STP declaration finalisation

What Is STP Declaration Finalisation?

STP declaration finalisation refers to the end-of-financial-year process where Australian employers notify the Australian Taxation Office (ATO) that the payroll information submitted throughout the year via Single Touch Payroll (STP) is complete and accurate. This process is essential for ensuring that employees' income statements are marked as “Tax Ready” in their myGov accounts, enabling them to lodge their tax returns correctly.

Finalising STP is a critical compliance task that replaces the need to issue payment summaries (also known as group certificates) for most employers.

ATO – Finalising STP Data

When Does STP Finalisation Happen?

For most employers, the STP finalisation declaration must be completed by 14 July each year. However, some entities (like those with closely held payees or micro employers using concessional reporting) may have different deadlines.

Timely and accurate finalisation is crucial because it impacts when employees can file their tax returns and whether pre-filled tax data in their myGov is correct.

Who Needs to Finalise STP?

All Australian employers who report through Single Touch Payroll are required to complete a finalisation declaration at the end of each financial year. This applies whether you're using STP Phase 1 or Phase 2, and regardless of business size.

Each employee that was paid during the financial year must have their year-to-date income, tax withheld, and superannuation contributions finalised.

Steps in the STP Finalisation Process

1. Review Year-to-Date (YTD) Data
   • Ensure all pay runs are processed correctly.
   • Check that YTD totals for gross wages, PAYG withholding, and super contributions are accurate.
2. Reconcile Payroll with General Ledger
   • Ensure payroll records match accounting records and bank statements.
3. Adjust or Correct Any Errors
   • If discrepancies are found, process an update event or create an adjustment pay run before finalising.
4. Submit Finalisation Declaration to the ATO
   • Declare that the STP data for the financial year is “final”.
   • Most payroll software platforms (like Microkeeper) have a built-in STP finalisation workflow.
5. Notify Employees
   • Once finalised, employees will see their income statement marked “Tax Ready” in their myGov account.

Why STP Finalisation Matters

Legal Compliance
It is an ATO requirement. Failing to finalise STP on time can result in penalties and compliance issues.

Tax Accuracy for Employees
Employees rely on your submitted data to complete their personal tax returns. Errors or delays can lead to frustration, delays in refunds, or incorrect tax outcomes.

Streamlined Record-Keeping
Finalisation ensures your records for the year are closed out correctly, helping simplify future audits, reconciliations, and business reporting.

Common Pitfalls to Avoid

• Incorrect employee details (e.g., TFNs, dates of birth, names not matching ATO records)
• Unfinalised terminated employees (All employees paid during the financial year must be finalised)
• Forgetting to reconcile salary sacrifice amounts
• Missing reportable employer superannuation contributions (RESC)

Proper configuration and regular reconciliation throughout the year make finalisation faster and smoother.

How Microkeeper Supports STP Finalisation

Microkeeper’s STP-enabled payroll software makes finalisation intuitive:

• Live STP reporting after each pay run, minimising year-end surprises
• Automatic STP finalisation workflows with built-in reconciliation tools
• Custom reports to verify YTD totals across employees
• Employee portal access so staff can verify their data

Learn More About Microkeeper’s STP Compliance Tools

STP Finalisation and Closely Held Payees

If you're a business that pays closely held payees (e.g. directors or family members of a small business), different STP finalisation rules may apply. As of FY22 and beyond, finalisation is still required, but businesses may opt for quarterly reporting if eligible.

ATO – Closely Held Payees STP Rules

FAQs About STP Declaration Finalisation

Do I still need to issue payment summaries to employees?

‍No, if you're reporting via STP, you do not need to issue traditional payment summaries. STP replaces this obligation.

Can I correct STP data after I’ve finalised?

‍Yes. If you find an error after finalisation, simply submit an update event with the corrected data. The ATO will update the employee’s income statement accordingly.

What happens if I miss the 14 July deadline?

‍You may be subject to ATO penalties and employees could be delayed in lodging their tax return. It’s important to complete finalisation promptly.

Do I need to finalise inactive employees?

‍Yes, any employee paid during the financial year must have their STP data finalised, even if they have since left your business.

Final Thoughts

STP Declaration Finalisation is a critical annual step for all Australian employers using Single Touch Payroll. It marks the formal close of your payroll year and ensures your employees' tax information is accurate and available. With reliable payroll software like Microkeeper, the process is straightforward, secure, and fully compliant.

_{Disclaimer: This article is general in nature and does not constitute financial or tax advice. For guidance specific to your business, please contact the ATO or consult a registered tax agent.}