Get your payroll ready for EOFY and the FY27 changes ahead

The end of the financial year is always busy: final pay runs to check, payroll accounts to reconcile and Single Touch Payroll (STP) finalisation to complete.

This year, there’s extra reason to get organised early. From 1 July 2026, a range of payroll changes take effect, including updated tax tables, wage increases and Payday Super. You can learn more about the upcoming super changes in the Payday Super hub.

A little time now to review your payroll setup can help you close out FY26 with confidence and start FY27 on the right foot.

1. Review pay items and payroll settings

Before finalising your payroll year, check that your pay items are set up correctly in Xero Payroll.

With STP, earnings, deductions, allowances and paid leave pay items need to use the right reporting categories. These categories help the ATO understand how each type of payment should be treated.

It’s also worth checking that pay items are reporting correctly for activity statements, including whether earnings are reportable as W1, and whether deductions are excluded from W1 where required.

As part of your review, you can also use the new bulk qualifying earnings review tool in Payroll settings to help check earnings settings ahead of the new financial year.

For more details, take a look at our guide to reporting categories for STP Phase 2.

2. Check employee records

Employee details play an important role in STP reporting, so it’s worth reviewing them before finalisation.

In Xero Payroll, check that active and terminated employees who need to be included in STP finalisation have the right employment type, income type and tax scale set up.

You can also run the Employee Contact Details report to check employee information such as date of birth, email address and postcode.

3. Fix any mistakes with an unscheduled pay run

If you find incorrect amounts or STP reporting issues, you can usually correct them using an unscheduled pay run.

Make sure the payment date falls in the correct financial year so the adjustment is reported in the right period.

Once the unscheduled pay run is posted, it will update the employee’s year-to-date amounts in Xero. You’ll file and finalise once you’ve completed the rest of your payroll checks.

4. Post and file all pay runs for FY26

Any pay run with a payment date in the 2025/2026 financial year needs to be posted and filed before you complete STP finalisation.

Make sure the payment date is on or before 30 June 2026 if the pay run needs to be included in this financial year.

If a pay run shows a filing error, check whether the issue still needs to be resolved. In some cases, a later successful pay run may have corrected the issue, but it’s important to confirm before finalising. If you’re unsure, you can use our guide on how to fix a filing error in STP.

5. Process outstanding superannuation payments

If you use auto super and want to claim a tax deduction for super payments in the current financial year, your super batches need to be approved by the authoriser no later than 2.00pm AEST, 24 June 2026.

This allows enough time for payments to be debited and forwarded to super funds by 30 June.

If you don’t use auto super, you can read our support article on how to register for automatic superannuation payments.

6. Reconcile payroll accounts

Once your pay runs are posted, filed and paid, reconcile your payroll accounts.

A good starting point is to run the Payroll Activity Summary report and compare it with the General Ledger report. This can help you check that wages, PAYG withholding and superannuation amounts line up with your accounts.

You can use a custom date range in both reports to help identify any discrepancies. If balances don’t match, check your pay run history to find the pay run that needs attention and process an adjustment if required.

7. Review payroll reports before finalisation

Before submitting STP finalisation, take time to review your payroll reports and check that the year-to-date amounts look right.

A good starting point is the Payroll Activity Summary report, which shows total payroll amounts for the financial year, including earnings, tax and superannuation.

If needed, you can compare the Payroll Activity Summary report with the STP Finalisation Summary to help check the amounts that will be reported to the ATO.

If salary sacrifice, pre-tax deductions, reportable employer super contributions or termination payments have been processed during the financial year, make sure these have been reviewed before you finalise.

You should also check that pay runs for the financial year have been successfully filed to the ATO, or that any filing errors have been resolved before you submit STP finalisation.

8. Complete STP finalisation

Once everything has been checked, you can complete STP finalisation in Xero.

Review each employee’s year-to-date summary, add any required reportable fringe benefits amounts and check the business and employee information before submitting to the ATO.

