As we begin a new financial year, it is important for employers using Xero Payroll to complete their year-end payroll process correctly. Finalising your payroll ensures your employees’ income information is accurately reported to the ATO through Single Touch Payroll (STP) and helps avoid issues when employees lodge their tax returns.
Your Xero Payroll Year-End Checklist
1. Review Your Payroll Records
Before finalising, make sure:
- All pay runs for the financial year have been completed
- Wages, PAYG withholding, and superannuation amounts are correct
- Any allowances, bonuses, or termination payments have been processed correctly
2. Reconcile Your Payroll
Compare your payroll reports with:
- Payroll expense accounts
- PAYG withholding accounts
- Superannuation payable accounts
Investigate and correct any discrepancies before finalising.
3. Finalise Your STP Reporting
Once everything has been checked, lodge your STP Finalisation Declaration through Xero. After the declaration has been accepted by the ATO, employees will be able to access their Income Statement through their myGov account, where it will show as “Tax Ready.”
4. Check Superannuation
Ensure all compulsory super contributions have been processed and paid on time. Remember that processing through the clearing house can take several business days, so do not leave payments until the last minute.
Common Year-End Mistakes to Avoid
Some of the most common issues we see include:
- Missing or duplicated pay runs
- Incorrect employee leave balances
- Payroll accounts not reconciling with Xero
- STP not finalised before employees lodge their tax returns
- Superannuation not paid by the required due dates
Need Help?
If you are unsure whether your payroll has been finalised correctly, or if your payroll accounts do not reconcile, we are happy to assist. At Impact Taxation & Financial Services, we can review your Xero Payroll setup, reconcile your payroll records, and ensure your year-end obligations have been completed accurately.
Contact our team before lodging your final payroll reports — call us on 1300 TAX SAV (1300 829 728) or reach out here.
