How do I prepare payroll information for a Compensation Fund Return of Earnings?

Start with the employer and the assessment period

A payroll export is only useful if it covers the correct employer and period. Confirm the Compensation Fund account, legal name and reporting dates before calculating anything. Do not combine group companies because their payrolls are processed by the same administrator.

The CF-2A form published with Notice 3910 of 2026 distinguishes actual and provisional earnings and provides separate employee and director or member columns. Use those labels when planning the working file. They are more informative than an attachment called “annual salaries”.

Keep a record of the form or official notice used for the preparation. A saved template from an earlier cycle may contain different dates and limits. The right answer for the previous year should not be copied into the current declaration without review.

Current form: two periods and two earnings limits

These amounts come from the published form and accompanying notice, not a payroll estimate. Do not apply the new limit to both columns merely because the return is being prepared in 2026. Retain the employee-level calculation showing how the relevant annual limit was applied.

Keep headcount separate from the capped earnings calculation. An employee whose earnings require an adjustment under the applicable annual limit must not disappear from the personnel record. The working schedule should show the person, the original amount and the reviewed amount. The Compensation Fund earnings limit also serves a different purpose from PAYE tax brackets or the Basic Conditions of Employment Act earnings threshold. A payroll system may store several statutory settings. Check that the report uses the setting for this declaration and period.

Collect records that let you trace each total

1. Monthly payroll detail. Export earnings components, employee identifiers and the periods covered, rather than only the net salary payment file.
2. Employment movements. Record starters, leavers and transfers between employing entities.
3. Director or member remuneration. Identify the relevant working relationships and separate records needed for the form.
4. Adjustments. Keep corrected runs, reversals, bonuses and other changes with their explanations.
5. Accounting reconciliation. Obtain the wage and salary accounts and identify amounts posted outside the normal payroll run.
6. Prior return and assessment. Use them for comparison, without treating last year’s figures as the answer for this year.

Store the original exports and a reviewed working copy. If you adjust a classification, keep the original amount, the reviewed treatment and the reason visible. That gives the employer a record that can be checked later.

Why net salary payments are not the starting total

The amount paid into an employee’s bank account has already been affected by deductions and other payroll items. It is therefore not a substitute for reviewing the earnings components relevant to the Compensation Fund. A single bank transfer total can also conceal reimbursements or payments covering different periods.

The Fund’s published earnings guidelines distinguish remuneration items such as regular overtime, bonuses and commission from certain occasional or reimbursive payments. That older document is useful for identifying classification questions; its old dates and monetary figures must not be reused for the current return.

Create a component mapping for review against current requirements. For each payroll code, state what the payment actually represents and why the proposed treatment applies. A label such as “allowance” is not enough to decide the treatment without understanding the arrangement.

Check people and groups before summing the year

The form separates ordinary employee information from directors or members. Check the actual working relationship and remuneration rather than classifying someone solely from a name on the company registration documents. Keep passive ownership returns distinct from payments for employment.

Review temporary workers and people who joined or left during the period. A year-end employee list may omit people who were paid earlier in the year. Conversely, importing both the old and new employee number after a payroll change can count the same person twice.

If workers are supplied by another business, examine the actual arrangement and the applicable responsibilities. Do not assume that a contractor label settles who is the employer. Mark uncertain cases for review before finalising the declaration. The purpose of the schedule is to support the employer’s statement with facts, not to make every person fit a convenient software category.

Keep actual and provisional calculations separate

Actual earnings are built from the records for the completed period. Provisional earnings represent the expected position for the following period on the form. Use separate tabs or clearly separated columns so that a forecast adjustment cannot overwrite historical payroll.

For the provisional calculation, record the assumptions: expected headcount, planned salary changes, known departures and realistic recruitment dates. Use information approved by the business rather than simply repeating last year’s total or applying an unexplained percentage.

A fictional employer might have fewer staff at the end of the completed period but plan to recruit for a new contract. The actual return must still reflect what happened in the completed period, while the provisional view should show the supported plan for the next one. Keep the contract and staffing assumptions available without presenting the forecast as a guaranteed outcome.

What if actual earnings differ from the earlier estimate?

A forecast and the eventual payroll can differ because recruitment, salary changes or contracts developed differently from the original plan. Preserve the earlier estimate and explain the events that changed the outcome. Do not alter actual payroll to make it agree with the forecast.

For example, a fictional business planned to recruit for a contract that was delayed. Its actual earnings record should reflect the employees and remuneration for the completed period. The next provisional schedule should use the supported staffing plan for its own period. Neither should be changed simply to keep an assessment at a preferred amount.

Separate a changed forecast from an error in a submitted return

A genuine change in expectations is different from omitting an employee, using the wrong annual limit or typing an incorrect historical total. For an error, identify the affected submitted period and ask which correction or revision process applies. Keep the original return, the corrected calculation and the reason together.

For a new forecast, record the assumptions approved by the business. Show known salary commitments separately from proposed hires, and use realistic commencement dates. A vacant role planned for later in the period should not quietly be treated as twelve months of confirmed payroll. If an assumption is uncertain, explain its basis and arrange a review.

After the return produces an assessment, compare the assessment periods and figures with the submitted information. An apparently unexpected amount should be traced to the relevant earnings, tariff, minimum or account item. The actual-versus-provisional distinction helps that review, but does not by itself establish that the assessment is incorrect.

Reconcile the total and explain meaningful changes

Compare the working schedule with payroll control totals and the relevant accounting balances. List differences rather than forcing the figures to match with an unsupported adjustment. Timing, corrected runs and items posted outside payroll may need explanation.

Compare the proposed return with the previous one. A significant change may be entirely real, but the explanation should identify what changed: headcount, activity, remuneration, reporting period or a correction. Keep evidence for that explanation, such as employment records or a revised payroll report.

The Fund’s employer guidance describes the supporting records that can be needed during an audit. Preparing a coherent file before submission makes it easier to answer a later question without reconstructing the year from scattered emails. Do not treat every variance as a system error.

Review the current submission position

As checked on 30 September 2026, Notice 4140 of 8 September 2026 addresses outstanding 2025 and earlier Returns of Earnings and calls for submission before 31 October 2026. This is a dated reminder about outstanding returns, not a permanent annual deadline for every future cycle.

Use the Department’s official online-services entry point and check the latest notice when preparing a submission. Keep evidence that the return was actually submitted, not only a saved draft or an exported payroll report.

If the employer has ceased operating or has no employees, check the current form’s instructions and the appropriate update process. Do not assume that typing zero into every field is an adequate way to explain a change in the employer’s position.

Approve the figures and retain the file

Before the authorised person signs or submits, provide the final declaration, the calculation and a short list of reviewed adjustments. Confirm that the employer understands the periods, the actual and provisional distinction and any unresolved issue. A consultant preparing a return does not remove the employer’s need to provide accurate information.

Retain the submitted version, acknowledgement, assessment and relevant correspondence together. If an error is found later, preserve the original and the correction trail rather than overwriting the file as though the first version never existed.

Vatco can assist with COIDA assessment and Return of Earnings work and related payroll preparation. Start by sharing the employer account, periods and the state of the records. The Letter of Good Standing guide explains how returns, assessments and payments connect to the later document.