7. End of Financial Year Payroll and STP Finalisation Copy

What’s New?

In this session, you will learn:

1. How to do the annual financial year processing the Payroll

2. How to finalise the Single Touch Payroll and submit to the ATO for the end of year

What is it?

Review:

• We need to set up the Organisation Settings
• Before we can process the Single Touch Payroll, we need to set up the Payroll in Xero.
• Set up the STP by clicking Opt-in to the Australian Tax Office. Once you opt-in to Single Touch Payroll, you no longer need to prepare the Payment Summary at the end of the year. 
• In order to be able to file the STP, you need to connect your Xero payroll account to the ATO, and then you have to register. 
• After you register the STP, the next step is to add the Employee’s details.
• Then, you can process the pay run and file the STP. 
• You submit the pay run to the Tax Office every time you do the pay run.

Before you finalise the STP, check first the employee’s details:

• name
• tax file number
• email address
• home address

Important note:

• At the end of the year, you can export the Payroll Employee Summary. 
• The Payroll Employee Summary should reconcile to all the BAS that we lodged with the ATO, ensuring that the W1 and W2, the gross wages, and the tax are correct.
• If everything is correct, select “finalisation.”

How to do STP Finalisation in Xero:

1. Make sure that all the pay runs are filed. 
2. Go to “Pay employees.”  
3. Check if all the pay runs are processed.
4. Download the report.
   • Go to Accounting
   • Go to Reports.
   • Scroll to the Payroll section
   • Click on Payroll Employee Summary.
   • Select the financial year of what you are finalising.

5. Make sure amounts filed matched with the Activity Statements Lodged.

• Payroll Employee Summary 
• Match all the eight components.
• Make sure that the gross wages and the tax that we report are matched with the Business Activity Statements logded by the company. We need to reconcile that.
• Export the Payroll Summary report into an Excel file. 
• List out all the employees, their earnings, their taxes, the super, and their net pay. 
• Make sure that the W1 and W2 that we lodged in the Business Activity Statements in total match that.

6. Summarise all the BAS that we lodged with the ATO. The best place to download the report is through the ATO portal. 

There are three reports that you need to match before you submit the finalisation of the STP to the ATO. 

• Payroll Employees Summary
  • In this report, we have the gross wages, tax, and super. We need to make sure that the Payroll Employee Summary is what we print out from Xero. 
• Make sure that it matches with all the Business Activity Statements, which are the four quarters, W1, and W2, that we have lodged with the ATO. 
• In the Single Touch Payroll finalisation report in Xero, we also need to make sure that all the details are matching.

7. If all three reports are reconciled, then we can submit the STP Finalisation report to the ATO. 

Please watch the video for the example activity.

What’s more?

When you hit the finalisation and submit to the ATO:

• we want to make sure everything is correct
• check the name of the employee
• the tax file number 
• the address
• the gross amount  
• the Super amount 
• the tax amount

How do we check that? 

• Copy the STP file to our worksheet.
• Compare the gross amount, the Super fund amount, and the tax amount. Make sure they are all reconciled, because that is how the ATO got the figure, and they will base their prefill on this for the taxpayer. 

What we do is that we also file all our working papers in our file, which includes the STP finalisation report that we send to the ATO. That’s how the Payroll and STP work.

See you in our next session!