What an exciting time of year! It's so much more enjoyable now as this is the first time businesses will be processing end of financial year through STP. So we know there will be lots of questions and have compiled this guide as a result. We will keep adding to this so make sure you refer here first if you have a question!

Section 1: New configuration settings/features

Closely Held Employees

Information pertaining to closely held employees, including how to classify an employee as closely held can be found here. It is important to note that we are unable to provide legal advice on whether any of your employees fall within the ATO's definition of closely held. Rather, you must speak with your accountant, solicitor or the ATO themselves if you need clarification on this. 

If ALL employees in the business are deemed to be closely held and you make the decision to delay reporting until the 20/21 financial year then you are not required to enable STP and report STP events (simply because there is nothing to report). Once you employ a new employee and they are not deemed closely held then you MUST commence reporting through STP for that 1 employee.

Please contact support@roubler.com to nominate any closely held employees. 

Reportable Fringe Benefits and separate cap for salary packaged entertainment benefits

Employers exempt from fringe benefits tax under section 57A of the Fringe Benefits Tax Assessment Act that have configured their business setting accordingly are now provided an additional setting. This setting  deals with separating entertainment related fringe benefits from other fringe benefit amounts. Specifically, a separate single grossed up cap of $5,000 applies to fringe benefits that are salary packaged meal entertainment and entertainment facility leasing expenses. As part of STP reporting, the data transmitted to the ATO separates reportable fringe benefits amounts into exempt and non-exempt amounts. As such, if employees are eligible for this separate cap, you must configure the business accordingly to allow separate reporting of RFB amounts. 

Instructions on how to do this can be found here. If you have eligible employees entitled to the seperate cap that do not take advantage of it, you can decide whether or not to apply the setting.

Student and Training Support Loans (STSL)

Employees completing a Tax File Declaration Form have to specify what loans (if any) they have. These loans include:

• Higher Education Loan Program (HELP);
• Student Start-up Loan (SSL);
• Trade Support Loan (TSL);
• Student Financial Supplement Scheme (SFSS).

Up until recently, HELP, SSL and TSL were 'lumped in' as HELP and SFSS was a separate amount with a separate tax calculation. From 1 July 2019, HELP, SSL, TSL and SFSS  will all be consolidated under one name - Study and Training Support Loan (STSL) - and one tax table. This change applies to all new and existing employees.

It goes without saying that we have updated all tax tables, including STSL. Other than that, how is this change reflected in the payroll platform?

Firstly, the pay run screen. As you would know, the Withheld Amounts column in the pay run is broken down into PAYG, SFSS and HELP: 

However, for all pay runs with a date paid on or after 1 July 2019, the Withheld Amounts column in the pay run will be broken down into PAYG and STSL, with STSL combining the SFSS and HELP amounts:  

Secondly, payroll reports. Depending on the date range used to generate the report, the withheld amounts will be itemised differently. Specifically, any report generated with a date range:

• of 18/19 FY or earlier will display the SFSS and HELP columns;
• of 19/20 FY and thereafter will only display the STSL column;
• spanning across the 18/19 FY and 19/20 FY will display both the SFSS and HELP columns, but the amounts will be consolidated and only display in the HELP column.

Lastly, pay slips. Pay slips relating to pay runs with a date paid on or after 1 July 2019 will reflect the STSL amount only. This excludes pay slips that are set to the legacy pay slip setting - rather these will continue to show HELP and SFSS but consolidate the amount into HELP. We strongly suggest updating your pay slip settings to the current version as we will no longer be supporting any maintenance of the legacy version. More details regarding this will be communicated shortly to affected users.

Please note: The ATO have not updated the Tax File Number Declaration Form so there is no requirement for existing employees to resubmit a new form. The latest version of the TFN Declaration Form is dated September 2017. 

Section 2: Prep recommendations before commencing finalisation event

Ensure Allowances are set up correctly 

The introduction of STP brought about a reclassification of allowances. As such, you should ensure that all Allowance pay categories have been assigned the correct Payment Summary Classification. Detailed instructions on classifying allowances can be found here.

Salary Sacrifice Super Deductions (RESC)

It is absolutely essential that Reportable Employer Super Contributions (RESC), otherwise known as Salary Sacrifice Super, is setup correctly. The ramifications of this is that employee YTD amounts will be incorrect when reporting to the ATO and the employee may be requested to pay money to the ATO. As such, we strongly suggest you conduct an audit of RESC payments recorded for the financial year.

