Single Touch Payroll Finalisation: Your EOFY Checklist

What Is STP Finalisation and Why It Matters

Single Touch Payroll (STP) finalisation is the declaration you lodge with the ATO at the end of each financial year confirming the payroll data you've reported through the year is complete and accurate. It replaces the old paper payment summary (group certificate) process entirely. Once you mark an employee as "final" for the financial year, the ATO changes their income statement status to "tax ready" in myGov — which is what allows them (or their accountant) to lodge their individual tax return.

For business owners across the Melbourne CBD, inner suburbs like Fitzroy and Richmond, and outer growth corridors such as Cranbourne and Werribee, this isn't just an administrative box-tick. Get it wrong and your staff can't lodge their own returns on time, and you risk ATO scrutiny on your payroll compliance more broadly — including superannuation guarantee obligations under the Superannuation Guarantee (Administration) Act 1992.

Key Dates: When Your Finalisation Is Due

The finalisation due date depends on your employee type, not your business size in the way many owners assume:

• 14 July — standard deadline for all employees who are not closely held payees. This applies whether you have two employees or two hundred.
• 30 September — extended deadline for closely held payees (family members, directors, or other individuals directly related to the entity that pays them), giving family businesses more breathing room to sort out drawings versus wages.
• Ongoing throughout the year — STP reporting itself happens each pay run, not just at EOFY. Finalisation is simply confirming that data is correct, not a separate reporting exercise.

If your financial year payroll includes any terminations, ETPs, or backpay adjustments, build in extra time before 14 July — reconciling these line items properly can take longer than a standard pay run review.

The Pre-Finalisation Checklist

Before you click "finalise" in Xero Payroll, work through this list. It's the same process we run for every Melbourne client during EOFY:

• Reconcile gross wages against your general ledger wage expense accounts for the full financial year.
• Confirm superannuation guarantee has been calculated at the correct rate for each pay period — 11.5% up to 30 June 2025, and 12% from 1 July 2025 onward.
• Check allowances and deductions are coded to the right STP Phase 2 categories (overtime, bonuses, director fees, salary sacrifice).
• Review reportable fringe benefits and reportable employer super contributions (RESC) for any salary-sacrifice arrangements.
• Verify termination payments — ETP codes must match the reason for termination (redundancy, resignation, invalidity).
• Match super paid to super reported — a common trap is reporting accrued super in STP that hasn't actually cleared to the employee's fund.
• Cross-check employee details — TFNs, addresses and bank details should be current before you lodge, especially for staff who've moved between Melbourne suburbs during the year.

Common Errors Melbourne Employers Make

We see the same handful of issues repeatedly across hospitality venues in Southbank, allied health clinics in Camberwell, and trades businesses running crews out of Dandenong:

• Super paid late but reported as paid — STP data should reflect what's actually been remitted to the fund, not what's accrued in the payroll system.
• Missing closely held payee elections — family businesses forgetting to flag directors or family members correctly, which changes the finalisation deadline.
• Incorrect income type — labour hire, working holiday makers and seasonal workers each have specific STP income type codes that affect how the ATO processes the employee's return.
• Skipping the mid-year reconciliation — waiting until July to check twelve months of data at once, instead of reviewing quarterly alongside BAS lodgement.
• Not updating opening balances after migrating to Xero mid-year, which can double-count or drop earnings for part of the year.

How Xero Payroll Makes Finalisation Easier

Xero Payroll is fully STP Phase 2 compliant and handles the finalisation declaration directly from the Payroll menu — no separate software or manual ATO portal upload required. A few features worth using properly before EOFY:

• Payroll reconciliation reports that compare STP-reported figures against your general ledger, so discrepancies show up before you lodge.
• Employee income type tagging, which flags closely held payees automatically so the correct finalisation deadline applies.
• Draft finalisation review, letting you preview each employee's full-year figures before submitting, rather than lodging blind.
• Direct integration with super clearing houses, so super guarantee payments and STP reporting stay aligned rather than drifting apart over the year.

If you're still running payroll manually or through a system that doesn't integrate with your accounting file, EOFY is the natural time to move to Xero — we handle these migrations for Melbourne clients regularly, timed to avoid disrupting a pay cycle.

What Happens After You Finalise

Once you lodge the finalisation declaration:

• Employees' income statements update to "Tax ready" in myGov, usually within 72 hours.
• You do not need to issue payment summaries — this obligation was removed once STP Phase 2 became mandatory.
• If you discover an error after finalising, you can lodge an update event to correct the figures — this doesn't require unlocking the whole finalisation, just adjusting the affected employee's data.
• Your BAS agent or accountant can now safely prepare individual tax returns for staff who rely on their income statement being finalised.

Penalties for Missing the Deadline

The ATO can apply failure-to-lodge (FTL) penalties under the Taxation Administration Act 1953 for late or missing STP finalisation. In practice, the ATO has historically taken a reasonable approach with small businesses making genuine errors, particularly where a registered BAS agent is actively working to correct the issue. But repeated lateness, ignored reminder notices, or a pattern of non-compliance increases the risk of penalties and can also trigger broader scrutiny of your superannuation guarantee compliance — which carries its own separate penalty regime under the SGA Act, including the Superannuation Guarantee Charge.

The safest approach is treating STP finalisation as part of your regular EOFY workflow, not a last-minute scramble on 13 July.

Next step: pull your full-year payroll reconciliation report in Xero this week, not in July. Match gross wages, super and PAYG withholding against your general ledger, flag any closely held payees, and confirm your super has actually cleared to employee funds — not just accrued. Do that now, and finalisation on or before 14 July becomes a five-minute task instead of a compliance risk.