End of Financial Year 2022/23 Payment Summaries | Payroll Guide

The guide only applies to businesses that are exempt from reporting Single Touch Payroll (STP), and have therefore chosen not to during the financial year. For the 2022/23 financial year, exemptions only apply to:

  • Withholding payer number (WPN) holders until 1st July 2033; or
  • Businesses granted a deferral or special exemption from the Australian Tax Office (ATO).

If this scenario two applies to you, you will need to submit an enquiry with Support and attach written proof from the ATO so that we can switch on the payment summary functionality for your business. Businesses who do not meet the above exemptions or exempt businesses as stated above that have lodged a successful or partially successful STP event during the financial year will not receive the option of publishing payment summaries. Rather, businesses will need to complete their end-of-year process by lodging an STP finalisation event.

What you need to do

There are multiple phases of end-of-year processing. The guide will walk you through wrapping up the 2022/2023 financial year, generating, and lodging your employees payment summaries, and getting ready for the 2023/2024 financial year. The steps are:

  1. Housekeeping: Recommended checks and reconciliations you should complete making sure all business and employee details are corrected before publishing payment summaries.
  2. Lodging payment summaries: Information on publishing and lodging payment summaries, sending notifications to employees, and what to do if you need to amend any payment summaries.
  3. Preparing for 2022/2023: Notes on changes/updates coming in the new year and pointers on setting up for STP.

Review employee details

Make sure employee details are up to date. In particular, the employee's tax file number, email and postal address. You will send them payment summary notifications to the email address provided in the Email field, so it is important the information is correct. However, the payment summary is printable and you can disperse it manually if required.

Check that the employee's address is complete and correct as this will trigger a validation and prevent the platform form publishing payment summaries. A quick way to audit this information is to generate an Employee Details report and select the following display columns to retrieve the information:

  • Postal address.
  • Email.
  • Tax file number.

Make sure you also include employees terminated in this financial year when generating the report, as they will also need issuing payment summaries. If you need to update any of the employee details, you can do this individually by navigating to the relevant screen of that employee's record and making the change. Otherwise, you can update in bulk by exporting the employee file, changing the spreadsheet, and then importing the updated file.

Review ATO settings

Make sure your ATO settings are up to date. If you are planning on lodging your payment summaries to the ATO electronically, please make sure you have registered your software ID by following these steps.For WPN holders, the ATO does not support lodging payment summary data electronically. As such, you will need to either download the EMPDUPE file and upload via your Business Portal or report to the ATO using paper forms

Review Fringe Benefits Tax (FBT) settings

Is your business exempt from FBT under section 57A of the FBTAA 1986? If so, make sure you have configured this via the ATO Settings page. By default, they will set this option to no, but it is important to review this set-up to make sure the employee payment summaries correctly reflect this information. For businesses with multiple employing entities set up, please note that you must set the FBT settings for each employing entity.

Review pay categories

Review your pay categories to make sure you have applied the correct classifications. You can configure this via the Payment Classification field within the pay category settings. It is important that you correctly report your payroll data to the ATO, so please make sure that all pay categories are as per ATO specifications. Pay particular attention to any pay categories classified as:

  • Default.
  • Do not report on Payment summaries
  • Allowance classifications.

Specifically, with allowances, we refer you to this article as a guideline on how to classify them. You can also prepare for STP reporting while making sure allowance-based pay categories are also correct. This allowance classification configuration works for both payment summaries and STP.

Review deduction categories

For any Union or Professional Association Fees or Workplace Giving deductions, be sure to assign the correct classification to the deduction category, so you itemise the deduction amounts separately in the payment summary. You can read about Salary sacrifice super (RESC) deductions further below.

Check initial values/opening balances

If you have migrated to our payroll platform from another platform during the financial year, it is important that the opening balances are set up correctly. If you want to produce only one payment summary for employees for the whole financial year. You should import the payroll earnings from the previous payroll platform using our Initial Values/Opening Balances feature.

Alternatively, if you will generate multiple payment summaries, please make sure you have not imported previous earnings, Pay as You Go (PAYG), RESC, etc. as it will overstate employee earnings to the ATO. Importing leave balances is not an issue in this scenario, as they do not report this in payment summaries. 

If you created your business in the previous financial year, but did not start processing pay runs until this financial year. It may be necessary to review the Initial Financial Year setting under the Opening Balances section found in the Payroll Settings menu on the payroll platform to make sure the configuration of the correct financial year is correct.

Helpful Hint

Do not change the initial financial year to the 2022/23 if you have already been processing pay runs in this payroll platform for multiple financial years. The setting only relates to users that have migrated to this payroll platform part way in the 2022/23 and want to capture all opening balances into the employee payment summaries.

If there are any opening balances for deductions that you will report as Reportable Employer Super Contributions (RESC) on the payment summary, be sure to tick the Include on Payment Summary as RESC checkbox alongside the deduction category in the employee's Opening Balances screen. If you are using the platform provided Salary Sacrifice Super Deduction category, the default setting will contain a tick by default.

Audit salary sacrifice super/RESC

Included automatically are any RESC classified amounts processed in pay runs and through opening balances and itemised on payment summaries in the Reportable Employer Superannuation Contributions field: The field pre-populates with an amount that comes from:

  • Pay runs: Any pre-tax deduction set up to be 'paid to a super fund', processed in any finalised pay run(s) for the financial year; and
  • Opening balance: Any pre-tax deduction whose checkbox 'Include on payment summary as RESC' is ticked, and where the business' initial financial year is set to 2022/2023.

