With this being only the second year of EOFY processing with Single Touch Payroll (STP), and for some businesses this will be the first time they will be lodging finalisations, we have compiled and updated this guide to help you navigate end of financial year processes. We've grouped questions into the following sections: Preparation; Payment summary v finalisation event; Creating and lodging a finalisation event; and Changing payroll systems during the financial year. We will keep adding to this, so make sure you refer here first if you have a question!
This FAQ should be read in conjunction with the EOFY Guide 2019/20 - Reporting STP.
Section 1: Preparation
Salary Sacrifice Super Deductions (RESC)
How do I fix RESC amounts incorrectly entered via an 'Employee's Opening Balance'?
Firstly, you will know the issue stems from the opening balance amount because the 'Deductions Report' will say as much under the employee name, for example:
To rectify this, go to the employee's file and click on 'Employee Settings' > 'Opening Balances' > 'Deductions'. Tick the 'Include on payment summary as RESC' checkbox and then click on 'Save'.
How do I fix RESC amounts incorrectly entered via a Pay Run?
It will be evident that the issue stems from what has been entered in a pay run because the 'Deductions Report' will list the pay schedule and the date paid under the employee name, for example:
What this looks like in a pay run is as follows:
In this example, you can see that the deduction is set up as a manual payment. Rather, it should be set up to be paid to the super fund:
To rectify this, create an empty pay run and reverse the incorrect entry by adding the deduction line and set to 'Manual Payment' with the corresponding negative figure (see below). Then add the correct entry by adding another deduction line and set it to be paid to the super fund with the correct positive figure. It will look like this:
NB. Make sure you add a note eg. "correcting payment method only" to leave an audit trail in the Notes field at the bottom of the employee's pay run record (if you don't do this the employee will drop out of the pay run on finalisation due to nil earnings being present).
How do I fix RESC amounts incorrectly set up via Pay Run Inclusions?
If you have had to fix RESC errors, best practice is to ensure it doesn't keep happening on an ongoing basis! So, you should generate a 'Pay Run Inclusions' report to review any ongoing RESC deductions set up for any employee. You will know an employee's pay run inclusion needs fixing if the deduction category is not set to be paid to a super fund.
For example, this RESC deduction setting is incorrect:
This RESC deduction setting is correct:
Instructions on how to configure employee pay run inclusions can be found here.
How do I fix RESC amounts incorrectly set up via pay events
This article will show you how.
Pay runs and pay events
What happens if I haven't finalised a pay run? Will it be included?
Put simply, if a pay run is not finalised it will not be reported to the ATO. If you lodge your finalisation event before finalising all pay runs for the 2019/2020 FY you will then need to lodge an amended finalisation event so that the correct figures are reported to the ATO. This includes normal pay runs and ad hoc pay runs – again if it relates to an employe's pay or is an adjustment to an employee's pay it must be finalised in order to be reported via STP.
Do all pay events need to be successfully lodged with the ATO before commencing the finalisation process?
There are some events that are currently in a failed or submitted status. Best practice is that all pay events are successfully lodged before lodging subsequent events.
However, for the purpose of lodging the finalisation event, it does not matter if some prior pay events or update events have not been successfully lodged. This is because the earnings that are reported come from finalised pay runs as opposed to just successfully lodged STP events.
Do we need to lodge an STP event first before lodging a finalisation event?
Yes. You cannot lodge a finalisation event without first lodging a pay event or update event during the financial year.
One of our monthly pay runs (pay event) has a status of "Failed" but all other pay runs were lodged successfully with the ATO. Will the earnings from the failed pay event be included in the finalisation event?
Yes, they will. So long as pay runs are finalised and regardless of whether they have been lodged successfully with the ATO or not, the earnings will be included as part of the employees' YTD figures reported in the finalisation event.
We recommend you review any JobKeeper related 'Pay Category' settings to ensure you have complied with ATO requirements for JobKeeper Top-Up, Start and Finish payments. See below for more details.
Section 2: Payment summary v finalisation event
Should I lodge payment summaries or a finalisation event?
The general rule here is if you have lodged STP events you MUST lodge a finalisation event and NOT lodge payment summaries. The only exemptions to this rule are detailed in this article. Lodging both will cause a duplication of data to be reported to the ATO and then you will need to deal with the ATO and explain/rectify the issue.
N.B. Businesses that have reported STP events, whether successful or partially successful, will notice that the payment summary generation function is disabled. This is intentional and purely to ensure users do not lodge payment summaries AND lodge STP events. The repercussion of this is not easy to solve and requires ATO intervention, so better to be on the safe side! If you believe you meet any of the exemptions in the article link above, then email payroll support.
