Every firm has a long list of new duties to perform when the fiscal year ends and one of these crucial responsibilities is finishing payroll finalisations. Employers in Australia must use the Single Touch Payroll (STP) system to finalise their payroll for the year. We refresh your knowledge on all you need to know about STP finalisation, including when to finish them because there are so many other moving parts this time of year.
STP: What is it?
Every time you process payroll, Single Touch Payroll transmits all relevant tax and superannuation data about your workers straight from your accounting software to the Australian Taxation Office (ATO). The data sent to the ATO comprises:
- Pay details, such as the kind of income and the division of earnings between overtime, paid time off, and gross pay
- Information on the pay-as-you-go (PAYG) withholding, such as the amount deducted and the method used to calculate it.
Completing the finalisations for STP
It is crucial to adhere to the specific STP finalisation procedure for your accounting and payroll software so that your workers receive the accurate data they need to file their taxes. Regardless of whether you use MYOB, Quickbooks, or Xero, the procedure can help your business run more smoothly and accurately while ensuring that the data used for your employees’ income tax returns is accurate and free of errors.
Best advice? Most workers await “tax time” hoping to receive a cash return. For many employees, a little lump payment through a tax return may alleviate financial stress, especially in light of the current cost-of-living issues. Having accurate and timely Single Touch Payroll data can contribute to a productive working relationship between employers and employees. If the data is ready, you can finish your STP data early!
The STP finalisation process
In essence, completing your STP data is how you notify the tax office that an employee’s STP reporting for the financial year is over.
Ensure that your STP, payroll, and employee data are correct for every employee (even those who left during that time) before submitting a finalisation statement. If any have “Update to STP2” shown next to their name, just click the update button, adhere to the instructions, save the data, and then reload the page.
Prepare for finalisation
To make sure the material is accurate, you must first review it.
- Choose “Single Touch Payroll” from the “Payroll” option
- Choose the tab labeled “Finalisation”
- Click on the “EOFY checklist (PDF)”
Finalise and submit STP data
Time to make the final decision after going over the specifics
- Once again, choose “Single Touch Payroll” from the “Payroll” option.
- Choose the tab labeled “Finalisation”
- Please select “Edit RFBA”, input the numbers correctly, and click “Save changes” if you need to submit fringe benefits amounts or exempt amounts.
- You can click “View Report” to view the employee year-to-date summary.
- You can select “Export” and then choose PDF or CSV as the file type to download these summaries in bulk.
- Click “Submit finalisation” after selecting the employees you want to finalise. You can choose “Show terminated employees for RFBA” if you need to see the terminated employees.
- Verify the financial year and organisation details in the finalisation summary to ensure accuracy.
- Click “Submit to ATO” after you’ve confirmed that you have read and comprehended the authorisation to file.
Please note that it could take up to 72 hours for Xero to update with the finalisation’s new status. The STP “Overview” or “Finalisation” tab is where you can see the current state.
The Australian Taxation Office (ATO) will immediately populate the employee’s income tax return and present it as “tax ready” on their ATO online services portal, which may be accessible through my Gov, once you’ve submitted the finalisation indicator for that employee
Summaries of payments
Employers using the Single Touch Payroll (STP) system are exempt from having to give their workers payment summaries for payments made and completed via STP. Instead, employees can get this information in the form of an income statement—which is akin to a payment summary—through ATO online services via myGov.
Employers must still give payment summaries and an annual payment summary report to the ATO for any payments that were not processed through single-touch payroll and were not recorded.
Deadlines for STP completion
Finalisation declarations for employees can be submitted at any time during the fiscal year; for current employees, this is usually done after the conclusion of the fiscal year; for terminated employees, the declaration can be completed after the employee’s employment has ended. The precise deadline for STP finalisations varies based on the specifics of your organisation, however.
Companies without closely held workers
An employee who holds a close link with the firm, company, or trust that provides their compensation is considered a closely held employee. This includes beneficiaries of a trust, directors or shareholders of a firm, and family members operating a family business.
The deadline for finalising the year-end STP is July 14.
Employers having 20 or more workers overall, including a combination of closely owned and arm’s length personnel
A person having a standard employment arrangement is considered an arm’s length employee. For instance, they are hired to work and have nothing to do with the company.
Closely held workers have until September 30, 2024, to finalise their end-of-year STP; all other employees have until July 14, 2024.
Small businesses (19 or fewer workers) that solely have closely held payees
The payee’s income tax return submission deadline will serve as the deadline for end-of-year STP finalisation.
Include STP finalisation in your bundle.
We would be happy to assist you in crossing off one more EOFY chore from your to-do list! Just get in touch with us to talk about incorporating STP finalisation into your accounting package.
Reach out to the Fullstack Advisory team as soon as possible to discuss payroll options.