After finalisation is submitted, your payroll year end is complete.

Looking ahead to FY27

A number of payroll changes take effect from 1 July 2026. Here are the key updates to be aware of.

Updated tax tables

Updated tax tables apply from 1 July 2026, including a cut to the lowest tax rate from 16% to 15%. Study and training support loan thresholds have also been updated, with the 2026 indexation rate set at 2.8%.

Xero applies these automatically to pay runs with a payment date on or after 1 July 2026. If you’ve already created pay runs dated after 1 July 2026, review them to confirm the correct rates have applied. If necessary, recalculate these pay runs by reverting to draft & reposting or creating an unscheduled pay run with a manual tax correction for the affected payslip(s).

It’s important to keep payment dates aligned to your normal pay cycle. Tax and super, where applicable, are calculated based on when a pay run is paid, not the period it relates to. This means pay periods in June that are paid in July should generally be processed using the new financial year’s tax rates.

Minimum wages

The National Minimum Wage and minimum award wages rise 4.75% from the first full pay period on or after 1 July 2026. If this affects your organisation, review employee pay rates and update them where needed.

For more information on minimum wage and award increases, visit the Fair Work Ombudsman.

Update award rates faster

The award rate bulk update tool is now live in Xero Payroll, helping you save time when applying annual award rate rises.

Instead of opening each employee record one by one, you can select employees from the Employees page, update eligible pay template earnings lines in bulk, preview the changes and then confirm them.

You’ll still need to check the correct published rates for your employees and awards, but the tool is designed to make the update process faster and reduce the risk of missing someone.

For businesses with employees on awards, this can help make a busy EOFY task simpler and give you more confidence that changes have been applied correctly.

Learn more in Xero Central.

Payday Super starts from 1 July 2026

Payday Super starts on 1 July 2026. From that date, super contributions will need to be received by an employee’s super fund within seven business days of payday.

This is a major change for Australian payroll, particularly for businesses that currently pay super quarterly. Now is a good time to review your super setup, check who can authorise super batches and make sure your process will work when super needs to be paid more frequently.

If you currently use the ATO’s Small Business Superannuation Clearing House, you should also be aware that it will close permanently from 1 July 2026. Existing users will no longer be able to access or download SBSCH records after 30 June 2026, so make sure you download any records you need before then.

Review qualifying earnings

Qualifying earnings is the new base used to calculate super guarantee from 1 July 2026.

From that date, employers must calculate super as 12% of an employee’s qualifying earnings for each pay period. Qualifying earnings includes ordinary time earnings, commissions, some salary sacrifice amounts and payments to some contractors who are treated as employees for super purposes.

For many employers, the move to qualifying earnings may not change the total amount of super they pay, but it’s important that payroll is set up correctly so the right payments are included.

The bulk qualifying earnings review tool is now live in Xero. You can review qualifying earnings settings in bulk, helping reduce the need to check pay items one by one.

You can also add the qualifying earnings column in the Payroll Activity Summary report to see which amounts will be reported to the ATO from 1 July 2026.

For anyone running payroll in Australia, this helps take some of the admin out of preparing for Payday Super. A clearer workflow means less manual checking, fewer follow-ups and more confidence that the right payments have been captured.

Learn more in Xero Central.

Superannuation guarantee remains at 12%

The superannuation guarantee rate remains at 12% for FY27.

While the rate is not changing, Payday Super will change the timing of payments. Instead of paying super quarterly, businesses will need to pay super in line with each payday from 1 July 2026.

Get ready early

EOFY is the right time to check your payroll setup, finalise STP and make sure your organisation is ready for the changes ahead.

By reviewing employee records, checking pay items, updating award rates and setting up qualifying earnings now, you can reduce admin and give yourself a clearer path into FY27.

For more support, visit the EOFY Resource Hub and the Payday Super hub.

This information is general only and does not take into account your circumstances. You should check your obligations with the ATO, Fair Work Ombudsman or your advisor.