Any employee payments that were not reported through STP MUST be included on a payment summary and in a payment summary annual report. Additionally, if you are exempt from reporting STP – ie a WPN holder or closely held employees – and so have chosen not to, you will need to issue payment summaries to these employees and lodge a payment summary annual report to the ATO. See this article for more information.
We only started reporting STP mid-year. Do we still need to process a finalisation event?
Once you start reporting successfully through STP, you can't stop! You MUST complete a finalisation event and NOT generate payment summaries or a payment summary annual report (PSAR) because payroll data will consequently be overstated to the ATO.
Don't forget that STP events are reporting YTD payroll data. For example, if a business only started reporting through STP from February (but was processing pays from the start of the financial year) the first event lodged in February would include all payroll data from 1 July for each employee in the event. Be aware that pay events only include employees who were paid in the pay run you are lodging.
There may be some employees paid from the start of the financial year who have not been paid since the business started lodging through STP. To ensure you capture all employee data, you should create and lodge an update event prior to completing the finalisation event. The update event will capture ALL employees paid in the financial year (who have not previously been marked as 'is final' in an event). Once successfully completed, you will then be in a position to process your finalisation event.
We have NOT been reporting through STP during the financial year but want to process a finalisation event rather than a payment summary. Is this possible?
Yes! You can definitely use the STP end of year process and lodge a finalisation event rather than issue payment summaries provided you have registered for STP, have finalised pay runs for the financial year and have lodged an STP event before proceeding with finalisation.
If you lodge a finalisation event DO NOT also issue payment summaries and lodge a PSAR with the ATO as your payroll data will be over reported.
I have closely held employees. Do I have to lodge a payment summary or can I include them in a finalisation event?
If you are a small employer (19 or fewer employees) with closely held employees, you are currently exempt from reporting through STP for those closely held employees. If all your employees are closely held and you have not registered for STP, you should lodge a payment summary. If you have been voluntarily reporting closely held employees through STP you MUST lodge a finalisation event.
If only some of your employees are closely held, you should be reporting all your other employees through STP, and you may prefer to include the closely held employees in the finalisation event rather than lodging a payment summary. To do this, you need to first unmark each of those employees as closely held. Open the employee's file, go to 'Pay Run Settings' > 'Pay Run Defaults' and click on the 'Single Touch Payroll' checkbox to remove the check, then click 'Save':
You can now include these employees in the finalisation event along with the rest of your employees. After unmarking your closely held employees, they will be included in subsequent STP events, including pay events. Please note: Once an employee has been included in an STP event, you need to keep reporting them through STP. As such, the 'Closely Held Employee' checkbox will be disabled to prevent you from subsequently marking them as closely held.
Are we no longer required by the ATO to keep a record of payment summary details?
Please be aware that all historic payment summary records for employees, ie for all financial years prior to 2019/2020 are automatically retained in the payroll system. There are no back-ups required to obtain a copy of this data – it just exists in the platform. You have the ability to continuously access previously published payment summaries and ETP summaries at an employee level via 'Employee Management' > 'Payment Summaries' or at a business level via 'Reports' > 'ATO Reporting' > 'Payment Summaries'.
Additionally, employees are still able to access historic payment summaries via their employee portal.
I have employees who still want a printed payment summary. Is it as simple as just printing it out?
Put simply, employees should not be issued payment summaries, even if they beg you for one! They need to be advised rather that they will now be provided with income statements via their myGov account. This is a significant change to what employees are used to so it may be worth communicating with your employees in advance to let them know what the changes are.
Another reason for not issuing payment summaries if you have been reporting through STP is the fact that different payroll configurations apply for STP reporting businesses and non-STP reporting businesses. If your settings are configured to be STP compliant, this may then affect what data is displayed in a payment summary. The last thing you want to do is issue a payment summary with incorrect figures or figures varying to the employee's income statement!
I have just discovered after reporting STP for an employee all year that they should actually be classified as closely held. Can I now mark this employee as closely held, update the ATO with a lodgement before finalisation and then process a payment summary for that one employee.
No, you cannot. If a closely held employee was not marked as closely held (via the employee's Pay Run Defaults screen > "Closely held employee" checkbox) and as such has been reported via STP events you cannot now decide to mark them as closely held and stop reporting them via STP for this financial year. Rather, the employee MUST be included in the finalisation event for the 2019/2020 financial year. Additionally, you will NOT be able to generate a payment summary for them.
Section 3: Creating and lodging your finalisation event
If an update event has been successfully lodged and all employees marked as 'is final', is this sufficient as a finalisation event or does a finalisation event need to be lodged again via the STP EOFY Wizard?
Lodging an update event with all employees marked as 'is final' is definitely sufficient as a finalisation event. To clarify, the STP EOFY Wizard is NOT the only way of lodging a finalisation event – we have merely created this feature to provide a simple step-by-step process on how to lodge a finalisation event.
