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Take control of your payroll this EOFY

Posted 2 months ago in Advisors by Steph Tibb
Posted by Steph Tibb

It’s that time of year again and if you’ve opted into Single Touch Payroll (STP), it’ll be the easiest one yet. Whether you need to produce payment summaries (for the last time ever) or if you’ve already gone paperless and begun your STP journey, we’ve got you covered with some easy-to-follow steps to keep this end of financial year under control.

Finish any pay runs for the 2019-20 financial year

Make sure all your pay runs for the financial year have been posted. If you’ve opted into STP, you’ll also need to make sure these have been filed.To ensure these pay runs are reported in the 2019-20 financial year, you’ll need to check the Payment Date falls either on or before 30 June 2020.

Reconcile your accounts, comparing the Payroll Activity Summary report and the General Ledger

Make sure your reporting is all up to scratch. The best way to do this is to run the Payroll Activity Summary report, and compare this to the General Ledger report. You can run both reports by a custom date range, to help identify any discrepancies.

Check out our support article for more details on reviewing your payroll transactions.

Don’t worry if you find a mistake. Simply edit the transaction, use the remove and redo feature, or find and recode the transactions to the correct accounts.

Hot tips

  • If multiple Expense Accounts have been 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.
  • If your totals don’t look correct, this could be due to some manual journals. Check the amounts by running the Journal Report, and then click Manual Journals.
  • If you’re having trouble locating the source of a discrepancy, run your reports for a smaller date range, like monthly, or by each pay period.

If you began using Xero part way through the financial year, you’ll need to make sure your employee’s Opening Balances match your Conversion Balances.

Review the Payroll Activity Summary report against the Payment Summary Details report

Don’t let the report names fool you you still need to compare this information if you’re completing an STP finalisation. Again, you can run these reports for a custom date range, and make sure that the information balances.

Hot tips

  • The key thing to note 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.

You can also use the Payroll Activity Summary report to check any JobKeeper top up amounts processed throughout the financial year. If you need to check this for specific employees, simply filter the report to show one employee at a time. These amounts are reported under the allowance category in either your STP finalisation or Payment Summaries.

Identify and amend any mistakes

Any errors made throughout the financial year can be corrected using an unscheduled pay run. Create the pay run for the required period, and enter the adjustment amounts. You can even enter negative values, if needed. 

Check that the Payment Date of the unscheduled pay run falls within the correct financial year, to ensure it’s reported correctly. If you’re using STP, the finalisation screen may take time to update, so grab yourself a cup of tea or coffee and come back to check on this a bit later on.

Publish Payment Summaries/Submit the Payment Summary Annual Report (PSAR) to the ATO

If you’ve not yet opted into STP, you’ll need to create and lodge Payment Summaries instead. Check out the steps listed here

Once published, you can then file the PSAR electronically to the ATO, and email them 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 2019-20 financial year, and
  • That an Employment Basis has been selected in their Taxes tab.

Hot tips

  • 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 in their Taxes tab.
  • If any Employment Termination Payments (ETPs) were processed, and an ETP summary has been generated, these will be included in your filing automatically. You will not need to file the payments separately.
  • Remember to check the Payment Summaries screen at a later date to make sure they have been accepted by the ATO.

Once your Payment Summaries have been accepted by the ATO, remember to set up STP. Once this is done and a pay run has been filed using STP, you can say “goodbye” to Payment Summaries. The functionality will be removed from your organisation.

Process STP finalisation

If your organisation is already reporting through STP, then your finalisation process will be easy to control. Take a look at the steps here to finalise your information with the ATO.

