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  • Finalising your Single Touch Payroll reporting

    You may be exempt from giving payment summaries and a payment summary annual report for the amounts you reported through Single Touch Payroll. This information will be made available to your employees in ATO online services, accessed through myGov. Your employees can also request a copy of this information from us.

    To be exempt from issuing these payments summaries to your employees, you will need to make a finalisation declaration. This declares that you have provided all required information for the financial year through your Single Touch Payroll reporting.

    These payment summaries include:

    • PAYG payment summary - individual non-business (INB)
    • PAYG payment summary - foreign employment income (FEI)
    • PAYG payment summary - employment Termination Payments (ETP).

    You will not have to provide payment summaries for the following payments if you reported them voluntarily through Single Touch Payroll:

    • payments under voluntary agreement
    • payments under a labour hire arrangement
    • death benefit employment termination payment.

    You will need to provide a payment summary for any payments not reported through Single Touch Payroll.

    Finalisation declaration

    You make a finalisation declaration by providing a finalisation indicator for an employee (including directors, contractors, and so on) as part of your Single Touch Payroll reporting.

    Once you have provided the finalisation indicator for the employee, we will pre-fill their income tax return and display the information as 'tax ready' in ATO online services accessed through myGovExternal Link.

    You can make a finalisation declaration for an employee any time during the financial year (for example, for employees who have ceased employment), or after the end of the financial year up to 14 July.

    If you do not make a finalisation declaration or, alternatively, provide payment summaries by 14 July each year you may be penalised subject to the transitional arrangements below.

    We have provided additional time for employers to make a finalisation declaration in their first year of reporting through Single Touch Payroll:

    • Employers who start reporting in the 2018 financial year will have until 14 August 2018.
    • Employers who start reporting in the 2019 financial year will have until 31 July 2019.

    If you need more time, you can apply for an extended due date to make your finalisation declaration.

    Finalisation declaration during the financial year

    If you make a finalisation declaration during a financial year, you do not need to provide the employee with a part year payment summary.

    If you pay an employee, and have already made a finalisation declaration for them for a financial year, consider the following:

    • If it is a one-off payment – make another finalisation declaration when you report this payment.
    • If you expect to make another payment (for example, you re-hire the employee) – unselect the finalisation indicator and wait until the end of the financial year to make another finalisation declaration.

    If you finalise an employee part-way through the financial year, the pre-fill will not be available until after the end of the financial year. The employee will need to follow the current process for lodging a part-year tax return. This would mostly impact employees who are leaving Australia once their employment has terminated.

    Amendments after finalisation

    If you identify the need to amend details after making a finalisation declaration you should submit these as soon as possible. You can do this by submitting an update event.

    We understand you may not be able to submit an update event report with the amended details within 14 days of identifying the need for an amendment. If this is the case, you should submit an update event with the previous details and the final indicator set to FALSE. This will advise us that the current information is not final and should not be used to pre-fill tax returns.

    You can amend finalised information reported through Single Touch Payroll up to five years after the end of financial year.

    Overpayment relates to a previous financial year

    If you overpay a worker in a previous financial year and only discover the overpayment in a later year, you should submit an update event to advise us the amounts the employee should have received in the relevant financial year. Do not adjust the amount of tax withheld.

    You should provide an update event for each financial year an overpayment occurred in.

    If the overpayment relates to a payment you did not report through Single Touch Payroll you should provide the worker with an amended payment summary and an amended payment summary annual report to us.

    Transitioning to Single Touch Payroll

    While many employers will start reporting through Single Touch Payroll from 1 July 2018, some employers will have a deferred start date. This may be because their software is not ready, or for other circumstances beyond their control.

    Employers who are granted a deferral will start reporting during the financial year, rather than on the first pay after 1 July.

    Your digital service provider will give you the information you need to support you when you transition to Single Touch Payroll reporting. They will let you know which of the following methods to use:

    • Provide an opening year-to-date balance for all employees (active, inactive and terminated) in an update event.
    • Report year-to-date balances for all employees (active, inactive and terminated) in your first pay event.
    • Report year-to-date amounts for employees through a Single Touch Payroll pay event and year-to-date amounts for inactive and terminated employees in a later update event which must be lodged by 14 July or the deferred due date.
    • Report the current year-to-date balances for the employees included in your first pay event. Give payment summaries to terminated and inactive employees and lodge a PAYG payment summary annual report to cover the payments you made before your first Single Touch Payroll pay event.
    • Start your Single Touch Payroll reporting with zero year-to-date balances and give payment summaries to all of your employees (current, inactive and terminated). Lodge a PAYG payment summary annual report for payments you made before your first Single Touch Payroll pay event.

    Changing payroll solutions during a financial year

    If you start reporting through one Single Touch Payroll-enabled solution and change to another during a financial year, you must transition correctly to make sure the information pre-filled into your employees' income tax return is accurate.

    There are three options to transition to a new payroll solution during a financial year:

    1. Migrate your year-to-date employee information to the new payroll solution. You will need to zero the employee year-to-date values from the old payroll solution through an update event to prevent duplicate information being displayed.
    2. If you do not migrate year-to-date employee information to the new payroll solution you can start reporting your employee year-to-date amounts from zero. You will need to finalise the employee information reported under the original payroll solution.
    3. Migrate your year-to-date employee information to the new payroll solution and use the original BMS identifier in future pay event reporting.

    Example: changing payroll solutions during a financial year

    Vandalay Industries has decided to change its payroll solution as the business is growing. Vandalay Industries will start using the new payroll solution from 1 September 2019. It will be unable to transfer employee payroll data from the old payroll solution to the new one. Vandalay Industries needs to finalise the employee information in the last pay event submitted using the old payroll solution.

    At the end of the financial year, the employees of Vandalay Industries will have two sets of information from Vandalay Industries pre-filled into their income tax return – one for the period 1 July 2019 to 31 August 2019 and another for the period 1 September 2019 to 30 June 2020.

    End of example
    Last modified: 22 Mar 2018QC 54550