If you choose to finalise via an update event, we recommend you closely follow the instructions to ensure correct end of year steps have been followed.
Employees are normally paid on a monthly pay schedule but sometimes they have been paid using an ad hoc pay schedule (for out of process adjustments and/or bonuses). Do we need to process a finalisation event for both the monthly pay schedule and the ad hoc pay schedule?
No. If you have assigned the monthly pay schedule in your employee's file ('Pay Run Settings' > 'Pay Run Defaults'), then the earnings under the ad hoc pay runs will be included in the finalisation event for the monthly pay schedule.
When you assign a pay schedule to the finalisation event, it picks up all active employees (that is, employees not marked as 'is final' in prior events) who have that pay schedule assigned as their primary pay schedule (as per the configuration in the employee's 'Pay Run Defaults' page). However, the employee's total YTD earnings will also include earnings paid using a different pay schedule during the financial year.
Before you commence processing finalisation events, we strongly suggest you audit which primary pay schedules have been assigned to your employees to ensure all your employees are finalised. See the EOFY Guide 2019/20 - Reporting STP for more details.
We changed from processing a weekly pay schedule to processing a fortnightly pay schedule during the financial year. Does this mean we have to create a finalisation event for both the weekly and fortnight pay schedule?
If the weekly pay schedule is no longer an 'active' pay schedule, you will only need to create a finalisation event for the fortnightly pay schedule. What we would strongly recommend though is ensuring all employees, including employees terminated in this financial year, have the fortnightly pay schedule assigned to them (via the "Pay Schedule" setting in the employee's Pay Run Defaults screen). This will ensure all active and inactive employees paid in the financial year are picked up in the one finalisation event. Alternatively, you should create a finalisation event for the weekly pay schedule just to double check whether any employee appears in the event. If there is no employee appearing in the event, then this means everyone has been/will be captured in the fortnightly finalisation event.
I am unable to proceed from the 'Confirm Payroll Data' step. I am being asked to correct all validation warnings before continuing to the next step.
So yes, this will happen if there are validation warnings that have not been corrected. We have enforced this practice to avoid failed lodgements with the ATO. When completing the finalisation event process, the payroll data and company details will be validated at the 'Confirm Payroll Data' step and any warnings will display at this stage. A list of possible validation warnings can be found here.
You are required to action all warnings before you can proceed. Once actioned, return to the 'Confirm Payroll Data' screen, click on the 'Actions' dropdown and select 'Refresh Data'. All warnings will disappear if they have been actioned correctly.
We only started reporting STP mid-year and had previously processed termination pays. Will the terminated employees appear in the finalisation event?
Yes they will. The only exception here would be if you have successfully lodged an update event during the financial year and prior to the finalisation event – as terminated employees would have been included in the update event and marked as 'is final'. If this is the case then the previously terminated employees will not appear in the finalisation event (nor will any other employees previously marked as 'is final' in successful lodgements). But that is ok! As soon as an event is lodged and an employee is marked as 'is final' you're communicating to the ATO that this is the final payment being made to the employee for that financial year - by doing this you have basically conducted a finalisation event for that employee.
With these terminated employees as they have been encompassed in STP events (whether via an update event or finalisation event), you must not generate payment summaries or PSAR for them as the payroll data will be overstated to the ATO.
We have multiple pay schedules set up in the business. I commenced the finalisation event for one pay schedule. Can I now click on "Save for later" and then start the finalisation event for another pay schedule or do I have to finish the first finalisation event before I can start on another?
You can have multiple finalisation events open at the same time for a different pay schedule. That is, you do not have to complete/lodge one finalisation event before you start on another finalisation event for a different pay schedule. N.B however, that you cannot create multiple finalisation events for the same pay schedule. Only one finalisation event per pay schedule can be created. If you then need to make amendments or add RFBT amounts for certain employees, you will need to create an amended finalisation event for that pay schedule.
Are closely held employees included in the finalisation event?
No. If you have marked an employee as closely held, that employee will not be added to the finalisation event. If you want them to be included, see I have closely held employees. Do I have to lodge a payment summary or can I include them in a finalisation event? for how to do this. See Managing Closely Held Employees for more information on closely held employees.
Once a finalisation event is successfully lodged with the ATO, will the status in the employee's myGov account change to 'Tax ready'?
Yes. As such, if you notice that an employee's pay needs to be adjusted after lodging the finalisation event you must action this immediately and notify the employee so they do not use outdated data to lodge their tax return.
Can I still create an urgent ad hoc pay run after lodging a finalisation event? If yes, how is this done using the STP EOFY Wizard?
