End of Financial Year Guide 2019/2020 - Reporting STP

This article is relevant for employers that have been reporting to the ATO for Single Touch Payroll (STP) during this financial year, as well as all businesses which do not fall within the exemption for WPN holders and small businesses with closely held employees.

The article will guide you through housekeeping and then the finalisation process for the 2019/2020 financial year.

The article should be read in conjunction with the End of Financial Year 2019/20 Processing Using STP – FAQ support article.

1. Preparation

These steps should be taken prior to lodging your finalisation event.

1.1. Review Configuration Data

Email address

Ideally, each employee should have an email address on file. This will then allow you to send a notification email directly from the platform to your employees after you have processed your end of year finalisation event to notify them that their Income Statement is 'Tax ready'. These notifications will go to the email address on the employee's details page.  A quick way to check these details is to export the employee list and review the data in Excel from the Employee Reports section of Roubler. 

FBT setting

Make sure you have nominated the correct setting with regard to whether the employer is exempt from fringe benefits tax (FBT) under section 57A of the FBTAA 1986.

This field can be found on the 'ATO Settings' tab on 'Payroll' > ‘Payroll Settings’ >  > ‘ATO Supplier Settings’. By default, this option will be set to 'NO' but it is important to review this to ensure it is correct. If you do select 'YES' you will then also need to select the organisation type the employer falls under:



If the employer IS exempt from FBT under section 57A of the FBTAA 1986, the following option will also be available:

If you have multiple employing entities set up in the business, ensure you configure the FBT setting for each employing entity. You can do this from ‘Payroll Settings’ >  > ‘Employing Entities’:

Pay Categories

Review your Pay Categories to ensure that the 'Payment Classification' field is correct (see image below):

The primary cases that you'll want to review are allowances.  Use this ATO article on Withholding from allowances as a guideline. The introduction of STP requires that allowances be reclassified and so we recommend you review this article to ensure correct setup. 

Please note: If the 'Payment Classification' was set up incorrectly, it only needs to be fixed at the pay category level, not on a per individual employee basis.

When paying out Lump Sums refer to the ATO website for guidance on which Lump Sum category, eg. A,B,D or E to list the payment.

We recommend you review any JobKeeper related 'Pay Category' settings to ensure you have complied with ATO requirements for JobKeeper Top-Up, Start and Finish payments. See Processing JobKeeper Payments in the pay run for more details.                                                               

Deductions

Review your set of Deductions. For any union fees or workplace giving deductions, be sure to adjust the 'Payment Classification' field accordingly (see image below):

Pay schedules

Review which primary pay schedules have been assigned to your employees to ensure all your employees are reported in finalisation events. You can do this by running an Employee Details Report for all employees and pay schedules, making sure to add 'Pay Schedules' to the 'Display columns' field. It may be helpful to export the report to Excel.

You will need to lodge finalisation for each pay schedule that has been assigned to your employees. When you create finalisation, you must select a pay schedule – this will pick up all active employees who have that schedule assigned as their primary pay schedule. If an employee has been added to a pay run on a different schedule to their primary one, those earnings during the financial year will also be included in the YTD earnings.

If you use ad hoc pay schedules, check whether employees have this assigned as their primary pay schedule. If you do have employees assigned to ad hoc pay schedules, you will need to either: (a) reassign the employees to a different pay schedule; or (b) process a finalisation event for that pay schedule.

1.2. Initial Values / Opening Balances

If you have migrated to this payroll system from another system during the financial year, it is important that the opening balances are set up correctly. Please refer to our article on your Transition options available with STP reporting.

If you set up this payroll system for your business in the previous financial year but didn't start using it until this financial year, you may need to review the initial financial year setting under your business settings. To do this go to 'Payroll Settings' >  > 'Opening Balances' and configure the correct 'Initial Financial Year':

If there are any opening balances for deductions that should be reported as Reportable Employer Super Contributions (RESC), be sure to tick the checkbox next to the deduction category in the opening balances screen:

1.3. Reportable Employee Super Contributions (RESC)

Any RESC, otherwise known as salary sacrifice super, that has been processed in the pay runs for this financial year will be automatically included in the finalisation event.  This data will be generated from any pre-tax deduction that is paid to a super fund. Any RESC for this financial year prior to migrating to this payroll system can be set up in the Initial Values/Opening Balances section. Refer to1.2 above.

It is absolutely essential that RESC is setup correctly otherwise 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 2019/2020 FY and filter using the relevant RESC deduction category;
2. Generate a 'Super Contributions Report' for the 2019/2020 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. Refer to the EOFY FAQ for instructions on how to fix differences in RESC.
5. Generate the 'Super Contributions Report' again and ensure the total amount matches the 'Deductions Report'.

Prior to commencing the finalisation event, ensure that all RESC transactions have correctly been processed as 'paid to a super fund'.

1.4. Finalise Pay Runs

Ensure that all pay runs are finalised, including any adjustments you need to make. If you lodge your finalisation event and then have to process adjustment pays, you MUST lodge a further finalisation event so we strongly suggest you hold off on commencing the finalisation process until you are 100% confident all pays for the financial year have been processed.

