This article will guide you through the process of wrapping up the FY2017/2018 financial year, producing your PAYG Payment Summaries (group certificates) and then getting ready for the FY2018/2019 financial year.
You can also watch the following video for handy EOFY tips and tricks:
These steps should be taken prior to producing the Payment Summaries:
1.1. Review Configuration Data
- In the employee file, select "Details" and ensure employee details are up to date. In particular email addresses. Payment Summaries will be sent to these addresses so it is important that they are correct. However, they can be printed and dispersed manually.
- In the employee file, select "Tax File Declaration" and ensure Tax File Numbers (TFN) and the Employment Declaration is correct. This information is included in the SBR lodgement that is sent from your payroll data to the Australian Taxation Office (ATO). A quick way to check the employee details is to export the employee list and review the data in Excel. You can find steps on how to do that here
- Ensure your "ATO details" are up to date. You can do this by going to "Payroll Settings" -> "ATO Supplier Settings".
If you're planning on lodging your payment summaries via SBR, please ensure you've registered your software ID by following the steps here
- The ATO changed their reporting requirement last year which changed the way FBT is treated under some government pensions and allowances. As a result, employers are required to nominate whether the employer is exempt from fringe benefits tax under section 57A of the FBTAA 1986.
There is a field on the "ATO details" page which can be found under "Payroll Settings" -> "ATO Supplier Settings". The default answer will be "no" but it is important to review this to ensure it is correct.
NOTE: On the payment summary, the 'Yes' or 'No' checkbox will only be checked if there IS a reportable FBT amount. If there is no FBT amount then these boxes will be (and should be) blank on the Payment Summary.
- Review your set of Pay Categories. Ensure that the 'Payment Summary Classification' field is correct (See image below).
The primary cases that you'll want to review are allowances. Use this ATO article on Withholding from allowances as a guideline. You will want to set the 'Payment Summary Classification' to the relevant Allowance option if the article indicates to show the allowance separately in the allowance box. The introduction of STP requires that allowances be re-classified and so we recommend you review this article to ensure correct setup.
When paying out Lump Sums refer to the ATO website for guidance on which Lump Sum category, eg. A,B,D or E to list the payment. Or you can find information in the instructions section of the ATO hard copy form PAYG payment summary - individual non-business (NAT 0046-02.2014).
- Review your set of Deductions. For any 'union fee' or 'workplace giving' deductions, be sure to adjust the 'Payment Summary Classification' field accordingly. See the image below re setting the classification.
1.2. Initial Values / Opening Balances
If you have migrated to this payroll system from another system during the financial year, it is important that the opening balances be set up correctly. Please refer to our article on setting employee initial values / opening balances.
If you created your business in the previous financial year but didn't start using it until this financial year, it may be necessary to review this setting under Business Details.
If there are any opening balances for deductions that should be reported as Reportable Employer Super Contributions (RESC) on the payment summary, be sure to tick the checkbox next to the deduction category in the opening balances screen.
1.3. Finalise Pay Runs
Ensure that all pay runs are finalised, including any adjustments you need to make.
Please Note: The date the pay run is PAID determines which financial year that pay run applies to. Therefore payment summaries generated, will only include for FY 17/18 any pay runs PAID within that financial year.
E.g. Pay run period ending 29/6/2018, PAID 30/6/2018 will be included in financial year 17/18.
Pay run period ending 29/6/2018, PAID 1/7/2018 will be included in financial year 18/19.
If you want to include every day worked within the financial year, you might have to split a pay run.
For example, a Weekly pay run for period ending 2/7/2018, paid 3/7/2018. Create pay run as normal and set the pay period ending 30/6, ensuring you stipulate date paid to be 30th June. You will then need to adjust the employee hours to reflect the hours worked for the 26th - 30th June and then finalise pay run. Then create another pay run for the period ending 2/7 and adjust the employee hours to reflect the hours worked for the 1st and 2nd. Then finalise pay run using normal date paid, e.g. 3/7/2018.
