Payroll Checklist for End of Financial Year

Posted on by Admin

Do you have a payroll checklist? The End of Financial Year in Australia is not far away. Ensuring that your payroll data is accurate and reconciled is crucial for compliance and avoiding unnecessary errors. I like to use a payroll checklist to ensure I stay on top of obligations. I have made a video taking you through this step by step with screensharing. You can view this here.

  1. Verify Wages, Salaries, and Bonuses

Ensuring that all wages, salaries, and bonuses are recorded correctly is a key part of EOFY payroll reconciliation.

  • Regularly check that payroll reconciles each month.
  • In Xero, use the Payroll Clearing Account (Wages Payable Account). If the balance is zero, it’s already reconciled.
  • Make sure bonuses are recorded through payroll and not as an expense.
  • Any payments to employees (unless reimbursements) should go through payroll.

  1. Ensure Superannuation Contributions Are Up to Date

Superannuation compliance is vital, as late or incorrect payments will result in penalties.

  • Super contributions must be paid at least quarterly, but many businesses opt for monthly payments.
  • Ideally, super should be paid 10 days before the quarterly deadline (28th of the following month).
  • Use an account transaction report to check your Super Payable Account
  • A well-maintained super account should show either zero or the amount outstanding for the prior period.

  1. Match Bank Payments with Payroll Records

For accurate reconciliation:

  • Your Wages Payable Account (on the balance sheet) should always be zero.
  • The Super Payable Account should only show outstanding amounts.
  • Payments recorded in your payroll system must match actual bank transactions.

  1. Review Payment Summaries and STP Finalisation

Before finalising Single Touch Payroll (STP), verify:

  • Total earnings, tax withheld, and super contributions for each employee.
  • Allowances and deductions are correctly recorded.
  • Any discrepancies are resolved before submission.

  1. Generate and Match Payroll Reports

To cross-check payroll accuracy, generate the following reports:

  • Payroll Employee Summary (shows earnings, tax, deductions, super, and net pay).
  • General Ledger or Account Transaction Report (showing all payroll-related accounts).
  • Ensure PAYG Withholding Account Credit Balance matches tax payable.
  • Super account credits should match liabilities.
  • Gross wages should match reported wages.

  1. Finalise Single Touch Payroll (STP) Reports

  • Export the STP finalisation report as CSV or PDF.
  • Compare with your payroll reconciliation spreadsheet.
  • Submit the final STP report to the ATO.
  • Verify submission via the BAS or Tax Agent Portal.
  • Employees will receive their final payroll information through myGov.

  1. Superannuation Compliance Checks

  • Super should be paid before June 30 to claim a deduction in the current financial year.
  • Payments must be made to the correct superannuation funds.
  • Employees should verify that their super contributions are received correctly.
  • If super is not paid on time, you must submit a Super Guarantee Charge (SGC) statement.

  1. Issue Payment Summaries (If Not Using STP)

  • If your business is not on STP, you must manually issue payment summaries.
  • Otherwise, STP finalisation automatically reports payroll details to the ATO.

  1. Keep Payroll Records for Audit Compliance

Maintaining payroll records for at least seven years is a legal requirement.

  • Store payroll reports securely using Dropbox, Google Drive, or accounting software.
  • Provide records to accountants and clients for transparency.

  1. Review and Update Payroll Tax Rates

  • Most payroll software updates tax rates automatically.
  • If using manual calculations, ensure you follow updated tax rates, award wages, and minimum wage requirements.

  1. Review Employee Classification and Contracts

  • Ensure all employees are classified correctly (casual, part-time, full-time, contractor).
  • Confirm pay rates align with employment contracts and award rates.

  1. Consider Upgrading Payroll Systems

If your current payroll system is inefficient, it may be time for an upgrade.

  • Cloud-based solutions like Xero, MYOB, QuickBooks, or KeyPay streamline compliance and automation.
  • Upgrading can save time and reduce errors.

 

If you need assistance, feel free to contact us for expert bookkeeping support.

For more bookkeeping tips, visit Sum & Substance or email us at support@sumsubstance.com.au.

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