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STP and finalisation: How to close out the year

Posted 2 years ago in Advisors by Mel Arrold
Posted by Mel Arrold

If you’ve been using Single Touch Payroll since it launched last July, you know how simple it is to file a pay run: just two extra clicks in Xero. But how do you handle the end of the financial year? It’s traditionally a time packed with administrative tasks such as creating payment summaries for your employers and each worker.

The good news is that Single Touch Payroll eliminates many of these year-end chores. If you’ve been STP-enabled at any point during FY2018-19, that payroll information already sits with the Australian Taxation Office. There should be no need to create PAYGs or PSARs. Employees will find their PAYG info at myGov, and it will be prefilled on their tax returns.

Bookkeepers and BAS agents just need to submit what’s called a finalisation declaration on behalf of the employer. This essentially tells the ATO that payroll is done for the financial year, and the figures that have been lodged are final. It’s as easy as ticking a few boxes in Xero Payroll.

If you’ve made payments during the financial year outside of Xero (e.g. your opening balances) and haven’t been able to report them to the ATO (either by a part year PSAR or STP), you will be able to handle that in Xero. We will offer this ability as soon as June 18 to include opening balances in your STP filings.

Here are a few images explaining how STP finalisation declaration works.

First, under Payroll, choose Employees. Then select End of Year Reports and STP Finalisation:

This will give you a list of all employees, both current and former. If your client is a larger employer, you’ll discover that STP offers some improvements on PSARs. For example, you no longer need to download an EMPDUPE file and handle that externally. With STP, you can process as many employees as you like at the end of the financial year.

You can opt to finalise all workers at once or select a particular employee.

Another convenient feature of STP is that you can immediately finalise terminated employees. That means less work stacked up for you at the end of the financial year.

“I think the finalisation declaration process is great,” says Jo Doye, director of Bendigo-based Alluvia Financial. “It’s so good to be able to finalise an employee as soon as they leave rather than waiting until year-end. We so often have trouble finding the employees after they leave especially when they change their number or email address.”

Here’s what the screen will look like when you select all employees at once:

Once you’re ready, press Finalise and Submit to ATO.

You’ll then see a screen asking you to verify that you have authority to file on behalf of your client:

If your client has given you an annual standing authorisation, note that it covers only pay runs – not the finalisation declaration. So be sure to obtain this authority before you submit a year-end declaration to the tax office.

When ready, press Submit to ATO. And voila! You should see a screen confirming that you’re done.

But wait! What if you’ve declared and realise you need to go back in and change some payroll figures? No problem. You can just jump in and do another pay run to make the adjustment, and then re-finalise the employee or employees.

And there’s no limit on how far forward or backward in the current financial year you can go with an unscheduled pay run. That’s true even if the employee has been terminated.

You can find year-end deadlines and more information on this ATO page.

12 comments

Nikki
June 27, 2020 at 10.59 pm

For my employees there final payrun finishes after the financial year is over. How would I process the End of year payment summary for the cross over?

Beeny Atherton in reply to Nikki Xero
June 29, 2020 at 3.13 pm

Hi Nikki, you would process STP Finalisation (the STP alternative to Payment Summaries) as per normal and it wouldn’t typically include the pay run you are referencing, because this is all based on the payment date of the pay run. If you want to include as a payment for this financial year, you would need to adjust the payment date of the pay run when processing it. Just click on the payment date in the draft pay run to adjust the date, prior to posting the pay run. Let us know if you have any further questions.

Nuwani
July 13, 2020 at 2.39 pm

Hi
I have question regarding the Xero STP setup, one of my client registered for STP with ATO after the end of 2019/2020 financial year. Client have pay runs for month of June in 2020, but he cannot file the pay runs to the ATO for this period. However, he can file pay runs from 01st July 2020. Can he file the pay runs of 2019/2020 financial year even though he registered with ATO after the financial year.

Joanne Tait in reply to Nuwani Xero
July 13, 2020 at 3.07 pm

Hi Nuwani, thanks for your comment.

You can technically only file pay runs from the financial year that you have opted in. Your client has two choices here, they can either complete the payment summary process for the 2019/2020 financial year, or they can raise a case with our customer service team to see if we can get their STP opt in date adjusted to they can complete the finalisation process for the 2019/2020 financial year.

For more info about the first option, see this link: https://central.xero.com/s/article/Payroll-year-end

And for more info about option two, see this link: https://central.xero.com/s/article/Finalise-Single-Touch-Payroll-data

Hopefully that helps!

Jenny Paterson
August 3, 2020 at 12.47 pm

Hi
I have posted all employees finalization fir the next year instead of this year. I have ticked to submit but the file is still pending. I haven’t submitted a payrun since.
How do I reverse the finalization while pending.

Beeny Atherton in reply to Jenny Paterson Xero
August 4, 2020 at 2.47 pm

Hi Jenny – thanks for getting in touch. You will be able to send through the finalisations for the correct financial year (assuming 2019/2020) by selecting the required year in the drop down and finalising your employees. Your pending finalisation for the next financial year should not prevent you from doing this. Then you can just pay your staff as you normally would, or if you want to do it sooner, post and file an unscheduled pay run for $0 for all employees (where the payment date is after 30 June 2020), which will undo the finalisation processed for the current financial year. Hope this helps.

Dan
September 10, 2020 at 6.49 am

I have a question my client finalised the payroll for the 2020 year and lodged direct with the ATO. I now need to add the director as an employee for the 2020 year. Is this possible to amend the payroll for the 2020 year once finalised and resubmit the final file to the ATO.

Beeny Atherton in reply to Dan Xero
September 10, 2020 at 1.24 pm

Hi Dan, thanks for your comment. Yes, there is a way to amend the payroll. Simply add an unscheduled pay run for the director for the relevant pay period with a payment date prior to 1 July 2020. Once this pay run is processed for the director, they will be listed as not finalised in the STP finalisation screen. You should be able to finalise the director for the 2020 financial year from there by ticking the single employee (the director) from the list and finalising just them (without affecting the other employees already finalised). Hope this helps. If you need any further assistance, please get in touch with our support team here and we will be in touch with you directly to give you a hand. Thanks!

Milly
July 6, 2021 at 12.32 pm

Hi, We had an employee start on the 29th June 2021 ( so he worked for us for 2 days in that financial year. When i go to finalize employees he’s is in there but it’s showing $0 earnt. Why would this be? I have processed a pay run for that final week which included the two days he worked. It has also been “filed” Did i miss something/ do something wrong?

Beeny Atherton in reply to Milly Xero
July 8, 2021 at 1.19 pm

Hi Milly, thanks for your comment. Can you please raise a case with our support team so we can take a closer look at what might be happening here? You can raise a case from your Xero org by clicking the help icon at the upper right hand corner of the screen followed by ‘Contact Xero Support’. Thanks!

tony
November 24, 2021 at 12.24 pm

Hi, If i have transitioned payroll to xero partway through the financial year and have been lodging fortnightly payruns through STP in the previous software, have imported all opening balances as “Excluded from STP”, do i finalise STP in both Payroll systems? If so should i finalise STP in the previous Payroll system now and then the remainder of the year at year end?

Xero in reply to tony Xero
November 25, 2021 at 2.57 pm

Hi Tony, we recommend you having a look at this article on Xero Central, which provides guidance on a number of different scenarios. If you still need a hand, please raise a case with our support team so we can get in touch with you directly. Thanks!

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