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  • Finalising your STP data

    You may be exempt from giving payment summaries to your employees and a payment summary annual report to us for the amounts you've reported through STP. This information will be made available to your employees online through myGov or via their registered tax agent. 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 you have provided all required information for the financial year through your STP reporting.

    These payment summaries include:

    • PAYG payment summaryindividual non-business (INB)
    • PAYG payment summaryforeign employment income (FEI)
    • PAYG payment summaryemployment termination payments (ETP).

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

    • 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 STP.

    End-of-financial-year finalisation declaration

    You make a finalisation declaration by providing a finalisation indicator for an employee (including directors and contractors) as part of your STP reporting.

    When you have provided the finalisation indicator for the employee, we will pre-fill the employee's income tax return and display the information as 'tax ready' in 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. It is important to make a finalisation declaration so that your employees can be confident they are using accurate information to complete their income tax return.

    You can apply for an extended due date to make your finalisation declaration.

    You may be subject to a penalty if you do not make a finalisation declaration by the due date.

    Changes to payment summaries

    You will not be required to provide payment summaries (including part-year payment summaries) to your employees for the payments you report and finalise through STP. We will make this information directly available to your employees online through myGov. This information will be called an income statement. It is the equivalent of a payment summary.

    Once you make a finalisation declaration, we will notify your employees that their income statement is 'tax ready' in myGov and they can use it to complete their tax returns.

    STP information will be pre-filled into myTax for individuals who prepare and lodge their own tax returns. It will also be made available to tax agents.

    Finalisation declaration during the financial year

    If you make a finalisation declaration during a financial year, you don't need to provide the employee with a part-year payment summary.

    If you pay an employee after you have already made a finalisation declaration for them in the same financial year, consider if:

    • it is a one-off payment, or
    • you expect to make another payment (for example, you rehire the employee).

    If it is a one-off payment, make another finalisation declaration when you report this payment.

    If you expect to make another payment, unselect the finalisation indicator and wait until the end of the financial year to make another finalisation declaration.

    If you finalise an employee record partway 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 affect employees who are leaving Australia once their employment has terminated.

    Amendments after finalisation

    If you need to amend details after making a finalisation declaration, you should do this as soon as possible by submitting an update event. We will make updated information available to your employee through ATO online. We also recommend that you notify your employee of any changes that might be reflected in their finalised income statement.

    If you can't submit an update event with the correct details straight away, you should submit an update event with the existing details with the finalisation indicator removed. This will advise us that the current information is not final and should not be used to pre-fill tax returns. If you cannot submit an update event with the correct details by the finalisation due date, you need to apply for a deferral.

    You must correct errors within 14 days of detection or, if your pay cycle is longer than 14 days (for example, monthly), in your next regular pay event.

    When you've submitted the update event with the correct details and the finalisation indicator, revise the PAYG withholding information (labels W1 and W2) on your activity statement for that period. You can amend finalised information reported through STP up to five years after the end of financial year.

    Overpayment in a previous financial year

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

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

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

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    Last modified: 21 May 2021QC 54550