This article is relevant for employers that have HAVE been reporting to the ATO for Single Touch Payroll during this financial year.
The article will guide you through housekeeping and then the finalisation process for the 2018/2019 financial year.
1. Preparation
These steps should be taken prior to lodging your finalisation event.
1.1. Review Configuration Data
- Ideally, each employee should have an email address on file. This will then allow you to send a notification email directly from the platform to your employees after you have processed your end of year finalisation event to notify them that their Income Statement is 'Tax ready'. These notifications will go to the email address on the employee's details page. A quick way to check these details is to export the employee list and review the data in Excel. You can find steps on how to do that 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 > 'ATO Supplier Settings' tab. 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?':
If you have multiple employing entities set up in the business, ensure you configure the FBT setting for each employing entity. You can do this from the Payroll Settings > Employing Entities screen. - Review your Pay Categories to 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. The introduction of STP requires that allowances be reclassified 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. - Review your set of Deductions. For any 'union fee' or 'workplace giving' deductions, be sure to adjust the 'Payment 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 your Transition options available with STP reporting.
If you do need to enter opening balances this article will assist - Setting Employee Opening Balances (Initial Values)
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 the initial financial year setting under your business settings. To do this go to Payroll Settings > Opening Balances > configure the correct 'Initial Financial Year':
If there are any opening balances for deductions that should be reported as Reportable Employer Super Contributions (RESC), 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. If you lodge your finalisation event and then have to process adjustment pays, you MUST lodge a further finalisation event so we strongly you hold off on commencing the finalisation process until you are 100% confident all pays for the financial year have been processed.
Please Note: The date the pay run is PAID determines which financial year that pay run applies to. Therefore pay events submitted, 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)
Any RESC that has been processed in the pay runs for this financial year will be automatically included in the finalisation event. 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.
Prior to commencing the finalisation event, ensure that all RESC transactions have correctly been processed as 'paid to a super fund'. To audit these transactions and make required corrects, refer to "Section 2: Prep recommendations before commencing finalisation event - Salary Sacrifice Super Deductions (RESC)" of this article.
2. Lodge your Finalisation Event
Ready to proceed?
Once you have completed the steps above, you will be ready to create the end of financial year 'Finalisation Event'. There are 2 ways of creating a finalisation event. They are:
- Via an Update Event; or
- Using the STP EOFY Wizard.
Either option can be used to fulfil your end of year processing obligations however we have specifically built the STP EOFY Wizard to simplify the process. Additionally, the STP EOFY Wizard provides additional functionality over an update event. This includes:
- Ability to bulk import RFB amounts for employees;
- Send notification emails from the platform once the finalisation event has been successfully lodged; and
- Accessing the amended finalisation event wizard if further finalisation events are required.
The ATO have extended their deadline on reporting finalisation events for the 18/19 FY - the deadline is 31 July 2019.
PLEASE NOTE: Employees will NOT be able to access their Income Statements from their employee portal or WorkZone. They will only be available via the employee's myGov account.
3. Preparation for FY 2019/2020
There are several considerations for the new financial year:
3.1 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.
3.2 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 on or after 1/7/2019 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 automatically apply to any pay runs with a date paid 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:
3.3 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.
3.4 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, 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.
3.5 Award Updates
For users that have installed pre-built Modern 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.
If you have any questions or feedback please let us know via support@yourpayroll.com.au.