at two levels: they affect the accuracy of employee income statements, which flow directly into individual tax returns; and they flag your business as a candidate for ATO compliance activity.
VeiraMal checks every pay event submitted through STP Phase 2 against payroll records, identifies mismatches, and lodges update events to correct them before EOFY. Since the introduction of STP Phase 2, reconciliation has become more complex. Income types must be disaggregated correctly, cessation reasons must be recorded, and worker classifications must be accurate. Our team sees businesses still operating with Phase 1-style reporting structures despite having Phase 2-compliant software. The software alone doesn’t fix the problem; the underlying payroll categories must be correctly mapped.
For more on what Phase 2 requires and the common configuration mistakes, read our related article on payroll services and STP compliance.
2. Superannuation Guarantee Compliance
Super is one of the most significant EOFY compliance obligations and one of the most frequently miscalculated.
The Super Guarantee rate increased to 11.5% from 1 July 2024. VeiraMal confirms the correct rate has been applied to every employee’s eligible earnings throughout the full financial year, that super has been calculated on ordinary time earnings (not just base salary, which excludes some components it shouldn’t), and that all quarterly super payments were made by the due dates: 28 October, 28 January, 28 April, and 28 July.
Late superannuation triggers the Superannuation Guarantee Charge (SGC), which adds interest and an administration levy on top of the unpaid amount and must be reported to the ATO via a Superannuation Guarantee Charge Statement. This is one of the most avoidable EOFY liabilities we encounter and one of the most expensive when it’s left undetected.
From 1 July 2026, the Payday Super legislation will require super to be paid on each payday rather than quarterly. Now is the time to ensure your payroll system and processes are set up for that transition. VeiraMal’s team is already helping clients prepare for this change as part of EOFY audit engagements. You can also read VeiraMal’s detailed breakdown at Your Guide to Payday Super 2026.
3. Award and Minimum Wage Compliance
Award underpayment is consistently the most common and most costly compliance failure in Australian businesses. It typically doesn’t happen through intent. It happens because award rates were updated on 1 July and the change wasn’t implemented, because an employee’s role changed without their award classification being reviewed, or because the business has been applying the wrong award for the role from the outset.
VeiraMal’s EOFY audit checks every employee’s pay rate against the current minimum for their classification under the applicable Modern Award or enterprise agreement. Where underpayment is identified, VeiraMal calculates the full back-payment liability and advises on the most appropriate approach to remediation proactive self-disclosure to the Fair Work Ombudsman significantly reduces penalty exposure compared to being found in a compliance investigation.
For a broader understanding of Fair Work compliance obligations and the mistakes that generate the most risk, see our Tash Talk on Fair Work Compliance Checks for Employers. The Australian Fair Work Ombudsman’s website also publishes current award minimum wages for all Modern Awards.
4. Leave Balance Accuracy
Leave balance errors are among the most common payroll discrepancies VeiraMal encounters at EOFY and the most likely to generate employee disputes when annual leave, personal leave, or long service leave payouts don’t match what employees believe they’re owed.
VeiraMal audits annual leave and personal leave accruals for accuracy, confirms that leave taken during the year has been correctly deducted, verifies that leave loading is being applied where the applicable award or agreement requires it, and checks that long service leave entitlements are being tracked correctly under the relevant state legislation.
Victoria’s long service leave legislation (the Long Service Leave Act 2018) provides entitlement after seven years of continuous employment different from some other states and requires careful tracking for employees approaching that threshold. VeiraMal’s team is experienced with state-specific variations across Victoria, New South Wales, Queensland, and Tasmania (where VeiraMal has offices in Melbourne, Sydney, and Hobart).
5. PAYG Withholding Reconciliation
Total PAYG withholding as reported through STP must reconcile with the amounts remitted to the ATO on your business activity statements. Even small discrepancies can prompt ATO follow-up, and significant differences can result in the ATO issuing an amended assessment.
VeiraMal reconciles these figures, identifies any gap, and lodges the appropriate amendments before your annual PAYG withholding reconciliation is finalised. For businesses that process termination payments, this area warrants particular attention different tax schedules apply to different components of a termination payment, and errors in tax withholding on redundancy payments or unused leave payouts are common.