1.4. Reportable Employee Super Contributions (RESC)
RESC will be automatically included on the Payment Summaries. This data will be generated from any pre-tax deduction that is paid to a super fund. Any RESC for this financial year prior to migrating to this payroll system can be set up in the Initial Values/Opening Balances section. Refer to step 1.2 above.
1.5. Reportable Fringe Benefits Tax (RFBT)
RFBT can be entered manually once the payment summaries are generated. To do so, click the 'Actions' button next to the payment summary and click 'Edit'.
The Reportable Fringe Benefit Amount (RFBA) field is open to enter in a dollar amount.
Please ensure you:
- Enter the "grossed-up" taxable value of these benefits;
- Do not enter any cents; and
- Do not include this amount in the "Gross Payments" field.
You may need to seek advice on which FBT deductions are reportable. Further information on FBT can be found here.
2. Payment Summary Generation
Ready to proceed?
- Once you have completed the steps above, you will be ready to publish employee payment summaries. Please refer to the steps on that article to produce the payment summaries and then continue here.
- Once your payment summaries are generated and published, you will want to submit your payment summaries to the ATO. You can lodge payment summaries either by:
- Employees will receive an email notification letting them know that their payment summary is available for download, along with a link for downloading. Employees will be able to access their payment summary at any time using either the employee self service portal available on any browser, or through Workzone (mobile app available on iOS or Android).
There are several considerations for the new financial year:
3.1 Single Touch Payroll
As you probably know already, Single Touch Payroll is a change in the way employers will report their PAYG and super information to the ATO. From July 1st 2018, businesses with 20 or more employees will be required to report PAYG and super after a “payroll event” – essentially after payroll has been processed – rather than previously reporting monthly or quarterly. In addition to PAYG, super information will have to be reported, which previously wasn’t required.
In essence, nothing will change in how you process payroll. The main thing is that after each “payroll event” you will have to send some additional reporting information to the ATO. The obligation is on the employer to send information to the ATO – not the software provider. Although this process should be seamless, you (or your registered agent) will need to provide the authorisation to report this information to the ATO each pay day through your software.
We will be STP compliant by July 1st 2018.
3.2 Tax Table Updates (information only)
The tax tables for the new financial year are automatically loaded (and have been done so already). Please note that any pay runs with a date paid of 1/7/2018 or later will use the FY2018/2019 tax tables automatically.
3.3. Superannuation Updates (information only)
The Superannuation Guarantee Contribution (SGC) percentage does not change for this financial year. It remains at 9.5%.
The Maximum Quarterly Contribution Base will increase from $52,760 to $54,030. This setting will be automatically applied to all employees who are currently on the default contributions base on 1/7/2018. Employees that aren't on the default setting will not be updated so you will need to do this manually.
The concessional contributions cap remains at $25,000 for all age groups. Any employee who have recurring salary sacrifice deductions paid to a super fund should be reviewed in light of this.
3.4. Super Compliance (information only)
The payroll platform is fully SuperStream compliant and has attained Gold certification. You can read all about it in ourSuperStream Compliance article. It is important to note that all businesses had to be SuperStream compliant by June 30, 2016.
The easiest way to ensure you're SuperStream compliant is to register with ClickSuper and use our in-built integration. You can find out more about registering with ClickSuper here.
To ensure your super payments are processed from the 2018 FY, you need to make sure your super payments are lodged no later than 2PM, Monday 25th June. If you don't lodge your super batch by 25th June, there's no guarantee that your funds will clear by June 30.
3.5. Award Updates
As with each year, Fair Work Australia will conduct an annual wage review which often means an increase to base rates for employees paid under a Modern Award. Fair Work will announce the annual wage increase in June.
For customers using the pre-built Industry Awards, new versions of these Award packages will be published on 1/7/2018 with the applicable rate changes included. Once you have wrapped up the FY2017/2018 financial year and are ready to start processing pays in the new financial year, there will be an action item on your dashboard like this example notification:
Click the 'Apply Updates' link and follow the prompts to update your award.
If you have any questions or feedback please let us know via firstname.lastname@example.org