STP Finalisation: Your Accountants’ Steps + Warnings
Written by: Accounting Team
Single Touch Payroll, or STP for short, is a mandatory initiative introduced by the Australian Government to streamline reporting to Government agencies.
Since July 2019, it has been compulsory for all businesses, regardless of the number of employees, to be compliant with the Australian Taxation Office (ATO) using Single Touch Payroll.
Keeping Financial Records Up To Date For Your STP Compliance
Single Touch Payroll enables employers to report employees’ payroll information upon payment to the required Government agencies through a compliant STP-enabled software (e.g., Xero, QuickBooks, MYOB, Payroller, etc.).
The information that is required to be sent is:
- Salaries and wages;
- Pay As You Go (PAYG) Withholding;
- Superannuation liability information; and
- The employer’s ABN information.
The STP enables accounting or payroll software will send the tax and super information to the ATO digitally when you finalise and run your payroll.
The reporting can be completed by yourself or through a registered tax or BAS agent. The process is the same whether you pay your weekly, fortnightly or monthly. There is no need to change your pay cycle from what you have previously used.
Single Touch Payroll + Your Employees’ Income Tax Returns
Single Touch Payroll finalisation is the process that confirms and closes off the payroll that has been reported to the ATO for that financial year.
This process needs to be completed by the 14th of July each financial year.
The finalisation declaration needs to be completed for all employees who have been paid and reported on STP throughout the financial year. This includes everyone from casuals to employees who have worked part-time or full-time within that financial year. When completing this, you need to confirm the information is true and correct, ensuring that all the ATO Single Touch Payroll obligations are met.
Employers are no longer able to supply employees with group certificates or payment summaries at the end of the financial year, as the ATO will already have this information, and once the STP finalisation has been completed, employees will be able to lodge their income tax returns with the pre-filled STP information in their MyGov Accounts.
If STP finalisation is not completed, your employees will not be able to lodge their income tax returns.
Keeping up to date is important; if you’re unaware of the changes made to STP at the end of the previous financial year. Check out this previous article we out together: Single Touch Payroll + EOFY: Changes And Actions
Considerations For Your Accounting System
Changing Software:
If you are changing software throughout the financial year, employers need to make sure that the balance has been cleared out of the old software and transferred into the new software under each employee year to date payroll balance.
If this is not correctly recorded, then when it comes to completing the STP finalisation, the figures will be incorrect and will have to be amended.
Making Amendments:
If you need to make amendments to your STP Finalisation after it has been submitted, it needs to be completed as soon as possible.
It is recommended that the employer tell the employees, especially if they have already lodged their individual tax return. Once the STP Finalisation has been amended, the employees will also need to amend their Individual Tax Returns.
STP Finalisation Through Your Accounting System
Whilst the process may look a bit different depending on what payroll software you are using, the process itself is still standard across the board.
The steps you should follow when preparing for STP Finalisation are:
- Run a payroll report for the entire financial year, download it and save it to your records;
- Reconcile your payroll clearing/wages payable account to ensure wages payments made match net wages for the year and that there are no adjustments to payroll required before finalising;
- Go to Single Touch Payroll (this will be found in the Payroll section of your software) and select ‘Finalisation’. Select the current financial year, and if prompted, select ‘all pay schedules’. This ensures all pay runs processed will be captured in the finalisation;
- In the next step, there will be a list of all employees who have been paid wages for the financial year. Click on each employee and compare the Gross Wages/Tax/Super/Allowances, etc. in the payment summary against the payroll report you downloaded in step 1; and finally
- Once the STP Finalisation figures match your payroll report, tick all the boxes next to the employees’ names and select ‘submit to ATO’. You should receive a confirmation after a few minutes that these have been finalised.
Here are some links that you can go to for your specific software to help find more information in regards to Single Touch payroll:
There’s more to keeping your bookkeeping in order than getting it done close to the end of the financial year; you can stay on top of it with each quarter. Check out this previous article we put together: Getting Your Bookkeeping In order For Each Quarter
Penalties for Late STP + Effects on Income Tax Returns
Employees can lodge their tax returns, but will not receive any refunds owing or a notice of assessment until the STP Finalisation has been finalised/completed.
There is an increase in audit risk if you have not completed your STP finalisation and your reported data does not match current financials. This could also lead to a loss of compliance status. If this happens, it may affect the business’s standing with the ATO.
There is a penalty of $210 for each 28 days after the STP Finalisation is due, which is the 14th of July 2025.
There is a maximum penalty of $1,050. For medium entities, this increases to $2,100 and $5,250 for large entities. The ATO will usually only apply these penalties when the employee is consistently late with reporting.
Canny Accounting + Ensuring Your Single Touch Payroll Compliance
If you are unsure of the STP Finalisation process or require help in doing so, get in touch with our team.
We have a team of expert bookkeepers who are well versed in Single Touch Payroll who can help you with the process of STP Finalisation as well as other bookkeeping, should you need it.
