Single Touch Payroll (STP) finalisation is a critical compliance obligation for Australian businesses at the end of each financial year. For small and medium enterprises (SMEs), navigating this requirement efficiently is essential to ensure timely reporting to the Australian Taxation Office (ATO) and to avoid penalties.

STP finalisation confirms the accuracy of the year’s payroll data and enables employees to access their income statements via MyGov for tax return purposes. Below is a comprehensive STP finalisation checklist tailored specifically for SMEs to ensure a smooth and compliant process.

Comprehensive STP finalisation checklist

1. Review Employee Details

Before finalising, double-check that all employee information is complete and correct, including:

  • Full name (as per legal ID)
  • Date of birth
  • Tax File Number (TFN)
  • Address
  • Employment status (e.g. full-time, part-time, casual)
  • Termination dates (if applicable)

Accurate data ensures proper alignment with ATO records and prevents errors during income tax return processing.

2. Reconcile Year-to-Date (YTD) Figures

Ensure that the year-to-date figures in your payroll system match your general ledger and BAS lodgements. This includes:

  • Gross wages
  • PAYG withholding
  • Superannuation contributions
  • Allowances, bonuses, and overtime
  • Fringe benefits (if applicable)

Reconciliation helps identify discrepancies early, reducing the risk of reporting incorrect figures to the ATO.

3. Categorise Income Types Correctly

STP Phase 2 requires disaggregated reporting of income components. Check that you have correctly classified payments such as:

  • Ordinary time earnings
  • Overtime
  • Bonuses and commissions
  • Paid leave (annual, personal, long service)
  • Salary sacrifices arrangements

Incorrect classification may lead to non-compliance and confusion for employees during tax time.

4. Finalise All Pay Runs

Make sure all pay runs for the financial year (1 July to 30 June) are completed, including:

Regular pay cycles

Ad-hoc or off-cycle payments

Adjustments or corrections to previous pays

Once all payroll events are submitted and reconciled, you can proceed with the finalisation declaration.

5. Lodge STP Finalisation with the ATO

Using your payroll or STP-enabled software, submit the STP finalisation declaration by 14 July. This declaration tells the ATO that the payroll information for the financial year is complete and accurate.

After lodging, employees will see the status of their income statements updated to “Tax ready” in their MyGov accounts.

6. Notify Your Employees

Inform your employees that their income statements are now available in MyGov. This helps them prepare for lodging their personal tax returns and prevents confusion or early filing based on incomplete data.

7. Correct Errors (If needed)

If you discover errors after lodging the STP finalisation, submit an updated finalisation event. The ATO allows amendments, but prompt correction is essential to avoid penalties and to ensure your employees’ tax returns are accurate.

8. Maintain Records

Keep records of payroll reports, reconciliations, and finalisation confirmations for at least five years as required by ATO regulations. These records are vital for audits and future references.

Conclusion

STP finalisation may seem daunting, but with proper planning and attention to detail, small and medium businesses can handle it efficiently. This checklist ensures you stay compliant, support your employees effectively, and avoid last-minute complications. Using reliable payroll software and seeking advice from a registered BAS agent or accountant can further simplify the process.