STP Finalisation Checklist for Each Employer Client

STP finalisation confirms that each employee’s annual payroll figures are complete. Reconcile the employer’s records, resolve employee-level errors and lodge the declaration before the applicable deadline. Keep the ATO acceptance with the client’s payroll workpapers.

What STP Finalisation Does and When It is Due

Single Touch Payroll (STP) reports an employer’s pay, tax withheld and super information to the Australian Taxation Office (ATO) from payroll software. The employer normally sends a report on or before each payday.

Super reporting includes the super guarantee liability and reportable employer super contributions, where applicable. Sending those figures through STP does not pay the employee’s fund. STP also carries super data used under Payday Super.

The finalisation declaration tells the ATO that a payee’s year-to-date information is complete for the financial year. After year-end, the employee’s income statement becomes tax ready in myGov once the finalisation is processed.

For most employees, the standard deadline falls 14 days after the financial year ends. Closely held payees and eligible inbound assignees have different arrangements. Use the ATO’s finalisation guidance to record the applicable deadline or approved deferral in your client list.

An income statement replaces a payment summary for amounts reported and finalised through STP. Payments outside that reporting still need the applicable payment summary obligations met.

STP Reporting and Phase 2 Checks

STP Phase 2 separates gross pay components and reports income types, employment basis and tax treatment codes. The year-end review checks that payroll settings describe the employee and the payments correctly.

Review allowances assigned to the wrong category, leave bundled into ordinary gross and missing country codes where required for working holiday makers. Check tax treatment codes against the employee’s declarations and residency settings. Follow the STP Phase 2 reporting guide for the detailed mapping work.

Section 389-5 of Schedule 1 to the Taxation Administration Act 1953 sets the employer reporting duty. It requires specified withholding and super-related amounts to be notified electronically in the approved form. Section 389-10 provides for exemptions.

Search the exact product in the ATO product register. Filter by Payroll (STP), expand the entry and inspect its authorised services. Payroll Event 2020 identifies the Phase 2 reporting service. Confirm that the client actually uses the supported release and has completed its Phase 2 setup.

The ATO’s Single Touch Payroll Phase 2 employer reporting guidelines explain reporting categories and employee information. Its Single Touch Payroll resource page directs employers to factsheets and reporting options for introductory questions. Use the ATO’s employer resources when a client needs an explanation of what they must report.

Setting Up Single Touch Payroll for a New Employer Client

Employers must generally use STP-enabled software, report on or before each payday and finalise each year. An ATO exemption or deferral changes the affected obligation only within its terms. Digital exclusion or unreliable internet can support an exemption application. A small headcount alone does not remove the reporting duty.

Collect the employer’s ABN and branch number, software product and release, pay cycles, employee count and closely held payee details. Establish who runs payroll, who reviews it and who lodges. Collect starting balances and previous reporting identifiers if payroll moves during the year.

Use the new employee forms guide for the declarations behind employee tax and super settings. Complete these ordered checks before the first report:

1. Confirm the employer identity and payroll access. Give each staff member their own permitted access.
2. Enter and check employee details, earnings categories and tax settings. Match opening balances to the previous payroll records.
3. Connect the reporting software to the ATO. Register its software provider and software ID using the provider’s instructions.
4. Lodge the first report when payroll is due. Confirm ATO acceptance and resolve any rejection before recording setup as complete.

In Xero, a payroll administrator reviews organisation details and the filing identity in Single Touch Payroll settings. Check the ABN and branch number before connecting Xero to the ATO and notifying the ATO of the hosted software service. Xero warns that changing these identifiers during the year can duplicate reported earnings.

Reckon Payroll displays its software ID under Settings. Register that ID with the ATO, then mark it registered in the payroll book.

Reckon Accounts Hosted and Reckon Accounts Desktop use Reckon GovConnect for their STP submissions. Create the employer’s GovConnect record, check its ABN and branch and register the GovConnect software ID. Reckon One payroll also uses GovConnect. Follow the instructions for the client’s actual product, because the connection routes differ.

The agent can configure and reconcile payroll under their own authorised access. The employer provides the underlying records and declarations and authorises the agent to lodge. Record that authority before sending reports. The TPB’s BAS services guidance includes payroll work involving tax-law interpretation and STP reporting or setup. A person providing that service for a fee needs the relevant registration or applicable exemption.

Pre-Finalisation Checklist for Each Employer Client

Reconcile year-to-date STP totals to payroll reports and the general ledger before making the declaration. Compare annual wages and PAYG withheld with the lodged business activity statements (BAS). Explain differences caused by category definitions, adjustments or timing before changing a figure.

