
Last updated: Mar 27, 2024
Tax time will look a little different this year compared to last, with the conclusion of the JobMaker and JobKeeper schemes and business slowly returning to normal. However, most of us will have completed an EOFY using Single Touch Payroll (STP) before, so wrapping up the 2021/22 financial year should be smooth sailing.
Whether this is your first time finalising your EOFY with STP, you’re an old hand, or you need to submit payment summaries for your employees – by following these steps you can keep tax time simple.
Any pay runs with a payment date in the 2021/22 financial year will first need to be posted and filed. If these pay runs are to be reported in the 2021/22 financial year, you’ll need to make sure the payment date of the pay run is on or before 30 June 2022.
If you’re using Single Touch Payroll (STP), ensure all of your pay runs have been filed to the ATO successfully.
Once you’ve processed all of your pay runs for the financial year, you’ll need to make sure your reporting is correct. The easiest way to do this is to run the Payroll Activity Summary report and compare this to the General Ledger report.
You can run both reports for a custom date range to help identify any discrepancies. We havet a support article available in Xero Central that provides some useful information about reviewing your payroll transactions at the end of the financial year.
If you do find a discrepancy in your payroll accounts, you can edit the transaction using the remove and redo feature to code the transactions to the correct accounts.
It can be easy to get the Payroll Activity Summary report and the Payment Summary Details report confused, so remember you still need to compare this information if you’re completing an STP finalisation. You can run these two reports for a custom date range and make sure that the information balances.
It’s important to note here that the Payroll Activity Summary report shows gross earnings, whereas the Payment Summary Details report shows taxable earnings.
If any salary sacrifice or pre-tax deductions have been processed during the financial year, they will need to be deducted from the gross wages that show in the Payroll Activity Summary report. The total should then match the Payment Summary Details Report.
When using the Payment Summary Details report, it’s useful to note that this will only show truncated values – the cents will not show in this report.
Any errors made throughout the financial year can be corrected using an unscheduled pay run. Simply create the pay run for the required period and enter the adjustment amounts. You can even enter negative values, if needed.
Check that the payment date of the unscheduled pay run falls within the correct financial year (for example, on or before 30th June 2022) to ensure it’s reported correctly. The STP finalisation screen may take time to update once you’ve posted and filed your unscheduled pay run, if you’re using STP.
If your organisation reports payroll through STP, your STP finalisation process should be simple. Take a look at these steps to finalise your information with the ATO.
You’ll also need to file at least one pay run before you’re able to complete the STP finalisation process. Your first submission will include all year-to-date (YTD) payroll information that has been entered into Xero. You’ll then be able to complete the STP finalisation process.
For those organisations yet to opt in to STP, you’ll be able to create and lodge Payment Summaries instead. For more information, read our helpful article on how to prepare Payroll for year end.
Once this is complete, remember to set up STP so that you can start reporting your payroll through STP for the new financial year. Once you’ve opted in and a pay run has been filed using STP, you can say goodbye to Payment Summaries and the functionality will be removed from your organisation.
Now that you’ve completed either your STP finalisation or Payment Summaries, it’s time to process any year end superannuation payments.
If you’re using Xero’s Auto Super feature, and want to claim a deduction on superannuation accruals for the 2021/2022 financial year, we recommend super batches are approved by the authoriser no later than 2.00pm AEST, 14 June 2022. This allows enough time for the payments to be debited and forwarded to the super funds by the 30 June 2022 deadline.
If you’re not registered for Auto Super, it’s not too late – read our support articles on how to register for automatic superannuation payments. Alternatively, the payments will need to be made manually outside of Xero.
All done – there’s nothing else you need to do to finalise payroll year end. Pay runs with a payment date on or after 1 July 2022 will fall within the next financial year and any new tax rates will be applied automatically.
If any changes to the minimum wage impacts your organisation, this will need to be updated manually in your employees’ pay templates – find out how to create or edit a pay template for an employee. To check if these changes impact you, see Fair Work Ombudsman.
Now, take a breather – you can relax knowing your payroll accounts are in good shape ready for the new financial year. To further help you get ready, read our blog post on the changes coming to payroll from 1 July 2022.
Find out why 4.2 million subscribers locally and across the world trust Xero with their numbers.
Try Xero For FreeYou're on our Global website. Change your region to see information and pricing for another location.