One of the appealing factors for using single touch payroll (STP), which was a highlighted positive of the new system when it was being rolled out, was the doing away with having to provide payment summaries (income statements) to employees, and a payment summary annual report to the ATO, after the end of a financial year.
However your business clients using STP should know that there is one more requirement needed (which is also subject to a penalty if not completed). A finalisation declaration needs to be made by 14 July each year (31 July if 19 or less employees, and there are special allowances for closely held payees).
Employers can make the declaration earlier if data is ready, and in fact the sooner they finalise their employee information, the sooner those employees will be able to lodge their tax returns. Before your employer clients make their finalisation declaration, it’s wise to ensure all the STP information is correct.
Amendments can be made after the declaration is submitted, however their employees should be notified if this is the case. Otherwise, your employer clients should note that the following information is generally required to be made known to their employees:
- the employer is no longer required to provide a payment summary for the information that has been reported and finalised through STP
- employees can access their year-to-date and end-of-year income statement online through myGov or talk to their registered tax agent
- ‘income statement’ is the new term for their payment summary
- to wait until their income statement is ‘Tax ready’ before lodging their tax return
- to check their personal details and if necessary update with both the employer and the ATO (incorrect personal details may prevent them from seeing their STP information).
The ATO has provided a factsheet for employees to help explain the changes, which you can provide to your employer clients for distribution if this is helpful.