It’s that time of year again - only this year’s a little bit sweeter. Whether you need to produce payment summaries (for the last time ever!) or if you’ve already begun your Single Touch Payroll (STP) journey, we’ve got you covered with some easy-to-follow steps to make this end of financial year the sweetest one yet.
Finish any pay runs for the 2018-19 financial year.
First things first: make sure all of your pay runs for the financial year have been posted. If you’re needing pay runs reported within the 2018-19 financial year, you’ll need to check that the Payment Date falls either on or before 30 June 2019.
Reconcile your accounts, comparing the Payroll Activity Summary report and the General Ledger.
Let’s then make sure your reporting is up to scratch! The best way to do this would be to run the Payroll Activity Summary report, and compare this against the General Ledger report. You can run both reports by a customised date range, to help identify any discrepancies.
Check out our support article here for more details on reviewing your payroll transactions.
- If multiple Expense Accounts were used for Earnings and Superannuation, make sure the totals are added together and compared against the Payroll Activity Summary report.
- Check for any transactions incorrectly reconciled against your Expense Accounts. You can check this by running the Account Transactions report.
- There may be some manual journals throwing your totals off! Check these amounts by running the Journal report, and then click Manual Journals.
Review the Payroll Activity Summary report against the Payment Summary Details report.
Don’t let the report names fool you - you’ll still need to compare this information if you’re completing a STP finalisation. Again, you can run these reports for a customised date range, and make sure that the information balances.
- The key thing to remember here, is that the Payroll Activity Summary shows gross earnings, whereas the Payment Summary Details report shows taxable earnings.
- If any salary sacrifice or pre-tax deductions have been processed, they will need to be deducted from the gross wages that show in the Payroll Activity Summary report. The total should then match the Payment Summary Details report.
Remember, the Payment Summary Details report shows truncated values - the cents aren’t reported.
Identify and amend any mistakes
Any errors made throughout the financial year can be corrected using an unscheduled pay run. Simply create the pay run for the required period, and enter the adjustment amounts. You can even enter negative values if you need.
Check that the Payment Date of the unscheduled pay run falls within the correct financial year, to ensure it’s reported correctly.
If you’ve not yet opted into Single Touch Payroll (STP), you’ll need to create and lodge Payment Summaries instead. Check out the steps listed here.
Once published, you can then file electronically to the ATO, and email these out to your employees from within Xero.
If there’s employees missing from the Payment Summaries screen, check that:
- They’ve had earnings processed within the 2018-19 financial year, and
- That an Employment Basis has been selected in their Taxes tab.
- It’s only possible to produce a Payment Summary for an employee who has an Employment Basis of Full-time employment, Part-time employment or Casual employment.
- If any ETP payments were processed, and an ETP summary has been generated, these will be included in your filing automatically - these won’t need to be filed separately.
- Remember to check the Payment Summaries screen at a later date, to ensure they’ve been accepted by the ATO.
Once your Payment Summaries have been accepted by the ATO, remember to prepare yourself for Single Touch Payroll. See the opt-in process here.
We suggest following the opt in process after 01 July 2019. Once this has been done, you can say goodbye to Payment Summaries - the ability to do this will then be removed from your organisation.
If your organisation is already reporting through STP, then your finalisation process will be a walk in the park - and we’re not sugar coating it! Take a look at the steps listed here to finalise your information with the ATO.
- Information included in the STP finalisation will pre-fill based on your previously posted pay runs (including Lump Sum amounts). Any RFBA amounts will need to be manually entered in the editable fields.
- All terminated employees will appear in the STP finalisation, even if they haven’t previously been included in STP filing.
- Any employees terminated on or before 30 Jun 2018 who need FBT amounts recorded, can be included in the STP finalisation by changing the toggle at the bottom of the page.
- If you’ve joined Xero part way through the financial year and need to report Opening Balances through STP, see the steps here.
- Payment Summaries previously reported additional superannuation contributions only. This has now changed with STP, so all super liabilities (including SGC) are now reported.
Process any outstanding super payments
Sweet, now that you’ve done either your payment summaries or STP finalisation, it’s time to think about superannuation.
If you’re using Xero’s Auto Super feature, and are wanting to claim a deduction on super accruals for the 2018-19 financial year, make sure you’ve allowed enough time for the contributions to reach the super funds. We recommend that Auto Super batches are submitted and approved by 20 Jun 2019, by 2:00PM AEST. Details on how to process to Auto Super batch are here.
If you’re not registered for Auto Super, it’s not too late - check out this link for details. Alternatively, the payments would need to be made manually outside of Xero.
You’re all done!
That’s it! There’s nothing else you need to do to finalise payroll year end. Any pay runs with a payment date after 01 July will fall within the next financial year, any new tax rates will be applied automatically. If any changes to the minimum wage impact your organisation, this will need to be updated manually in your employees’ pay templates - you can find information here. To check if these changes impact you, please check out this link to Fair Work Ombudsman.
Now it’s time to put your feet up, and treat yo’ self!