To be exempt from issuing these payments summaries to your employees, you will need to make a finalisation declaration. This declares you have provided all required information for the financial year through your STP reporting.
These payment summaries include:
- PAYG payment summary – individual non-business (INB);
- PAYG payment summary – foreign employment income (FEI); and
- PAYG payment summary – employment Termination Payments (ETP).
You will not have to provide payment summaries for the following payments if you reported them voluntarily through STP:
- payments under voluntary agreement;
- payments under a labour hire arrangement; and
- death benefit employment termination payment.
You will need to provide a payment summary for any payments not reported through STP.
FINALISATION DECLARATION
You make a finalisation declaration by providing a finalisation indicator for an employee (and directors, contractors, etc.) as part of your STP reporting.
Once you have provided the finalisation indicator for the employee, The Australian Taxation Office will pre-fill the employee's income tax return and display the information as 'tax ready' in myGovExternal Link.
You can make a finalisation declaration for an employee any time during the financial year (for example, for employees who have ceased employment), or after the end of the financial year up to 14 July. The ATO have provided additional time for employers to make a finalisation declaration in their first year of reporting through STP.
- Employers who started reporting in the 2017–2018 financial year have until 14 August 2018.
- Employers who start reporting in the 2018–2019 financial year will have until 31 July 2019.
If you need more time, you can apply for an extended due date to make your finalisation declaration. You may be subject to a penalty if you do not make a finalisation declaration or, alternatively, provide payment summaries by 14 July each year.
FINALISATION DECLARATION DURING THE FINANCIAL YEAR
If you make a finalisation declaration during a financial year, you do not need to provide the employee with a part-year payment summary.
If you pay an employee, and have already made a finalisation declaration for them for a financial year, consider the following:
- if it is a one-off payment – make another finalisation declaration when you report this payment; and
- if you expect to make another payment (for example, you re-hire the employee) – unselect the finalisation indicator and wait until the end of the financial year to make another finalisation declaration.
If you finalise an employee partway through the financial year, the pre-fill will not be available until after the end of the financial year. The employee will need to follow the current process for lodging a part-year tax return. This would mostly impact employees who are leaving Australia once their employment has terminated.
AMENDMENTS AFTER FINALISATION
If you identify the need to amend details after making a finalisation declaration you should submit these as soon as possible. You can do this by submitting an update event.
The ATO understands you may not be able to submit an update event report with the amended details within 14 days of identifying the need for an amendment. If this is the case, you should submit an update event with the previous details and the final indicator is removed. This will advise the ATO that the current information is not final and should not be used to pre-fill tax returns. You can amend finalised information reported through STP up to five years after the end of financial year.
OVERPAYMENT RELATES TO A PREVIOUS FINANCIAL YEAR
If you overpay a worker in a previous financial year and only discover the overpayment in a later year, you should submit an update event to advise us the amounts the employee should have received in the relevant financial year. Do not adjust the amount of tax withheld.
You should provide an update event for each financial year an overpayment occurred in.
If the overpayment relates to a payment you did not report through STP you should provide the worker with an amended payment summary and an amended payment summary annual report to us.