The easiest way to do this is as follows:

1. Generate a Deductions Report for the 18/19 FY and filter using the relevant RESC deduction category;
2. Generate a Super Contributions Report for the 18/19 FY and filter the Contribution Type to Salary Sacrifice;
3. Compare the total $ amounts between both reports. Do they match? If yes, you're all good. If they don't match, identify where the differences lie.
4. Once the differences are identified, you will need to fix them and the way to fix them depends on whether the amount comes from Opening Balances or from within a pay run. Instructions on how to fix the differences are detailed below. 
5. Generate the Super Contributions Report again and ensure the total amount matches the Deductions Report.

Fixing RESC amounts incorrectly entered via an Employee's Opening Balance 

Firstly, you will know the issue stems from the opening balance amount because the Deductions Report will say as much under the employee name, for example:

To rectify this, go to the employee's file and click on Opening Balances (left nav menu) > Deductions tab. Tick the "Include on payment summary as  RESC" checkbox and then click on 'Save'.

Fixing RESC amounts incorrectly entered via a Pay Run 

It will be evident the issue stems from what has been entered in a pay run because the Deductions Report will list the pay schedule and the date paid under the employee name, for example: 

Fixing RESC amounts incorrectly set up via Pay Run Inclusions

If you have had to fix RESC errors, best practice is to ensure it doesn't keep happening on an ongoing basis. So, you should generate a Pay Run Inclusions report to review any ongoing RESC deductions set up for any employee. You will know an employee's pay run inclusion needs fixing if the deduction category is not set to be paid to a super fund. 

For example, this RESC deduction set up is incorrect:

This RESC deduction setting is correct:

Instructions on how to configure employee pay run inclusions can be found here. 

Finalise pay runs

Put simply, if a pay run is not finalised it will not be reported to the ATO. If you lodge your finalisation event before finalising all pay runs for the 18/19 FY you will then need to lodge an amended finalisation event so that the correct figures are reported to the ATO. This includes normal pay runs and ad hoc pay runs - again if it relates to an employe's pay or is an adjustment to an employee's pay it must be finalised in order to be reported via STP.     

Do all pay events need to be successfully lodged with the ATO before commencing the finalisation process? There are some events that are currently in a failed or submitted status.

Best practice is that you ensure all pay events are successfully lodged before lodging subsequent events but this has been the first year reporting STP so the ATO have not been overly strict on this. From the 19/20 financial year, we do strongly suggest you follow best practice.

However, for the purpose of lodging the finalisation event, it does not matter if all prior pay/update events have not been successfully lodged. This is because the earnings that are reported come from finalised pay runs as opposed to just successfully lodged STP events.

Section 3: Payment Summaries vs Finalisation Event

The general rule here is if you have lodged STP events you MUST lodge a finalisation event and MUST NOT lodge payment summaries. Doing both will cause a duplication of data to be reported to the ATO and then you will need to deal with the ATO and explain/rectify the issue. The only exemptions to this rule are detailed here. We will also discuss here specific scenarios asked by users.

We only started reporting STP mid year. Do we still need to process a finalisation event?

Once you start reporting successfully through STP, you can't stop! You must also complete a finalisation event and NOT generate payment summaries/payment summary annual report (PSAR) as payroll data will be overstated to the ATO.

Don't forget that STP events are reporting YTD payroll data. So if, for example, a business only started reporting through STP from February 2019 (but was processing pays from the start of the FY) that first event included the YTD payroll data for each employee in the event. This means that all payroll data from 1 July for the employee was captured in the first event lodged. What you need to be aware of though is that pay events only include employees who were paid in the pay run you are lodging.

There may be some employees paid from the start of the financial year who have not been paid since the business started lodging through STP.  To ensure you capture all employee data, you should create and lodge an update event prior to completing the finalisation event. The update event will capture ALL employees paid in the financial year (who have not previously been marked as 'is final' in an event). Once successfully completed, you will then be in a position to process your finalisation event. 

We only started reporting STP mid year and had previously  processed termination pays. Will the terminated employees appear in the finalisation event?

Yes they will. The only exception here would be if you have successfully lodged an update event during the financial year and prior to the finalisation Event - as terminated employees would have been included in the update event and marked as 'is final'. If this is the case then the previously terminated employees will not appear in the finalisation Event (nor will any other employees previously marked as 'is final' in successful lodgements). But that is ok! As soon as an event is lodged and an employee is marked as 'is final' you're communicating to the ATO that this is the final payment being made to the employee for that financial year - by doing this you have basically conducted a finalisation event for that employee.

