Finalising an employee now, not at the end of the payroll year

Question

We have notified the ATO of an employee termination and that employee would like us to finalise them now, not when we complete our STP finalisation at the end of the payroll year.

The 'Terminate an Employee' help guide says to refer to the 'End of of year finalisation with Single Touch Payroll reporting' guide which I have done, I can't see anywhere where it specifically mentions finalising an employee before end of the payroll year so I am assuming you follow the same steps, Payroll reporting centre > EOFY Finalisation, select the individual employee you want to finalise, then click Set as Final?

How does this affect our STP finalisation at the end of the payroll year? Thank you.

Tracey_H · Accepted Answer

Hi @BW_1145

Thanks for your post. Finalising an employee in the Payroll reporting centre>>EOFY finalisation tab lets the ATO know that the employee won't be receiving any further pays from the employer. As such, the process is the same. At the EOY you won't need to finalise the employee again, just ensure you reconcile their YTD amounts before you finalise.

Something to note when finalising an employee during the payroll year, this is from the ATO website:

Even if you finalise an employee record partway through the financial year, we will not pre-fill the information into your employee’s tax return until after the end of the financial year. The employee will need to follow the current process for lodging a part-year tax return. This commonly affects employees who are leaving Australia once their employment has terminated.

Please let me know if you need further help.

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