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The 2025 Financial Year is almost at an end, so there has never been a better time to prepare. A great first step on your EOFY preparation journey is to review your payroll finalisation. Getting a head start on your organisation’s payroll ensures your July is as easy as possible.<\/p>\n
Not sure where to start? You\u2019ve come to the right place. Whether this is your first payroll finalisation, or your hundredth, blast past your tax time stress by following our handy list of steps.<\/p>\n
With Single Touch Payroll (STP), it is important that the correct reporting categories are used for your earnings, deduction and paid leave pay items. Allowance pay items also need to be assigned an appropriate reporting type.<\/p>\n
Because these categories tell the ATO how to treat each type of payment you\u2019re reporting through STP, it\u2019s crucial that all the pay items used in the current financial year are correctly assigned.<\/p>\n
For more details on reporting categories, take a look at our guide in Xero Central<\/a>.<\/p>\n There are key compliance requirements within STP reporting that affect the way employees are set up in Xero.<\/p>\n In Xero Payroll, all active and terminated employees (who will be included in the STP finalisation for the financial year) will need an employment type, income type, and tax scale defined in their records.<\/p>\n Review your employees\u2019 records to ensure they\u2019re STP compliant. You can run the Employee Contact Details report<\/a> to check for accuracy, keeping a close eye on things like date of birth, email address and postcode.<\/p>\n Any pay runs with a payment date in this financial year will need to be posted and filed before you complete this year’s payroll finalisation. If you have pay runs that need to be reported in the 2025 financial year, ensure the payment date set for the pay run is on or before 30 June 2025.<\/p>\n However, please note that there may be scenarios where your pay run status shows a filing error, rather than the successful \u2018Filed\u2019 status. If you see a \u2018Filing Error\u2019 status on a pay run, you will need to confirm if the error was fixed or still needs to be addressed. Generally, if the subsequent pay runs for your employees are successful, the filing error seen can be safely ignored. If you are unsure, you can use our handy guide on how to fix a filing error in STP<\/a>.<\/p>\n To claim a deduction on superannuation accruals submitted via Auto Super for the current financial year, super batches should be approved no later than 2:00pm AEST, 20 June 2025. We recommend marking this date in your calendar so you don\u2019t forget.<\/p>\n If you\u2019re not registered for Auto Super, you still have time to take advantage of this time saving feature! Check out our support article on how to register for automatic superannuation payments<\/a>. Alternatively, the payments can be made manually outside of Xero.<\/p>\n After processing all pay runs for the financial year, it\u2019s important to forensically check the accuracy of your reporting. One way to do this easily is by generating the Payroll Activity Summary report<\/a> and comparing it with the General Ledger report.<\/a> <\/p>\n You can specify a custom date range in both reports to help find any discrepancies. For guidance on reviewing payroll transactions at EOFY, take a look at this support article<\/a> in Xero Central.<\/p>\n If you come across any discrepancies in your payroll accounts, you can use the remove and redo feature<\/a> to edit the transaction and allocate it to the correct accounts.<\/p>\n Stay with us \u2013 you\u2019re almost there. <\/p>\n It can be easy to get the Payroll Activity Summary report<\/a> and the Payment Summary Details report<\/a> confused, so remember you\u2019ll still need to compare this information if you\u2019re completing an STP finalisation. You can run these two reports for a custom date range and make sure the information balances.<\/p>\n It\u2019s important to note here that the Payroll Activity Summary report shows gross earnings, whereas the Payment Summary Details report shows taxable earnings.<\/p>\n If there are salary sacrifice or pre-tax deductions that have been processed during the financial year, they will need to be deducted from the gross wages that show in the Payroll Activity Summary report. The total should then match the Payment Summary Details report (note that this will only show truncated values \u2013 the cents will not show in this report).<\/p>\n If you found any pay runs with incorrect STP reporting or amounts, these can be corrected using an unscheduled pay run<\/a>. Simply create the pay run for the required period and enter the adjustment you need. When an unscheduled pay run is posted and filed, it will update your employees year-to-date (YTD) amounts and notify the ATO of this change.