EOFY 2023 Prepare for Finalising Single Touch Payroll

EOFY 2023 is almost here. Are you ready?

Employers are required to run their usual end of financial year reconciliations for payroll and lodge a Single Touch Payroll (STP) Finalisation Declaration to the ATO.

STP Finalisation Declaration Deadlines

The EOFY finalisation declaration can be done through STP. There is no need to issue payment summaries to employees you have reported through STP.

Employers must complete the finalisation declaration by 14 July for employees. Employers with a mixture of employees and closely held payees have until 30 September to make the declaration.

Small employers (fewer than 19 employees) that only pay closely held payees have until the payee’s income tax return due date. Employers will need to liaise with the individual payee about the exact tax return due date.

You may have some payees who have not been reported through STP, so you still need to issue a payment summary for anyone not reported through STP. You will also need to submit a payment summary annual report (PSAR) for any payments outside the STP system.

Once the STP finalisation has been sent to the ATO, the employee’s information will be released in their myGov account and listed as ‘tax ready’.

STP Payroll Checklist

Be efficient and prepare as much as you can now so that you are able to finalise your data by 14 July.

Check that your business details, including ABN, registered name and address and authorised contact person are correct in your software.
You should already have necessary details for all employees, both current and any who have terminated throughout the year if you are using STP. The essential information is full name, date of birth, address and tax file number.
Review any terminated employees. Is the correct termination date recorded in your software? Are Employment Termination Payments (ETPs) coded correctly?
Review salary sacrifice payments to superannuation for Reportable Employer Superannuation Contributions (RESC) amounts.
Check with us for any Reportable Fringe Benefit Tax (RFBT) amounts that should be included.
Check that all payroll categories are assigned to the correct ATO reporting category. This includes all ordinary earnings, loadings and penalties, allowances, commissions, bonuses, leave payments and termination payments.
You may have other unusual payments such as those made under a voluntary agreement for contractors or labour-hire arrangements—check that you have reported them correctly.

Finalising Single Touch Payroll

It’s important to verify payroll figures before finalising, in order to minimise the chance of errors and having to re-issue at a later date. The finalisation process is the same whether you are using STP Phase 1 reporting or Phase 2.

You can learn more about end of year finalisation of STP from the ATO.

Common issues to avoid

Ensure you finalise the correct financial year. Mistakes commonly occur when the declaration is being lodged after 30 June.
Submit a finalisation declaration for all employees including employees who may have only worked for part of the financial year such as terminated employees and casuals.
Changing payroll software or Payroll IDs during the financial year may lead to misreporting. Read the ATO’s guidance on this issue here.

Once the payroll year is completed at 30 June, you can then analyse the payroll amounts for each employee and cross-check against the numbers in your profit and loss accounts.

When you have reported and finalised your employees’ information through STP, you are exempt from:

providing payment summaries to your employees
lodging a payment summary annual report.

For payments to your employees that were not reported through STP, you still need to:

give a payment summary to your employees
provide the ATO with a payment summary annual report for these payment summaries.

Making an amendment

If you identify that you need to make an amendment after you have submitted a finalisation declaration, you’ll need to submit these as soon as possible. You can make the amendments to finalised STP data in your STP solution.

The ATO recommend you tell your employees when you make an adjustment that will be reflected in their income statement. If they have already lodged their tax return they may need to lodge an amendment.

What to tell your employees

You will need to tell your employees:

you are no longer required to provide them with a payment summary for the information you’ve reported and finalised through STP
they can access their income statement online through myGov or talk to their registered tax agent
‘income statement’ is the new term for their payment summary (if they don’t already know this from last year)
to wait until their income statement is ‘Tax ready’ before lodging their tax return
to check their personal details and if necessary, update with both you and the ATO (incorrect personal details may prevent them from seeing their STP information).

If an employee does not have a myGov account, they can easily create one online. They can also talk to their tax agent who will have access to their income statement information. If they can’t create a myGov account and don’t have a tax agent, they can phone the ATO for help on 132861.

If the ATO cannot match STP data to an employee they may not see their income statement. This may happen where the TFN you’ve reported doesn’t match ATO records. If your employee can’t see their income statement, they will need to phone the ATO on 132861.

Want to make the STP end of year process easier?

Talk to Balanced Beans bookkeeping and payroll specialists about reviewing and validating your payroll figures prior to finalising the data and lodging with the ATO. The end of the payroll year will be here sooner than you think!

Servicing Newcastle, Lake Macquarie, Maitland & The Hunter Valley

(02) 4046 1000