Making a finalisation declaration
You need to make a finalisation declaration by 14 July each year to ensure your employees can access their finalised information to complete their tax return.
If you can't make a finalisation declaration on or before the due date, you will need to apply for a deferral.
Finalising your STP data is explained in detail in the STP employer reporting guidelines for STP employer reporting guidelines for phase 2. This includes making amendments for current and previous financial years.
When you have reported and finalised your employees' information through STP, you're not required to:
- provide payment summaries to your employees
- lodge a payment summary annual report.
For payments to your employees that were not reported and finalised through STP, you still need to:
- provide a payment summary to your employees
- send a payment summary annual report to us for these payment summaries.
Common issues to avoid
When making your finalisation declaration, check your employees' year-to-date (YTD) amounts are correct. We have outlined some common issues with STP finalisation declarations.
Ensure you finalise the correct financial year
A common mistake employers make is finalising their employee records for the incorrect financial year. This may be caused when the declaration is being lodged after 30 June.
Please check the financial year you've finalised to avoid this common mistake.
Submit a finalisation declaration for all employees
You need to lodge a finalisation declaration for all employees you've paid and reported through STP during the financial year. This includes those employees who may have only worked for part of the financial year, for instance terminated employees and casuals.
This will make sure you're meeting your obligations and will help your employees lodge their tax return with finalised information.
Changing payroll software or Payroll IDs during the financial year
Sometimes, you may need to change your payroll solution or your employee's Payroll IDs part way through a financial year.
There are important steps you need to take to ensure your employees income statements are accurate and their income is not overstated.
A common mistake when moving payroll solutions part way through a financial year is bringing YTD amounts into your new solution and forgetting to either zero out amounts in your old software or, advising us of your previous BMS ID if your software offers this functionality.
By following this guidance, you'll avoid these sorts of issues.
For more information see Changing your payroll solution or employees’ Payroll IDs.
Employers with closely held payees
If you have 20 or more employees, you should be reporting closely held payees each pay day along with arms-length employees. The finalisation due date for closely held payees is 30 September each year.
For small employers (19 or fewer employees) who only have closely held payees, the due date for end-of-year STP finalisation is the payee's tax return due date.
For employers that have both closely held payees and arm's length employees:
- your finalisation declaration for your closely held payees is due by 30 September each year.
- you must still make a finalisation declaration for your arm's length employees by 14 July.
Making an amendment
If you identify that you need to make an amendment after you have submitted a finalisation declaration, you'll need to lodge the amendment as soon as possible.
We recommend you tell your employees when you make a correction that will be reflected in their income statement. If they have already lodged their tax return, they may need to lodge an amendment.
For information on making amendments after finalisation, see STP employer reporting guidelines for phase 2.
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 talk to their registered tax agent
- if they don't have a myGov account, they can easily create a myGov account and link it to the ATO
- '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 log into ATO Online services to check their personal details are accurate and up to date and if necessary, notify both you and the ATO of any changes (incorrect personal details may prevent them from seeing their STP information).
What your employees 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.
When you have made the finalisation declaration, your employees will see the status of their payment information change to 'tax ready'.
Some employees like to 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 without a myGov account
If your employee doesn’t have a myGov account, it’s easy for them to create one. See Online services for individuals and sole traders for information on how to create and set up a myGov account, link it to the ATO and use our online services.
They can also talk to their tax agent who will have access to their income statement information.
If they can’t create a myGov account and don't have a tax agent, they can phone us on 13 28 61.
Employees who can’t see their income statement in myGov
If we have been unable to match your STP data to your employee, they may not see their income statement. This may happen where the tax file number (TFN) you’ve reported doesn’t match our records.
If your employee can’t see their income statement, they will need to phone us on 13 28 61.