What is STP finalisation?¶

Through the year, each time you run a pay you report it to the Australian Taxation Office (ATO) using Single Touch Payroll (STP). At the end of the financial year there is one more step. You tell the ATO that the pay you reported for each employee for the whole year is complete and correct. That step is called STP finalisation.

You do this by making a finalisation declaration. It is a simple statement, in the form the ATO asks for, that says you have fully reported for the year for each of your employees.

Why this matters¶

Your employees cannot safely finish their own tax return until you have finalised. The ATO explains that once you make the finalisation declaration, it marks each employee's income statement as Tax ready in myGov. "Tax ready" is the signal to your employee that the figures are final and safe to use in their tax return.

So finalisation is not just paperwork for the ATO. It is the step that lets your employees get on with their own tax. Doing it on time is part of looking after them.

What you will learn¶

• What STP finalisation is
• What the finalisation declaration tells the ATO
• What "Tax ready" means for your employees

Understanding the concept¶

All year, STP sends the ATO a running picture of what each employee has been paid, how much tax you withheld, and their super. By the end of the year the ATO already holds these totals. What it does not yet have is your confirmation that the year is finished and the totals are right.

The finalisation declaration is that confirmation. The ATO describes it as a declaration, lodged after the end of the financial year, stating that you have fully reported for the year for each of your employees through STP.

You finalise for all the employees you paid and reported during the year — not just the ones still working for you. The ATO is clear that this includes people who only worked part of the year, such as casuals and employees who have since left.

Once you finalise, the ATO changes the status of each employee's income statement to Tax ready. The ATO then lets your employees know, through myGov, that their income statement is ready to use.

Example¶

A small cafe employs three people during the year. Two are still working there at 30 June, and one casual left in March. Through the year every pay was reported to the ATO through STP as normal.

At year-end the owner reviews the totals for all three — including the casual who left — makes sure they look right, then makes the finalisation declaration. That single step tells the ATO the year's reporting is complete for each of the three. Shortly after, all three see their income statement marked "Tax ready" in myGov, and can use it for their own tax returns.

Common mistakes¶

• Finalising only current employees and forgetting people who left during the year.
• Thinking the last pay run of the year finalises for you — it does not; finalisation is a separate step you make after the year ends.
• Finalising before checking the year's totals are correct, so the "Tax ready" figures are wrong.

How this works in myaccountant¶

Key points¶

• STP finalisation is a year-end step you take after the financial year ends.
• You make a finalisation declaration telling the ATO the year is complete and correct.
• Finalise for every employee paid during the year, including those who have left.
• Finalising marks each employee's income statement "Tax ready" in myGov.
• "Tax ready" tells the employee the figures are safe to use in their tax return.

Learn next¶

• What is EOFY for payroll?
• Reconciling payroll before you finalise
• Income statements explained

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