We strongly suggest you audit all RESC amounts processed in your pay runs to make sure you have correctly assigned them as paid to a super fund. The ramifications of any other allocation, i.e., other than to the super fund, will cause employee amounts not being reported correctly on the payment summary and the employee being stuck with a tax liability. To audit RESC amounts, follow these steps:

  • Generate a Deductions Report using the Financial Year date range and filter the report by selecting the relevant RESC deduction category.
  • Generate a Super Contributions Report using the Financial Year date range and select the Salary Sacrifice option from the Contribution Type filter;
  • Compare the total $ amounts between both reports. Do they match? If yes, then all is well. If the amounts do not match, review each employee to identify where the difference lies.
  • Once you identify the differences, you will need to fix them. The method you will use depends on whether the amount comes from the employee's opening balance or from within a pay run.
  • Once you make any required corrections, generate the Super Contributions Report again and make sure the total amount matches the Deductions Report

If the Opening Balance figures are incorrect, you can update the data using our Initial Values/Opening Balances feature.

Finalise pay runs

Make sure that all pay runs with a date paid by the 30th June are finalised, including any adjustment pay runs you have to create. If you publish the payment summaries and then have to process adjustment pays, you will be required to publish amended payment summaries, so we strongly suggest you hold off on starting the lodgement process until you are 100% confident all pays for the financial year have been processed.

The date you paid the pay determines which financial year the pay run applies to. The finalisation event for the 2022/23 financial year will only include earnings, etc, from pay runs paid within that financial year. For example:

  • Pay-run period ending on the 29th June 2023. Paid on the 30th June 2023 will be in the 2022/23 financial year.
  • Pay-run period ending on the 29th June 2023. Paid on the 1st of July 2023 will not be in the 2023/24 financial year.

If you want to include every day worked within the financial year, you might have to split a pay run. For example, a weekly pay run for a period ending on the 2nd of July 2023, but paid on the 3rd of July 2023. Create a pay run as normal and set the pay period ending 30/6, making sure you stipulate the date paid to be 30th June.

You will then need to adjust the employee hours to reflect the hours worked for the 26th - 30th June and then complete the pay run. Then create another pay run for the period ending on the 2nd of July and adjust the employee hours to reflect the hours worked for the 1st and 2nd. Then complete the pay run using the normal date paid, being the 3rd of July 2023.

Generate, publish, and submit payment summaries

Before publishing the payment summaries, reconcile your financial year data. Refer to the End of Year Reconciliation article for instructions on how to do this. Once you complete the above, you will now be ready to publish the employees' payment summaries. Please remember you must issue payment summaries to employees by the 14th of July. Once you publish your payment summary, you must lodge your payment summary annual report to the ATO by the 14th of August. You can lodge the report either by:

Preparation for FY 2023/2024

Single Touch Payroll

Although STP exemptions still exist for WPN holders until the 1st July 2023, you can choose to report earlier. Please note that WPN holders can only use the services of a registered agent to report STP on their behalf, as the ATO does not support electronic lodgement by WPN holders. Refer to this article for further information on how to report STP using a registered tax/BAS agent. There is also plenty of information on STP on our EOFY Hub and the ATO website.

Tax table updates (information only)

Loading of the tax tables for the new financial year is automatic. Please note that any pay runs with a date paid of the 17th of July 2023 or later will apply to the FY 2023/2024 tax tables automatically.

Superannuation updates

The Superannuation Guarantee Contribution (SG) percentage will increase to 11%, effective for all pay runs with a date paid on or after 1st July 2023. The platform will automatically apply the increase across all businesses, except in the following circumstances:

  • A business that does not have the Automatically Update Super Rates checkbox ticked.
  • The Override checkbox in the Super Rate column in an employee's Pay Rates screen has a tick.
  • The Override checkbox in the Super Rate column of any pay rate template has a tick.

If any of the above scenarios apply to a business and/or employee record and you want the 11% SG rate to calculate on OTE, you must change your settings accordingly so that the Automatically Update Super Rates checkbox is ticked and/or the Override checkbox in any employee's Pay Rates screen or pay rate template is not ticked. To read more information, review theAnnual increase to superannuation guarantee (SG) rate effective from the 1st July article.

The maximum quarterly contribution base will increase to $62,270. This increase will automatically apply to all employees who are currently on the default contributions base, from the 1st of July 2023. Employees that are not in the default setting will not update, so you will need to do this manually.

Processing super

If you want super contributions to be included in the 2022/2023 financial year for tax reasons, the contributions need to reach the super funds by the 30th June 2023. To meet this deadline and if you are using our automated super payments functionality, i.e. Beam, you must successfully upload and pay your super batch by 3.30pm AEST on the 23rd June 2023.

If you have pay runs scheduled for payment between 23 and 30th June, you can always create these pay runs in advance by the 23rd of June using the usual period end and paid dates, finalise the pay run and then create your super batch for the period up to the 30th June 2023.

Allowing you to include the super amounts before the deadline without the need of paying employees in advance; i.e., you will not need to upload the ABA file to the bank until the actual scheduled paid date of the pay run. If you are using another clearing house to process super payments, make sure you liaise directly with the clearing house to confirm their deadlines.

Award updates

For customers using our pre-built modern awards, we will publish updated versions of these award packages by the effective increase date.

ATO vehicle allowance rates update

The ATO-approved vehicle allowance rates for 2023-2024 will increase to 78c per kilometre. Please refer to the ATO website for further information. If your business has set its own vehicle allowance rates, you will need to make sure you are not paying no less than the ATO-approved rate.

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