6. Employee Classifications
Following the Fair Work Legislation Amendment (Closing Loopholes) Act 2023, the casual employment definition and conversion rights have changed significantly. VeiraMal reviews how each employee is classified full-time, part-time, or casual and confirms the classification is accurate and legally defensible.
A casual employee who has been engaged on a regular and systematic basis and has a reasonable expectation of continuing employment may no longer qualify as ‘genuinely casual’ under the new definition. Misclassification exposes employers to both back-payment liability for entitlements (annual leave, personal leave, notice) and Fair Work penalties. VeiraMal identifies at-risk casual arrangements as a standard component of every EOFY audit.
7. Allowances and Penalty Rates
Allowance and penalty rate errors accumulate quietly over a full year and can represent substantial underpayment amounts by EOFY. VeiraMal checks that all applicable allowances, tool allowances, vehicle allowances, meal allowances, remote area allowances have been paid correctly, and that overtime, weekend, evening, and public holiday penalty rates have been accurately calculated for every affected employee.
In the hospitality, retail, and healthcare sectors where VeiraMal has deep experience, penalty rate complexity is particularly significant. Multiple award conditions can apply to the same shift depending on when it starts and ends, and automated payroll systems don’t always handle these configurations correctly without periodic human review.
8. Termination Payment Calculations
Termination payments are a high-risk area for calculation errors. VeiraMal reviews every termination payment made during the financial year to confirm that unused annual leave was calculated at the correct rate (including leave loading where applicable), long service leave was included where the employee was entitled, redundancy pay was correctly calculated for eligible employees and excluded for ineligible employees (such as short-tenure casuals), and the correct tax treatment was applied to each component.
The ATO publishes specific tax withholding schedules for termination payments; different rates apply to Eligible Termination Payments, unused annual leave, and other components. Applying the standard tax schedule to all components is a common and potentially costly error.
9. Victorian Payroll Tax Obligations
For Melbourne businesses, payroll tax compliance is an EOFY obligation that requires specific attention. Victoria’s payroll tax threshold is $900,000 in total Australian wages (2024-25), and businesses exceeding this threshold must lodge monthly payroll tax returns with the State Revenue Office and complete an annual reconciliation by 21 July each year.
VeiraMal checks that monthly returns were lodged and paid correctly throughout the year, that wages have been correctly categorised (some contractor payments may need to be included), and assists with the annual reconciliation lodgement. For businesses operating across multiple states, wages must be correctly apportioned for each state’s payroll tax return.
10. WGEA Reporting (100+ Employees)
If your business has 100 or more employees, WGEA reporting is an annual obligation that intersects directly with your payroll data. VeiraMal confirms that your WGEA submission has been completed, that the gender pay gap data is accurate and consistent with your payroll records, and that your workforce profile data (headcount by gender, employment type, and manager level) is correctly reported.
Since the WGEA began publicly disclosing individual employer gender pay gaps, the reputational stakes of inaccurate or incomplete reporting have increased significantly. VeiraMal’s analytics team prepares and reviews WGEA data for clients as part of both EOFY audit engagements and standalone analytics projects.
See our detailed WGEA guidance in our Tash Talk on WGEA Reporting and learn more about VeiraMal’s HR Analytics and Reporting services.
What Happens When VeiraMal Finds Issues
VeiraMal’s EOFY payroll audits deliver more than a list of findings. Every issue is risk-rated (high, medium, low), accompanied by a dollar-value estimate of the liability where relevant, and addressed with a specific, practical remediation step. High-risk issues are corrected immediately STP amendments lodged, super payments made, underpayments back-paid before the financial year closes.
Clients who complete a VeiraMal EOFY audit consistently report that the audit pays for itself many times over not just in penalties avoided, but in the management time saved from dealing with ATO and Fair Work inquiries after the fact.
Explore VeiraMal’s full Payroll Services and HR compliance audit capabilities to understand how we can support your business beyond EOFY.
Book your EOFY payroll audit with VeiraMal. Contact the team at Veiramal or call 0433 892 300 to secure your audit date now spots fill quickly as the financial year end approaches.
