Finalising your STP data is how you let us know your STP reporting is complete for an employee for a financial year.
The way you finalise your STP data is by making a finalisation declaration. A finalisation declaration is a declaration in the approved form lodged by 14 July each year indicating you have fully reported for the financial year for each employee. You make a finalisation declaration by providing a finalisation indicator for an employee (and directors, contractors, etc.) as part of your STP reporting.
When you have provided the finalisation indicator for the employee, we will prefill the employee's 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 at 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 and complete information for their income tax return.
You can apply for an extended due date to make your finalisation declaration.
Interaction with payment summaries
You are not required to provide payment summaries (including part-year payment summaries) to your employees for the payments you report and finalise through STP. We make this information available to your employees in ATO online services accessed through myGov. This information is called an income statement. It is the equivalent of a payment summary.
Once you make a finalisation declaration, after the end of the financial year we will notify your employees that their income statement is 'tax ready' through myGov and they can use it to complete their tax returns.
Finalised STP information will be pre-filled after the end of the financial year into myTax for individuals who prepare and lodge their own tax returns. It will also be made available to tax agents.
You will still need to provide your employees with a payment summary and send a payment summary annual report to us for any payments not reported and finalised through STP.
If you make a finalisation declaration during a financial year, you don't need to provide the employee with a part-year payment summary.
In some circumstances you may pay an employee after you have already made a finalisation declaration for them in the same financial year.
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 rehire the employee), deselect or remove the finalisation indicator and wait until the end of the financial year to make another finalisation declaration.
Even if you finalise an employee record partway through the financial year, we will not pre-fill the information into your employee’s tax return 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 commonly affects employees who are leaving Australia once their employment has terminated.
If you need to amend details after making a finalisation declaration, you should do this as soon as possible by lodging an update event. We will make updated information available to your employee through ATO online services. We also recommend that you notify your employee of any changes because they may need to correct their tax return if they used the previous information.
If you can't lodge an update event with the correct details straight away, you should lodge an update event with the existing details with the finalisation indicator removed. This will advise us that the current information is not final and shouldn't be used to pre-fill your employees’ individual tax returns. If you cannot lodge an update event with the correct details by the finalisation due date, you need to apply for a finalisation declaration deferral.
You must correct errors within 14 days of detection or, if your pay cycle is longer than 14 days (for example, monthly), by the date you would be due to lodge your next regular pay event.
When you've lodged 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.
If you overpay a worker in a previous financial year and only discover the overpayment in a later financial year, you should lodge an update event to advise us the amounts the employee should have received in the relevant financial year. You must not 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 your employee with an amended payment summary and send an amended payment summary annual report to us.
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