Use one checklist per employer and financial year:

• Confirm every scheduled and unscheduled pay event is included in the correct year, using the payment date.
• Match employee year-to-date earnings and withholding to payroll records. Investigate omitted employees and duplicated records.
• Review terminated employees, cessation details and finalisation status. Include payments made after an earlier finalisation.
• Check lump sums, back payments and termination payments against their reporting categories.
• Review salary sacrifice amounts and their separate reporting. Check that payroll calculations use the correct super base for the period.
• Add reportable fringe benefits amounts where required, using the relevant fringe benefits period and grossed-up amount. Include them before the employee’s finalisation deadline.
• Confirm reportable employer super contributions. Distinguish discretionary employer contributions from compulsory super guarantee.
• Reconcile super liabilities with fund payment records. Identify unpaid or late amounts and send the client the action required before making the declaration.
• Obtain the employer’s confirmation of complete records and the authority needed for lodgment.
• Record the declarant, lodgment date, payroll year, employees covered and ATO acceptance reference.

Consider this fictional reconciliation. The payroll annual report includes a terminated employee, but their record is absent from the finalisation selection. Reconcile that employee’s totals and include the record before declaring the employer complete. Matching only the current employees would leave the former employee’s statement unfinished.

Keep the payroll reconciliation with the business tax records checklist. Track contractor reporting separately through taxable payments annual report lodgment.

Closely Held Payees and Other Timing Exceptions

Closely held payees are people directly related to the employer. Examples include family members of a family business, company directors or shareholders and trust beneficiaries who receive reportable payments.

A small employer with 19 or fewer employees can report their closely held payments as actual amounts each payday, actual amounts quarterly or reasonable estimates quarterly. Arm’s length employees remain subject to payday reporting. Reconcile estimates to actual annual amounts before finalising.

Where a small employer has both groups, closely held finalisation is due at the end of the first quarter after financial year-end. Arm’s length employees keep the standard deadline. Where the small employer has only closely held payees, finalisation can follow each payee’s individual income tax return due date. Larger employers’ closely held payees also have the separate first-quarter deadline.

Record each payee’s deadline using the ATO’s closely held arrangements. A quarterly reporting concession does not make the employer’s entire payroll quarterly.

Inbound assignees on eligible shadow payroll arrangements have separate reporting and finalisation concessions. Confirm eligibility and the approved deadline from the ATO’s concessional reporting guidance before applying them. Keep the overseas payroll reconciliation and the Australian reporting calculation together.

Finalising STP in Xero and MYOB

Finalise the reconciled employee totals for the correct payroll year, then confirm the ATO accepts the submission. A successful button click alone does not establish acceptance.

In Xero, open the payroll year-end reporting area and review each employee’s annual summary. Correct flagged employee details and missing amounts before submitting the finalisation. Xero’s published instructions describe year-end reporting under Payroll, Employees and End of year reports. Select the correct year and retain the submission result.

For MYOB Business, open Single Touch Payroll reporting from Payroll and select EOFY finalisation. Review the YTD verification report against payroll reports. Add applicable fringe benefits amounts, select the employees and use Finalise and notify the ATO.

AccountRight has the same EOFY finalisation work in its Payroll Reporting Centre. Reconcile its Activity Summary and Register Summary reports first. Review the YTD verification report before sending the declaration.

The employer can make the declaration through their own software. A registered tax or BAS agent can lodge under the agent declaration with the required client authority. Keep the employer’s confirmation with the agent’s record of the lodgment.

Save the final annual reports, submission identifier, submission time and the ATO accepted status. Keep any rejected response and the accepted correction that resolves it. Leave the client marked outstanding while a rejection or pending result remains unresolved.

After Finalising: What Employer Clients Tell Employees

Employees see year-to-date payroll information in ATO online services through myGov. Before finalisation, the statement can remain not tax ready. Once the declaration is processed after year-end, it becomes tax ready for their return.

The employer can pass on this message after acceptance:

Your income statement is tax ready in ATO online services through myGov. You can use it to prepare your tax return. We will not issue a payment summary for the amounts reported and finalised through Single Touch Payroll.

Tell employees whose statements remain unfinished to wait for finalisation. Early lodgment can require a later amendment if payroll data changes. An employee with several employers needs to check each income statement separately.

Correcting Finalised Data With an Update Event

Correct a current-year error through the next pay event when that event carries the affected employee’s corrected year-to-date figures. Use an update event where there is no further pay event or the correction concerns a completed financial year.

The ATO allows amendments to finalised STP information for up to five years after financial year-end. For an older correction, contact the ATO about the reporting method with the affected year and records ready. Avoid putting an old-year error into the current year’s income statement.

If a finalised figure is wrong, lodge the corrected update promptly. Remove the finalisation indicator if the correct figures cannot be supplied immediately. Re-finalise when the correction is complete and accepted.

Notify the client and affected employee whenever finalised data changes. Explain which figures changed and that an already lodged return might need amendment. Review the corresponding BAS withholding figures as part of the correction.

Late lodgment and incorrect reporting can attract penalties. Correcting an error promptly and keeping the explanation supports the response to an ATO enquiry. Close the correction only when the accepted update matches the revised payroll records and the client has received the employee notification.