End-of-year finalisation through STP
The official date that you are required by the ATO to make a finalisation declaration for all of your employees is 14th July. However, the ATO have recognised the impacts of COVID-19 on the Australian community and given an extra 2 weeks if you need it. That means you can complete your STP finalisation up until 31 July.
Whilst the ATO has been generous in allowing this extension they are encouraging those employers that can complete their finalisation by 14 July if they can. You should let your employees know when you have done so that they can lodge their income tax returns. If you don’t lodge until 31st July neither can they so to maintain good relations it is important to lodge as early as you can.
Making a finalisation declaration
Before making your finalisation declaration, make sure your STP information is correct. You should check all reconciliations and resolve any queries as quickly as you are able.
If you can’t make a finalisation declaration by the due date, you will need to apply for a deferral. Contact the ATO if this will be necessary.
You can, of course, finalise your data earlier if it is ready to go. The sooner you finalise your employees’ information, the sooner they will be able to lodge their tax returns. This will make you more popular!
If you are unsure of how to process your End-of-year finalisation through STP you can refer to the ATO guide here.
When you have reported and finalised your employees’ information through STP, you are exempt from:
- providing payment summaries to your employees
- lodging a payment summary annual report.
For payments to your employees that were not reported through STP, you still need to:
give a payment summary to your employees
provide the ATO with a payment summary annual report for these payment summaries.
Making an amendment
If it becomes clear that you need to make an amendment after you have lodged a finalisation declaration, you’ll need to submit these as soon as possible. You can make the amendments to finalised STP data in your STP software package.
We suggest that you let your employees know when you make an adjustment if it will be reflected in their income statement. Let them know that if they have already lodged their tax return, they may need to lodge an amendment.
What to tell your employees
You will need to tell your employees:
- you are no longer required to provide them with a payment summary for the information you’ve reported and finalised through STP
- they can access their year-to-date and end-of-year income statement online through myGov
- or they can talk to their registered tax agent
- ‘income statement’ is the new term for their payment summary
- to wait until their income statement is ‘Tax ready’ before lodging their tax return
- to check their personal details and if necessary, update both you and the ATO. Incorrect personal details may prevent them from seeing their STP information
- if they don’t have a myGov account they can easily create one – see Setting up your myGov account.
What they will see
STP allows your employees to view their payment information at any time in our online services through myGov.
On 1 July, they will see the status of this information change from ‘year-to-date’ to ‘not tax ready’. It will stay like that until you submit your finalisation declaration.
You can let them know that once you have made the finalisation declaration, they will see the status of their information change to ‘tax ready’.
Be aware that some employees lodge their tax returns early in July and may choose to do so before you have finalised their STP information. We will make it clear to them that their income statement is not ‘tax ready’. If they choose to use the un-finalised information, they will need to acknowledge that:
- you may finalise their income statement with different amounts
- they may need to amend their tax return and pay additional tax.
Employees with more than one employer
If your employees have more than one employer, remind them that not all employers have started STP reporting yet.
They will still receive a payment summary from employers who are not yet reporting through STP.
If you need any help with any aspect of this please speak to your Bookkeeper or your Tax Agent. If you don’t have one then you could consider speaking to Liz and the team at Keeping Numbers. With full training and lots of experience, they are currently helping hundreds of clients with their End-of-year finalisation using STP