How to Get STP Finalisation Right

When the end of the financial year approaches, you need to make sure that your Single Touch Payroll (STP) finalisation is completed accurately and on time. In this process, you confirm that the information you have reported throughout the year via your payroll software is correct and make any necessary adjustments before submitting your final report to the ATO. This process can surface any discrepancies that might exist in your payroll data, so you need to complete all required steps and give yourself enough time to get your finalisation right.

What is STP finalisation?

STP finalisation is the process of confirming that the wage, tax, and superannuation information you have submitted to the Australian Taxation Office (ATO) for each of your employees throughout the year is correct. It also ensures that your employees can access their finalised information to complete their tax return.

When is STP finalisation due? 

The ATO requires you to submit your STP finalisation declaration by the 14th of July each year. With so many EOFY payroll tasks coming up in this period, you should make sure you plan ahead and have enough time to complete all of your requirements. 

How long does STP finalisation take? 

After you have finished your last pay run of the financial year, the time taken to complete STP finalisation will depend on the number of employees you have, the complexity of your payroll data, and the ease of use of your payroll software. After submission, the ATO often takes a day or two to process. Employees will then be able to see their income statements ready in their MyGov accounts.

How should I complete STP finalisation?

To help you navigate this process, let’s take a deep dive into the steps involved:

1. Plan ahead and set internal deadlines

To avoid last-minute stress and potential errors, plan to complete your STP finalisation by the 14th of July. Make sure that you have lots of time to address data integrity issues and variances that may arise. Reviewing your employee data well before end of financial year also ensures that you have the right information to confirm that pay is accurate.

Make sure you also understand the deadlines for any closely held payees, such as family members, directors, or shareholders. If you are an employer with 20 or more employees, the finalisation for closely held payees is usually due by 30 September. If you are a small employer with 19 or less employees with only closely held payees, the finalisation is often due by the payee’s income tax return due date. 

If you're unable to meet the finalisation deadline, you can apply to the ATO for a deferral. However, it’s best practice to finalise STP on time, so that your employees can access their ‘tax-ready’ information easily.

2. Generate final pays and make necessary adjustments

Before you can finalise STP, all of your final payments for the financial year need to be processed. Account for any adjustments, such as corrections to previous pay slips or entitlements. Getting these final payments right helps to ensure that the data you report to the ATO is correct.  

3. Review and reconcile employee data

Thoroughly review every employee’s STP data. This includes verifying their year-to-date (YTD) earnings, tax withheld, superannuation contributions, and leave balances. Reconcile this data against the records stored in your payroll software to identify and correct any differences. Using foundU’s tools, like the STP YTD Report and the Advanced Payroll Activity Report can make the reconciliation process easier.  

If you’re using foundU, you should also make sure that any employees who are no longer with your business are terminated before you complete this step. This is especially important if you have a large, casualised workforce. 

4. Review STP reporting categories

Make sure that your STP reporting categories are matching up. This includes deductions, leave entitlements, income type, and allowances.  Confirm that each employee has the correct income type assigned, such as 'salary and wages' or 'working holiday maker'. 

5. Apply fringe benefits and other adjustments

If applicable, report any fringe benefits provided to employees during the financial year to the ATO.
 

6. Submit all STP pay events

All STP pay events for the financial year should be submitted to the ATO, otherwise you may not be able to complete the finalisation process. Verify that all of your pay runs have been lodged before you proceed with finalisation.

7. Remember to reconcile your data per paying entity

If you operate multiple paying entities, you will need to reconcile your STP data for each one separately. This ensures that the information you report to the ATO is complete for each employee under each entity.

8. Notify employees of finalisation

Once you have completed STP finalisation, you should inform your employees. This allows them to access their 'tax ready' income statements through myGov and lodge their tax returns. Using foundU, you can send this notification via an automated email communication within a few clicks. 

9. Use your support resources

foundU offers a variety of resources, such as STP finalisation guides, webinars, and customer support via phone, email, and in person to help you get the STP finalisation process right.  

Why STP finalisation is important 

Accurate and timely STP finalisation helps you comply with ATO regulations and supports your employees to lodge accurate tax returns. It helps you meet your legal obligations, while also building trust with your workforce. By planning ahead, you can ensure the entire process runs smoothly.  

Interested in learning more about how foundU makes EOFY payroll easy? Book a demo today.