Hot tips

  • Information included in the STP finalisation will pre-populate based on the information processed in Payroll. You will need to manually enter any Reportable Fringe Benefit Amounts (RFBAs) in the editable fields. If you need to report any leave paid out on termination as Lump Sum A or Lump Sum B, you can do this by processing an unscheduled pay run. For more information, read our helpful article on how to adjust the lump sum value for unused leave.
  • All terminated employees will appear in the STP finalisation, even if they haven’t previously been included in an STP filing.
  • Any employees terminated on or before 30 June 2019 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, read our helpful Transfer payroll balances to Xero article.
  • The Payment Summaries only report additional superannuation contributions. This has now been changed with STP, which means all super liabilities (including SGC) are now reported.
  • Any ETP payments that have been processed will not show in the STP finalisation. However, the payments will still be reported to the ATO when this is filed. 
  • You can export a copy of the information to be filed with the ATO (including ETPs) by selecting the employee’s name and clicking Export to CSV from the finalisation screen.

Process any outstanding superannuation payments

Now that you’ve done either your STP finalisation or Payment Summaries, it’s time to process any superannuation payments. 

If you’re using Xero’s Auto Super feature, and want to claim a deduction on super accruals for the 2019-20 financial year, make sure you’ve allowed enough time for the contributions to reach the super funds. 

If you’re not registered for Auto Super, it’s not too late click here to read our articles on how to register for automatic superannuation payment. Alternatively, the payments will 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 the 01 July will fall within the next financial year, and 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 find out to create or edit a pay template for an employee here. To find out if these changes impact you, check the Fair Work Ombudsman

Although the ATO has updated the date where closely held employees are required to be filed through STP, why not get started early by opting in. Simply follow these steps to process closely held employees

Congratulations! You can now relax knowing your payroll accounts are in good shape ready for the new financial year.

24 comments

Elizabeth Tilmouth
June 24, 2020 at 3.33 am

All instructions very clear and no problem following – my only comment is that it didn’t say to print the CSV report on the finalisation page and I submitted to ATO before printing. Then I noticed it and tried to print the report and I couldn’t. Will try again tomorrow but it might be too late . You may want to update your instructions to say print this report if you think we should have a copy of what has been submitted.

Beeny Atherton in reply to Elizabeth Tilmouth Xero
June 24, 2020 at 10.50 am

Hi Elizabeth, thank you so much for your feedback – I will pass your suggestion onto my team.

REBECCA PEARCE
June 26, 2020 at 2.58 pm

I also have noticed this and have not printed a copy for myself and now am unable to print? any advice greatly appreciated.

Beeny Atherton in reply to REBECCA PEARCE Xero
June 29, 2020 at 3.10 pm

Hi Rebecca, you can download the CSV report by going to Payroll > Single Touch Payroll and clicking the menu icon to the right of the Finalisation and then clicking Download CSV.

Beeny Atherton in reply to Elizabeth Tilmouth Xero
June 29, 2020 at 3.08 pm

Hi Elizabeth, I’ve just caught up with my team and they have informed me that if you’ve already finalised STP, you can download the CSV report after the fact by going to Payroll > Single Touch Payroll and clicking the menu icon to the right of the Finalisation, you can then click Download CSV. Hope that helps – let us know if you have any other questions.

WAI KHOO
June 28, 2020 at 11.33 pm

First time on xero. Not sure if i still need to do group certificate manually for my staff. I have finalised 19/20 year to ATO.

Beeny Atherton in reply to WAI KHOO Xero
June 29, 2020 at 2.56 pm

Hi, thanks for getting in touch. The STP Finalisation removes the need to provide group certificates, or payment summaries (now called income statements). Your employees can log into their MyGov to see their income statement, or they can contact the ATO to have a physical copy provided. Hope that helps.

Catalina
June 30, 2020 at 5.07 pm

Hi, my pay period is from 21 June 2020 – 4 July 2020, so I can’t see it in the scheduled fortnightly pull down menu. What can I do to process this pay?

Do I have to manually rollover a payroll year?

Beeny Atherton in reply to Catalina Xero
July 1, 2020 at 12.33 pm

Hi Catalina, thanks so much for your comment. You can roll the calendar forward in the Calendar tab of Payroll settings. You can find out how in this helpful article on Xero Central.

