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Australia Explains End-Of-Year Reporting Under STP

Monday, April 29, 2019

The Australian Taxation Office (ATO) has issued guidance on how employers can prepare for end-of-year reporting under the new Single Touch Payroll (STP) system.

Under STP, employers are required to report to the ATO directly payments such as salaries and wages, pay as you go withholding, and superannuation information. STP reporting has been a requirement for large employers since July 2018 and will be extended to include employers with fewer than 20 employees from July 1, 2019. Companies could voluntarily adopt STP as of the 2017-18 financial year.

An employer may be exempted from providing payment summaries to employees and a payment summary annual report for the amounts they reported through STP if they make a "finalization declaration." This declares to the ATO that the employer has provided all required information for the financial year through their STP reporting.

The ATO said that employers will need to finalize their employee's STP information through their STP-enabled software by making a finalization declaration. When the declaration has been made, the ATO will pre-fill the employee's income tax return and display the information as "tax ready" in myGov.

Employers can make a finalization declaration for an employee at any time in the financial year, or after the end of the financial year up to July 14. The ATO has provided additional time for employers to make a finalization declaration in their first year of STP reporting. Employers who started STP reporting in the 2018-19 financial year will have until July 31, 2019, to submit their finalization declarations.

The ATO advised employers to ensure that the STP information they hold on each employee is true and correct. It noted that the sooner an employer finalizes an employee's information, the sooner the employee will be able to lodge their tax return. It said that if an employer needs to make an amendment to a finalization declaration, this should be done as soon as possible.