This Guide is relevant only to employers that have NOT been reporting to the ATO using Single Touch Payroll for the 18/19 financial year.
The article will guide you through the process of wrapping up the FY2018/2019 financial year, producing your PAYG Payment Summaries (group certificates) and then getting ready for the FY2019/2020 financial year with Single Touch Payroll.
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 the employee's email address. Payment Summaries will be sent to these addresses so it is important that they are correct. However, the payment summary can be printed and dispersed manually if required.
- In the employee file, select 'Tax File Declaration' and ensure the employee's Tax File Number (TFN) and Employment Declaration details are correct. A quick way to check the employee details for both step 1 and 2 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 settings are up to date. You can do this by going to Payroll Settings > ATO Settings page > ATO Supplier Settings tab.
If you're planning on lodging your payment summaries via SBR, please ensure you've registered your software ID by following the steps here.
- Make sure you have nominated the correct setting with regard to whether the employer is exempt from fringe benefits tax under section 57A of the FBTAA 1986.
This field can be found on the 'ATO Settings' page. By default, this option will be set to 'NO' but it is important to review this to ensure it is correct. If you do select 'YES' you will then also need to select the organisation type the employer falls under:
If the employer IS exempt from FBT under section 57A of the FBTAA 1986 the following option will also be available - 'Are employees entitled to a separate cap for salary packaged entertainment benefits as per section 6.5 of the Fringe Benefits Tax legislation?':
You may have arrangements in place with your employees where an agreement has been made to salary package meal entertainment and entertainment facility leasing expenses. If this is the case, select Yes for the above setting so that a separate single grossed-up cap of $5,000 will apply to the employee’s fringe benefits exemption amount. This additional setting will not affect payment summary data, however, it will prepare you for STP reporting in the new financial year.
- 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 "Allowance (Other)" if the article indicates to show the allowance separately in the allowance box.
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.
The introduction of STP requires that allowances be classified in a different manner. As such, once you have completed your end of year process, we strongly recommend you review this article to ensure correct setup of allowance pay categories before commencing STP reporting.
- Review Deduction Categories. For any 'union fee' or 'workplace giving' deductions, be sure to adjust the 'Payment Classification' field accordingly so the deduction amounts are detailed separately in the payment summary.
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. Using the opening balances functionality means that you only have to generate one payment summary per employee and lodge one Payment Summary Annual Report (PSAR) to the ATO.
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 Payroll Settings > Opening Balances to ensure the correct financial year is configured.
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 18/19 any pay runs PAID within that financial year.
E.g. Pay run period ending 29/6/2019, PAID 30/6/2019 will be included in financial year 18/19.
Pay run period ending 29/6/2019, PAID 1/7/2019 will be included in financial year 19/20.
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 2/7/2019, paid 3/7/2019. 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. 3/7/2019.
1.4. Reportable Employee Super Contributions (RESC)
RESC will be automatically included on the Payment Summaries and pre-populate in the 'RESC' field. This data will be generated from any pre-tax deductions that are set up to be '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 (RFB)
RFBA's can be entered manually once the payment summaries are generated. To do so, click the 'Actions' button at the end of the employee's line and click on 'Edit':
The Reportable Fringe Benefit Amount (RFBA) field will become editable > enter a dollar amount > save:
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 generate the employees' payment summaries. Please refer to the steps in this article to produce the payment summaries and then continue here.
- Prior to publishing the payment summaries, you should reconcile your financial year data. This article has instructions on how to do that - End of Year Reconciliation. Please remember that payment summaries must be issued to employees by no later than 14 July.
- Once your payment summaries are generated and published, you must submit your payment summaries to the ATO by no later than 14 August. You can lodge payment summaries either by:
- Once you send the payment summary notifications to the employees they 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).
3. FY 2019/2020
There are several considerations for the new financial year:
3.1 Single Touch Payroll
STP is a government initiative to streamline business reporting obligations. It starts from 1 July 2019 for employers with 19 or less employees (businesses with 20 or more employees were required to be STP compliant in July 2018).
In a nutshell, STP requires employers (or their registered agent/intermediary) to report payments such as salaries and wages, PAYG withholding and super information directly to the ATO from their payroll system. This must be reported after every pay run has been finalised but no later than the employee's payment date.
You can easily register for STP using our STP Registration Wizard.
You can also browse our vast knowledge base of articles relevant to STP.
There is also plenty of information on STP that can be found on the ATO's website.
3.2 Closely Held Employees
A closely held employee (payee) is one who is not "at arm’s length". This means they are directly related to the entity from which they receive payments. Examples include:
- family members of a family business;
- directors or shareholders of a company;
- beneficiaries of a trust.
The ATO have allowed a later reporting start date for any eligible business (any business with 19 or less employees who will commence reporting STP events from 1 July 2019) with closely held employees. Specifically, you will not need to report closely held employees through STP in the 19/20 financial year.
To clarify, this does NOT mean you are exempt from STP reporting altogether. You must still report all other employees through STP commencing from the first pay run with a pay date on or after 1 July 2019. If you have been granted a deferral date from the ATO then you would commence reporting from such deferred start date. See this article for more information - Managing Closely Held Employees.
3.3 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 1/7/2019 or later will use the FY2019/2020 tax tables automatically.
The HELP/SSL/TSL tax tables will be renamed ‘Study and training support loans tax tables’ as of 2019/2020 FY. They will incorporate HELP, VSL, SFSS, SSL, ABSTUDY SSL and TSL. There will no longer be separate SFSS tax tables. These changes arise from the passing of the Sustainability and VSL Separation Bills in 2018.
The applicable 'Study and training support loans tax table' rates have already been loaded into the system and will apply to any pay runs with a Paid Date on or after 1/7/2019.
This will also be reflected in any pay runs (and reports). The HELP and SFSS columns in the pay run will be replaced with an STSL column for pay runs on or after 1/7/2019.
3.4 Superannuation Updates (information only)
The Superannuation Guarantee Contribution (SG) percentage does not change for this financial year. It remains at 9.5%.
The Maximum Quarterly Contribution Base will increase from $54,030 to $55,270. This setting will be automatically applied to all employees who are currently on the default contributions base on 1/7/2019. 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 has recurring salary sacrifice deductions paid to a super fund should be reviewed in light of this.
3.5 Super Compliance (information only)
The payroll platform is fully SuperStream compliant and has attained Gold certification. You can read all about it in our SuperStream 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 and use our fully integrated clearinghouse via the in-built integration. You can find out more about registering here.
If you want super contributions to be included in the 2018-19 financial year (for tax deduct-ability) the contributions need to reach the super funds by June 30th 2019, which is a Sunday so, in reality, the deadline is Friday 28th June this year.
To meet this deadline, if you're using automated super payments your super batch will need to be successfully uploaded/paid by 3.30pm AEST on Friday 21st June 2019.
3.6 Award Updates
As with each year, Fair Work Australia conducts 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, updated versions of these Award packages will be published on 1/7/2019 with the applicable rate changes included. Once you have wrapped up the FY2018/2019 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 the updates' link and follow the prompts to update your award.
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