With these terminated employees as they have been encompassed in STP events (whether via an update event or finalisation event), you must not generate payment summaries/PSAR for them as the payroll data will be overstated to the ATO.

We changed payroll systems during the financial year and have not added previously terminated employees (from prior payroll system) in this payroll system. How do we deal with the terminated employees not entered in this payroll system? 

So the first thing that needs to be considered here is whether the business was reporting through STP in the previous payroll system. 

Scenario 1: Reporting through STP was occurring in previous payroll system

If this is the case you need to ensure the employees' final STP event in the previous payroll system included these employees and were marked as 'is final'. This acts as an indicator to the ATO that there are no further payments to be made to that employee for the remainder of the financial year. So if that was done then there is nothing further required for you to do with these employees - their finalisation event has occurred. If this has not been done, then lodge an update event in the previous payroll system for those terminated employees and mark as 'is final'. Also, please note that as you have been reporting through STP in the previous payroll system you must not add the terminated employees in this payroll system and include opening balances as this will duplicate the reporting of payroll data for the terminated employees. You must finalise the process for those terminated employees in the previous payroll system.

Scenario 2: Reporting through STP was NOT occurring in previous payroll system

If this is the case and you only commenced STP reporting in this payroll system then there are a few ways to deal with this:

• Option 1: Keep the terminated employee data in the previous payroll system and generate payment summaries/PSAR for such employees; or
• Option 2: Add terminated employee data in this payroll system and enter their YTD data via the Opening Balances functionality so that they are then included in the finalisation event. If you choose this option then you are not required to generate payment summaries/PSAR for the terminated employees. 

Changing payroll systems during the financial year... in general

There are so many variables with this topic and different scenarios that need to be considered here. As such, if your exact scenario has not been discussed above, please refer to this article to get a better understanding and resolution to your specific situation.  

Section 4:  Lodging your Finalisation Event 

Employees are normally paid on a monthly pay schedule but sometimes they have been paid using an adhoc pay schedule (for out of process adjustments). Do we need to process a finalisation event for both the monthly pay schedule and the adhoc pay schedule?

The answer here is No. When you assign a pay schedule to the finalisation event, it picks up all active employees (that is, employees not marked as 'is final' in prior events) who have that pay schedule assigned as their primary pay schedule (as per the configuration in the employee's Pay Run Defaults page). The employee's total YTD earnings for that financial year will appear in the event. This includes earnings paid using a different pay schedule during the financial year. We strongly suggest however that you check no employees are assigned to any adhoc pay schedules otherwise they will be missed when reporting finalisation events. If you do have employees assigned to any adhoc pay schedules you will either (a) need to process a finalisation event for that pay schedule or (b) reassign to a different pay schedule. Ensure you perform this audit before you commence processing any finalisation events. 

I am unable to publish an employee's proceed from the 'Confirm Payroll Data' step. I am being asked to correct all validation warnings before continuing to the next step.

So yes, this will happen if there are validation warnings that have not been corrected. We have enforced this practice to avoid failed lodgements with the ATO. When completing the finalisation event process, the payroll data and company details will be validated at the 'Confirm Payroll Data' step and any warnings will display at this stage. A list of possible validation warnings can be found here.

You are required to action all warnings before you can proceed. Once actioned, return to the 'Confirm Payroll Data' screen and click on Actions > Refresh Data. All warnings will disappear if they have been actioned correctly. 

What is contained in the notification email sent to employees once the finalisation even has been lodged successfully?

Users can choose to send out the system generated notification email once the finalisation event has been successfully lodged. To do this, click on Actions > Send Notifications (which is located within the successful finalisation event). The email contains the following text:

"Your income statement for [Employing Entity Name] for the financial year ending June 30, 2019 is now available.

You can access your income statement via ATO online services through your myGov account. If you do not already have a myGov account, it is easy to create. Click here for instructions on how to do this.

To clarify, an income statement is different to a payment summary. We are no longer required to provide you with a payment summary as we have been reporting your payroll data for the financial year through Single Touch Payroll (STP).

Other general information regarding how STP has changed the end of year process can be found here."

 This text is fixed and cannot be configured by users.

If you have any feedback or questions please contact us via support@roubler.com.