The ATO stipulates that this must be completed no later than the 14th of July 2022. In addition, if you are an only closely-held employee, you have until the 30th of September to complete this process.
Finalisation of STP is an obligation employers have and enables employees to prepare their tax return. Let’s go through the fundamentals and the straightforward steps involved.
What is STP?
The Australian Taxation Office previously received annual payroll information through paper lodgements, then electronic lodgement and now via the ‘live’ STP system. The introduction and widespread implementation of STP means that businesses now supply a report after each pay cycle to the ATO through their payroll software.
These reports are easily accessible by employees through the Australian Government website MyGov during the year. However, the annual payroll total still needs to be reconciled and then “finalised” so that they can prepare their tax return.
What you need to do
In order to successfully complete your end-of-financial-year accounting, this step, despite its seeming lack of complexity, is essential. By completing this procedure, you provide the ATO with confirmation of both the total payroll for the year, as well as the wages, allowances, superannuation and tax withheld for each individual employee. And in turn, your employees have the green light to file their individual tax returns for the year. As an aside, this sort of reconciliation is also required for other things like payroll tax and workcover declarations.
At the end of each financial year, the time-honoured practice of generating printing and distributing PAYG Payment Summaries is now superseded by the STP Finalisation process. As a result, you are responsible for ensuring that the data you provide is accurate and comprehensive despite the fact that the ATO already obtains data on salaries through STP lodgements throughout the year.
Final steps
You must proceed with the finalisation if you are satisfied that the payroll data is correct. The procedures for doing this task are ultimately similar for all employers, but each payroll software will have the finalisation function in a different spot.
In general, to check if your STP data is ready to be finalised, you should:
- Ensure all pay runs have been filed with the ATO
- The relevant profit/loss expense accounts should be reconciled to payroll reports
- The relevant balance sheet accounts for PAYG & wages or superannuation payable should be reconciled to payroll reports
- If there are any variances, these will require further reconciliation and adjustment before finalisation is done.
The following links will lead you to detailed instructions for four of the most significant vendors.
Should you discover an amendment is required after finalising, then you or your advisor should contact the ATO and consult the detailed steps required for each software provider.
If you require assistance with your payroll reconciliation, your Accru contact will be able to assist you with any questions or concerns.
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