STP Finalisation — What You Need to Know

The financial year changeover brings a multitude of added tasks to every business' to-do list; one of these very important tasks is to complete payroll finalisations! All Australian employers must complete their payroll finalisation process for the year using the Single Touch Payroll (STP) system.

With so many other 'moving parts' at this time of year, we refresh your memory on what you need to know about STP finalisations, including when to complete them.

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What is STP?

Single Touch Payroll directly sends any tax and superannuation information relating to your employees from your accounting software to the Australian Taxation Office (ATO) each time you run payroll. The information reported to the ATO includes: 

• Details of the pay, including type of income and the breakdown between gross pay, paid leave, overtime etc.
• Details of the pay as you go (PAYG) withholding, including, how much you withheld and how you calculated the amount.
• Superannuation liability information.

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Completing your STP finalisations

Following the unique STP finalisation process for your payroll and accounting software is essential to ensure that your employees receive the correct information to lodge their tax returns. Whether you use Xero, Quickbooks, or MYOB, following the process can mean efficiency and accuracy for your business, helping to ensure minimal errors with the information used for your employee's income tax return.

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Top tip: many employees eagerly anticipate the arrival of 'tax time', looking forward to getting a refund. Given the current cost-of-living challenges, a small lump sum through a tax return may ease financial stress for many employees. Ensuring your Single Touch Payroll data is correct and lodged promptly can help build a positive employer/employee relationship. Finalising your STP data early is possible if the information is ready!

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The STP finalisation process 

Effectively, finalising your STP data is how you advise the tax office that your STP reporting has been completed for the financial year for an employee.

Before making a finalisation declaration, it's important to ensure that your STP, payroll, and employee information is accurate for all employees (including employees who left during the period). If any are showing with "Update to STP2" next to their name, simply click where it says to update, follow the prompts, save the information and then refresh the page. 

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Prepare for finalisation

You'll first need to review the information to ensure it's correct.

• Go to the "Payroll" menu and select "Single Touch Payroll".
• Select the "Finalisation" tab.
• Select "EOFY checklist (PDF).

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Finalise and submit STP data

After reviewing the details, it's time to finalise!

• Again, go to the "Payroll" menu and select "Single Touch Payroll".
• Select the "Finalisation" tab.
• If you need to report fringe benefits amounts or exempt amounts, select "Edit RFBA", enter the correct amounts and click "Save changes". 
• To check employee year-to-date summary, select "View Report".
• To download these summaries in bulk, select "Export", then choose PDF or CSV as the file type. 
• Select which employees you wish to finalise and click "Submit finalisation". If you need to view terminated employees, you can select "Show terminated employees for RFBA".
• Check the finalisation summary to make sure the financial year and organisation details are correct.
• Make sure you have read and understood the authorisation to file and then click "Submit to ATO".

Be aware that Xero may take up to 72 hours to reflect the updated status of the finalisation. You can view the status in the STP "Overview" or "Finalisation" tab.

Once you've provided the finalisation indicator for an employee, the Australian Taxation Office (ATO) will automatically populate the employee's income tax return and display it as 'tax ready' in their ATO online services portal, which can be accessed through myGov.

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Payment summaries

Under the Single Touch Payroll (STP) system, employers are not required to provide payment summaries to their employees for payments reported and finalised through STP. Instead, this information is made available to employees through ATO online services accessed via myGov, in the form of an income statement, which serves as the equivalent of a payment summary.

However, employers are still required to provide payment summaries and send a payment summary annual report to the ATO for any payments that were not reported and finalised through single touch payroll.

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Due dates for STP finalisations

You can submit a finalisation declaration for an employee at any point during the financial year — this would generally be done after the financial year's end for active employees, while terminated employees' declaration can be completed after their employment has ceased. The exact due date for STP finalisations varies depending on your organisation's circumstances, though:

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Employers with no closely held employees

A closely held employee is someone who has a direct relationship with the business, company, or trust that compensates them. This includes family members in a family business, directors or shareholders of a company, and beneficiaries of a trust.

The due date for end-of-year STP finalisation is 14 July.

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Employers with a mix of closely held and arm's length employees and a total of 20 or more employees

An arm’s length employee is someone with a typical employee arrangement. For example, they’re unrelated to the business and are employed to work.

The due date for end-of-year STP finalisation is 30 September for closely held employees, while all other employees must finalise by 14 July 2024.

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Small employers (19 or fewer employees) with only closely held payees

The due date for end-of-year STP finalisation will be the payee's income tax return due date.

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Who can complete STP finalisations?

You have two options to report your payroll information. The first option is to utilise STP-enabled payroll software directly.

Alternatively, you can choose to engage a third-party service provider like Bonerath & Co. We can act as an external intermediary and handle the reporting on your behalf, as well as provide guidance and best-practice efficiencies across your entire taxation, payroll and end-of-year obligations.

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Add STP finalisation to your package

If you'd like to take one extra EOFY task off your to-do list, we'd love to help! Simply reach out to us to discuss adding STP finalisation to your accounting package.

With the end of the financial year only days away, don't delay in reaching out to the team at Bonerath & Co.!