End of Financial Year
Preparing your clients for 21/22 EOFY
NB: This blog is relevant for businesses that have been reporting to the Australian Taxation Office (ATO) for Single Touch Payroll (STP) during this financial year, as well as businesses not exempt from STP reporting. Businesses exempt from reporting STP can refer to our EOFY Payment Summaries Guide or see our on-demand webinar.
With the End of Financial Year almost upon us, it’s time to ensure your clients are prepared and ready to lodge their finalisation event(s) to the ATO.
Here’s a helpful list to support you and your clients in preparing and lodging this financial year!
Let’s get started!
It’s important to do some housekeeping before a finalisation event is lodged to the ATO. Here are the recommended checks and reconciliations that should be completed to ensure all business and employee details are correct:
1. Review employee details
Check all employee details are up to date, particularly the employee’s tax file number, email and postal address. Make a note of any closely held employees or foreign employees as these might be reported on separately. A quick way to audit this information in KeyPay is by running an Employees Details Report.
2. Review FBT settings
Are your clients exempt from FBT under section 57A of the FBTAA 1986? By default, this option will be set to ‘No’ on the ATO Settings page but it’s important to review this and ensure reportable fringe benefits amounts are reported correctly in the finalisation event.
3. Review pay categories
As part of STP Phase 2, the ATO has new regulations around the disaggregation of gross income, so it’s important to ensure that pay categories are classified as per ATO requirements.
4. Review deduction categories
There are new reporting requirements regarding deductions as part of STP Phase 2. KeyPay has added a number of new classifications as well as two Salary Sacrifice classifications, to categorise the deduction types.
5. Check opening balances
If a client has migrated from another system during the financial year, it’s important to ensure that the opening balances are set up correctly.
6. Audit salary sacrifice super/RESC
It’s important to ensure all RESC amounts are correctly assigned. Errors in assigning RESC amounts will result in employee amounts not being reported correctly on their Income Statement and the employee potentially being stuck with a tax liability.
7. Finalise pay runs
Ensure all pay runs with a date paid on or before 30 June 2022 are finalised to avoid having to lodge an amended finalisation event.
8. Reconcile financial year data
A crucial part of wrapping up EOFY and reducing filing errors is reconciling employee earnings reported via STP during the financial year with employee earnings processes in finalised pay runs for that same financial year.
9. Review lodgement authority is correct in client ATO settings
Whether your clients are lodging their own finalisation events or you are lodging on their behalf, it is important to confirm their settings are correct with the ATO.
Now it’s time to create the end of financial year finalisation event!
KeyPay is an ATO-certified STP reporting solution and has an STP EOFY Wizard built right into the platform that simplifies the process of creating a finalisation event and lodging with the ATO. With the STP EOFY Wizard, you’ll have the ability to:
- Bulk import reportable fringe benefit amounts for employees;
- Send notification emails from the platform once the finalisation event has been successfully lodged;
- Process an event encompassing all pay schedules if you are dealing with businesses with less than 2000 active employees, as opposed to creating an event for each individual pay schedule;
- Auto-calculate any variances between STP reported earnings vs earnings processed in finalised pay runs as part of the reconciliation process; and
- Access the amended finalisation event wizard if further finalisation events are required.
If using KeyPay’s STP EOFY Wizard, there’s just a few steps left!
- Select the pay schedule
- Confirm the payroll data
- Enter reportable fringe benefits
- Enter foreign tax paid (if applicable), and
- Authorise and lodge the finalisation event!
Reminder: Super guarantee contributions must reach super funds by 30 June 2022 to qualify for a tax deduction in the 2021/22 financial year. Finalisation declarations can be lodged to the ATO after the financial year up to the 14th July 2022.
And there you have it! A successfully completed and lodged, finalisation event. Now it’s time to start preparing for the next financial year! Here’s a quick note on the upcoming changes to superannuation contributions.
The Superannuation Guarantee Contribution (SG) percentage will increase to 10.5%, effective for all pay runs with a date paid on or after 1 July 2022. The maximum quarterly contribution base will also increase to $60,220. KeyPay will automatically apply these increases except when businesses have opted out of automatic super updates.
The $450 per month eligibility threshold for when SG is paid, is being removed.
For a comprehensive summary on the upcoming increases to minimum wage and minimum award wages, read our blog here.
We’ll be hosting the following webinars, specifically for businesses that have been reporting to the ATO for STP during this financial year, that will guide KeyPay users through Year End processing.
Thursday 23 June 2022, 11am AEST | Register
Thursday 30 June 2022, 11am AEST | Register
For a comprehensive guide to completing these steps in KeyPay, refer to our End of Financial Year Guide here. We’ve also put together a list of FAQs based on the commonly asked questions around the finalisation event process. You can read them here.
Not yet using KeyPay to support your clients with payroll? The new financial year is a great time to re-evaluate your processes and consider introducing a new payroll solution to your clients. Get in touch with the team to find out how KeyPay could support your payroll processes throughout FY22/23.