Yes, you can. However, bear in mind that the successful finalisation event would have marked the employee's income statement as 'Tax ready' so you must notify the employee immediately that an adjusted pay is required and to hold off on lodging their tax return. If this is not done prior to an amendment taking place and they lodge their tax return there will be implications for the employee.
Once you have finalised the ad hoc pay run, go to 'Reporting' > 'Single Touch Payroll'. From this screen, click on the dropdown arrow to the right of the 'Start Finalisation Process' button and then click on 'Create an amended Finalisation Event':
N.B. This option will only appear once a successful finalisation event has been lodged with the ATO.
From there, you will be directed to enter the applicable pay schedule and then add the effected employees. You can select all employees or just the specific employees affected.
The 'Amendment Employees' are made up of all active and terminated employees assigned to that specific pay schedule that have a start date earlier than 1 July 2020. Once you proceed to next screen, the process will mirror that of a finalisation event.
Do I have to complete the finalisation event process before I can start creating pay runs for the 2020/2021 financial year?
No. You can start creating pay runs for the new financial year immediately without having commenced the finalisation event process.
What is contained in the notification email sent to employees once the finalisation even has been lodged successfully?
Users can choose to send out the system generated notification email once the finalisation event has been successfully lodged. To do this, in the successful finalisation event, click on the 'Actions' > 'Send Notifications' dropdown. The email contains the following text:
"Your income statement for [Employing Entity Name] for the financial year ending June 30, 2020 is now available.
You can access your income statement via ATO online services through your myGov account. If you do not already have a myGov account, it is easy to create. Click here for instructions on how to do this.
To clarify, an income statement is different to a payment summary. We are no longer required to provide you with a payment summary as we have been reporting your payroll data for the financial year through Single Touch Payroll (STP).
Other general information regarding how STP has changed the end of year process can be found here."
This text is fixed and cannot be configured by users.
How can I resend the notification after the finalisation event?
If you select the "Actions" button up on the right you can re-send the notifications. However, this will send it to all the employees again.
Can we print the income statements for employees who do not have an email address?
Firstly, the notification email sent to employees does NOT include a copy of their income statement. The email simply advises the employee that their income statement is now available and how they can access it.
Secondly, no payroll system can generate or retain copies of employee income statement as this is currently not catered for by the ATO. Employees can only access their income statement by one of the following ways:
- The employee's myGov account. If the employe lodges their own tax return and cannot create a myGov account, they will need to get in contact with the ATO on 13 28 61.
- If the employee is using a registered agent to lodge their tax return, their registered agent will have access to the employee's income statement.
How are JobKeeper payments dealt with in end of financial year STP processes? Do I need to take any additional steps when finalising reporting?
Be aware that due to ATO requirements, JobKeeper payments are reported separately as allowances and should appear in STP events under the allowances column.
Provided you have set up JobKeeper payments correctly, they will be reported and appear correctly. If you are using the system-generated JobKeeper pay categories for Start, Finish and Top-up payments, the correct STP classifications have already been applied. See Processing JobKeeper Payments in the pay run for more details.
There are no further steps required for end of financial year with respect to JobKeeper payments.
Section 4: Changing payroll systems during the financial year
There are so many variables with this topic and different scenarios that need to be considered here. As such, if your exact scenario has not been discussed below, please refer to this article to get a better understanding and resolution to your specific situation.
We changed payroll systems during the financial year and have not added previously terminated employees (from prior payroll system) in this payroll system. How do we deal with the terminated employees not entered in this payroll system?
The first thing that needs to be considered here is whether the business was reporting through STP in the previous payroll system.
Scenario 1: Reporting through STP was occurring in previous payroll system
If this is the case you need to ensure the employees' final STP event in the previous payroll system included these employees and were marked as 'is final'. This acts as an indicator to the ATO that there are no further payments to be made to that employee for the remainder of the financial year. So if that was done then there is nothing further required for you to do with these employees - their finalisation event has occurred. If this has not been done, then lodge an update event in the previous payroll system for those terminated employees and mark as 'is final'. Also, please note that as you have been reporting through STP in the previous payroll system you must not add the terminated employees in this payroll system and include opening balances as this will duplicate the reporting of payroll data for the terminated employees. You must finalise the process for those terminated employees in the previous payroll system.
Scenario 2: Reporting through STP was NOT occurring in a previous payroll system
If this is the case and you only commenced STP reporting in this payroll system then there are a few ways to deal with this:
- Option 1: Keep the terminated employee data in the previous payroll system and generate payment summaries/PSAR for such employees; or
- Option 2: Add terminated employee data in this payroll system and enter their YTD data via the Opening Balances functionality so that they are then included in the finalisation event. If you choose this option then you are not required to generate payment summaries/PSAR for the terminated employees.
If you have any feedback or questions please contact us via firstname.lastname@example.org.