Please Note: The date the pay run is PAID determines which financial year it  falls within for STP reporting purposes. Therefore, only pay runs PAID in the 2019/2020 financial year will be included in the finalisation for 2019/2020.

E.g. Pay run period ending 29/6/2020, PAID 30/6/2020 will be included in the 2019/2020 financial year.

      Pay run period ending 29/6/2020, PAID 1/7/2020 will be included in the 2020/2021 financial year.

If you want to include every day worked within the current financial year, you might have to split a pay run.

For example, a Weekly pay run for period ending 2/7/2020, paid 3/7/2020.  Create a pay run as normal and set the pay period ending 30/6/2020, ensuring you stipulate date paid to be 30/6/2020. Adjust the employee hours to reflect the hours worked for 26–30 June and finalise the pay run.  Now create another pay run for the period ending 2/7/2020, adjust the employee hours to reflect the hours worked for the 1–2 July and finalise this pay run using the normal date paid, eg 3/7/2020.

2. Lodge your finalisation event 

Ready to proceed?

Once you have completed the steps above, you will be ready to create the end of financial year finalisation event. There are 2 ways to create a finalisation event. They are:

1. Using the STP EOFY Wizard; or
2. Via an update event.

Either option can be used to fulfil your end of year processing obligations however we have specifically built the STP EOFY Wizard to simplify the process. Additionally, the STP EOFY Wizard provides more functionality over an update event, including:

• Bulk import RFB amounts for employees;
• Send notification emails from the platform once the finalisation event has been successfully lodged; and
• Access the amended finalisation event wizard if further finalisation events are required.           

Check the ATO finalisation deadline applicable to your business.

• Normally you will need to make the finalisation declaration by 14 July each year.
• If you started reporting in the 2018-19 financial year, you will have an extended due date until 31 July 2019.
• You don’t have to wait until 31 July – you can finalise as soon as you’re ready.

If you need more time, you will need to 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 14 July each year.

PLEASE NOTE: Employees will NOT be able to access their Income Statements from their employee portal or WorkZone. They will only be available via the employee's myGov account. 

3. Preparation for FY 2020/2021

There are several considerations for the new financial year.

3.1 Closely Held Employees

A closely held employee (payee) is one who is not 'at arm’s length'. This means they are directly related to the entity from which they receive payments. Examples include:

• family members of a family business;
• directors or shareholders of a company;
• beneficiaries of a trust.

In response to the COVID-19 crisis, for small employers (19 or fewer employees) with closely held employees, the ATO has extended the date to commence reporting closely held employees, from 1 July 2020 to 1 July 2021. These employers are now exempt from reporting their closely held employees for the 2020/2021 financial year. 

This does NOT mean you are completely exempt from STP reporting. You should have been reporting all other employees through STP commencing from the first pay run with a PAID date on or after 1 July 2019. If you have been granted a deferral date from the ATO then you would commence reporting from such deferred start date 

3.2 Superannuation Updates (information only)

The Superannuation Guarantee Contribution (SG) percentage does not change for this financial year. It remains at 9.5%.

The Maximum Quarterly Contribution Base will increase from $55,270 to $57,090. This setting will be automatically applied to all employees who are currently on the default contributions base on 1 July 2020. Employees that aren't on the default setting will not be updated, so you will need to do this manually.

The concessional contributions cap remains at $25,000 for all age groups. Any employee who has recurring salary sacrifice deductions paid to a super fund should be reviewed in light of this.

3.3 Super Compliance (information only)

The payroll platform is fully SuperStream compliant and has attained Gold certification. You can read all about it in our SuperStream Compliance article. It is important to note that all businesses had to be SuperStream compliant by 30 June 2016.

The easiest way to ensure you're SuperStream compliant is to register with and use our fully integrated clearinghouse via the in-built integration. You can find out more about registering with Beam to automate super payments.

If you want super contributions to be included in the 2019/2020 financial year, the contributions need to reach the super funds by 30 June 2020.

To meet this deadline, if you’re using automated super payments, your super batch will need to be successfully uploaded/paid by 3.30pm AEST on 23 June 2020.

If you have pay runs scheduled for payment between 23 – 30 June then you can always create these pay runs (in advance) on or before the 23 June (using the "usual period end and paid dates), finalise and then create your super batch for the period up to 30 June 2020 so you can pay the super but you won't actually pay your employees/upload the ABA file into the bank until the scheduled paid date of the pay run.

3.4 Award Updates

Normally at this time of the year, the Fair Work Commission would have announced their annual wage review decision regarding the national minimum wage. For customers using the pre-built modern awards, updated versions of these award packages would normally be published on 1/7/2020 with the applicable rate changes included.

However, this year, as a consequence of the COVID-19 pandemic, the timelines for consultations, submissions, etc have been extended to enable parties to respond to delayed release ABS March quarter national accounts. The Commission is yet to make a decision on when the wage review decision will be handed down and the operative date for any updates to awards.

What does this mean? 

At present, there is no definitive timeframe as to when an announcement will be made. It's seemingly unlikely that award wage updates will occur from 1 July, however you can never say never.

We will obviously be staying abreast of this exciting development and keep you informed of any updates along the way.

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