Catalina in reply to Beeny Atherton
July 21, 2020 at 6.01 pm

Thank you Beeny.

Anna
July 1, 2020 at 11.33 am

As usual, a wonderfully supportive step-by-step article to help me finalise my payroll simply, correctly and smoothly. Thanks again to the Xero team for creating easy to follow processes with no financial jargon! Love your work. Here’s to a HAPPY NEW (Financial) YEAR ahead for all of us. Thanks everyone!

Beeny Atherton in reply to Anna Xero
July 2, 2020 at 11.35 am

Oh wow Anna – that’s so lovely to hear, thank you so much for sharing. We are thrilled that we have been able to help you with your EOFY. All the best – and here’s to a very happy New (Financial) Year!!!

Ian Marshall
July 1, 2020 at 4.32 pm

When I go into Payment Summaries, it only shows me Financial Year ending june 2019 and not june 2020

Beeny Atherton in reply to Ian Marshall Xero
July 2, 2020 at 11.33 am

Hi Ian, thanks for getting in touch. It sounds like you opted into STP in the 2019 Financial Year and this is why you’re unable to select the 2020 Financial Year in the Payment Summaries feature. You will need to use the STP feature to finalise your year end. Hope that helps.

Cathy K
July 3, 2020 at 1.50 pm

Thanks for the instructions. I am trying to enter FBT amounts for employees who resigned prior to June 2019. Please explain how I do this. Everyone else is all set to go.

Joanne Tait in reply to Cathy K Xero
July 3, 2020 at 2.10 pm

Hi Cathy, you should be able to do this by selecting the toggle shown under all employee names called “Show employees terminated this FBT year”. This will show employees terminated during the FBT year that need to be reported this FY.

Felicity
July 6, 2020 at 6.20 pm

Hi When we started using Xero at the beginning of FY2020, an employee had an incorrect super contribution type selected. He is paid fortnightly. We did not pay this super. The amount is still showing on his payment summary. Do I have to do an adjustment for each wage or can I do one unscheduled payroll and adjust the amount as a total.
Thanks

Beeny Atherton in reply to Felicity Xero
July 8, 2020 at 2.02 pm

Hi Felicity, thanks for your comment. This is actually a business decision whether you choose to adjust this in one unscheduled pay run, or multiple. Hope you have a lovely day!

Tarnya
July 7, 2020 at 10.39 pm

Hi , I only started using STP in September 2019, so do I need to provide group certificates to staff prior to this date ?

Beeny Atherton in reply to Tarnya Xero
July 8, 2020 at 4.14 pm

Hi Tarnya, thanks for your comment. You won’t need to, the employee can log into their MyGov account to see this. Hope that helps.

Mel
July 13, 2020 at 6.13 am

Hi there,

Thanks for all the notes! I think I am nearly there. I was just checking the CSV file that shows the data sent to the ATO as part of the STP finalisation process and I noticed the Payroll Period Start Date and the Payroll Period End Date both show as 30/06/2020. This does not seem right? I have selected the correct year ie 2019/20 tax year. Could someone just confirm if this is OK or how let me know how I can correct it?

Joanne Tait in reply to Mel Xero
July 13, 2020 at 3.34 pm

Hi Mel, thanks for your question. This is a known display issue that our Product Team are aware of. We can confirm that the dates finalised will be 1 Jul 2019 until 30 Jun 2020.

Dee
July 21, 2020 at 7.26 am

Hi I’ve opted for STP for 2020 so can’t do payment summaries for staff. My employees don’t have myGov set up. Is there any way I can manually give them a copy of their summary for 2019 – 2020?

Beeny Atherton in reply to Dee Xero
July 21, 2020 at 3.35 pm

Hi Dee, the only way is to contact the ATO directly. Your employees may have to do this themselves.

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