<\/p>\n You will need to doublecheck the payment date of the unscheduled pay run falls within the correct financial year (for example, on or before 30 June 2025) to ensure it\u2019s reported correctly and updates the correct YTD amounts.<\/p>\n You made it! It\u2019s now time to process your STP finalisation.<\/p>\n Take a look at these steps<\/a> on how to finalise your payroll information with the ATO. There\u2019s also an easy-to-follow checklist<\/a> to make sure you don\u2019t miss anything.<\/p>\n You\u2019ll need to file at least one pay run<\/a> before you\u2019re able to complete the STP finalisation process. Your first submission will include all YTD payroll information that has been entered into Xero.<\/p>\n Keep these tips in mind to help you along the way:<\/p>\n Once you click the \u2018Submit Finalisation\u2019 button, you can rest easy knowing that your EOFY Payroll is complete for another year. Go take a break, you deserve it!<\/p>\n Superannuation: <\/strong>Superannuation guarantee rate is <\/strong>increasing from 11.5 to 12 percent on 1 July 2025. Any employees with a superannuation line set up with a rate type of statutory rate will be automatically updated. If their rate type has been set up as Percentage of Earnings, you will need to ensure you edit this percentage manually.<\/p>\n These changes to income tax rates and thresholds<\/a> will also be automatically applied in pay runs with a payment date of 1 July 2025.<\/p>\n Superannuation for Government-funded Paid Parental Leave: From 1 July 2025, super will be paid by the Government on its Paid Parental Leave scheme. Superannuation remains optional for employer-funded Paid Parental Leave.<\/p>\n Visit the ATO<\/a> website to learn more.<\/p>\n Tax Brackets<\/strong>: No changes – the next change will occur in FY27.<\/p>\n Tax Tables:<\/strong> Changes to study and training support loans weekly, fortnightly and monthly tax tables due to annual indexing and repayment income thresholds changes.<\/p>\n These changes apply to pay runs with a payment date on or after 1 July 2025. If pre-created pay runs have been created for after this date, please review to ensure the correct tax rates have been applied.<\/p>\n Lump Sum and Termination Payments<\/strong>: The $1,200 Lump Sum E threshold is removed. All back payments over 12 months old must now be reported as Lump Sum E, regardless of value. ETP caps and Lump Sum D thresholds have also increased.<\/p>\n If your organisation is impacted by changes to the minimum wage, you will need to update your employees\u2019 pay templates. You can learn how to create or edit a pay template for an employee by checking our Xero Central article<\/a>.<\/p>\n To find out if these changes could affect you, please refer to the Fair Work Ombudsman<\/a>.<\/p>\n Looking for more information? Check out our <\/em>EOFY Resource Hub<\/em><\/a> for everything you need to know (and do) to round out FY25, and set up strong for the new year ahead.<\/em><\/p>\n The post Blast past tax time stress this EOFY: Steps to process and finalise payroll<\/a> appeared first on Xero Blog<\/a>.<\/p>\n\n","protected":false},"excerpt":{"rendered":" The 2025 Financial Year is almost at an end, so there has never been a better time to prepare. A great first step on your EOFY preparation journey is to review your payroll finalisation. Getting a head start on your organisation’s payroll ensures your July is as easy as possible. Not sure where to start? […]<\/p>\n","protected":false},"author":1,"featured_media":278125,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11759],"tags":[18257,15442,85205,62968,16929,13306,13609,106453,2962,460,7356,1231,55961,62637],"dealstore":[],"offerexpiration":[],"class_list":["post-278124","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-accounting","tag-blast","tag-compliance","tag-eofy","tag-finalise","tag-payroll","tag-process","tag-reporting","tag-single-touch-payroll","tag-steps","tag-stress","tag-tax","tag-time","tag-xero-payroll","tag-xerocon"],"yoast_head":"\n2. Check your employees\u2019 records <\/strong><\/h2>\n
3. Post and file any pay runs for the 2024\/2025 financial year<\/strong><\/h2>\n
4. Process any outstanding superannuation payments<\/strong><\/h2>\n
5. Reconcile your payroll accounts<\/strong><\/h2>\n
Troubleshooting tips<\/strong><\/h4>\n
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6. Review the Payroll Activity Summary report against the Payment Summary Details report<\/strong><\/h2>\n
7. Amend any pay run mistakes you found<\/strong><\/h2>\n
8. Process STP finalisation<\/strong><\/h2>\n
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Looking ahead to FY26<\/strong><\/h2>\n