What EOFY means for payroll¶

EOFY stands for end of financial year. In Australia the financial year runs from 1 July to 30 June. When 30 June arrives, the payroll year for your business is over and there is one main job to do: tell the Australian Taxation Office (ATO) that the year's pay figures are complete and correct.

This module walks you through that job. This first lesson gives you the big picture, so the steps in the later lessons make sense.

Why this matters¶

Your employees cannot lodge their own tax return until you finish your end-of-year job. The ATO explains that an employee's pay information stays marked as "not tax ready" until you finalise it. Once you do, the ATO marks it "Tax ready" and the employee can use it. So this is not just paperwork — other people are waiting on it.

What you will learn¶

• What the financial year is for payroll
• What an employer does at end of financial year
• What "Tax ready" means for an employee

Understanding the concept¶

Each pay you run through the year is reported to the ATO as you go, using Single Touch Payroll (STP). STP is the system that sends each employee's pay, tax and super figures to the ATO every time you pay them.

Because the figures build up all year, at the end you do not have to send everything again. Instead you send one final message called a finalisation declaration. The ATO describes this as telling them that you have fully reported for the year for each employee. It is your way of saying "these year-to-date totals are the final, correct figures".

Your employees see the result of this on their income statement. The ATO explains that the income statement is the online version of what used to be called a payment summary or group certificate. Employees view it through myGov. Until you finalise, it shows as "not tax ready". After you finalise, the ATO marks it "Tax ready", and the employee (or their tax agent) can use it to do their tax return.

You need to finalise for every employee you paid during the year — including people who left partway through and casuals who only worked a few shifts.

Example¶

A small cafe pays three staff through the year. Every payday, the payroll software reports each person's pay, tax and super to the ATO. On 30 June the year closes. In early July, the owner checks the totals, makes sure everything is up to date, and sends the finalisation declaration. A few days later, each staff member logs into myGov and sees their income statement now says "Tax ready", so they can go ahead and lodge their tax return.

Common mistakes¶

• Thinking EOFY is only about the business's own tax — it is also the point where you release your employees' income statements.
• Forgetting staff who left during the year or casuals — you finalise for everyone you paid.
• Assuming employees can start their tax return straight after 30 June — they usually need to wait until you mark the income statement "Tax ready".

How this works in myaccountant¶

Key points¶

• The Australian financial year runs 1 July to 30 June.
• Each pay is reported to the ATO through STP during the year.
• At year-end you send one finalisation declaration for the whole year.
• You finalise for every employee you paid, including leavers and casuals.
• Finalising marks each employee's income statement "Tax ready" in myGov.
• Employees usually cannot lodge their tax return until you finalise.

Learn next¶

• The EOFY payroll checklist
• What is STP finalisation?
• Income statements explained

General information only — not tax, super or financial advice.