End of Year (EOY) is nearly upon us. There are a number of steps you can carry out ahead of time to ensure that you are well prepared for this busy period.
1. Employment Termination Payments (ETPs).
First and foremost, be sure to understand the ATO legislation (NAT 70980) around ETPs and how to manage them in your software. Key points to keep in mind:
ETP pay components are no longer recorded on a single ETP payment summary.
When multiple components are paid on termination, an employee could now receive two separate ETP payment summaries.
If any ETPs have been completed in Meridian and a payment summary has not been printed, upgrade to ETP release (available soon) and process an ETP Adjustment.
If a manual payment summary has been completed using ATO stationery, these employees will need to have their ETP payment summary flagged as Suppress in the Employee, Termination Details screen.
If you pay an employee an ETP, you may need to take into account the new additional ‘Whole of Income’ Cap.
2. Check that your company details and payroll details are up to date.
This is a step you can take easily ahead of time. Company Details and Payroll Company Details contain information that is included in the EMPDUPE file and on the Payment Summary, so it is essential to ensure that the contents of both are correct before you start EOY processing.
3. Run a Tax Details Report to verify tax details for employees.
If you have entered new employees into the system during this financial year, or have current employees who have varied their tax details, it is recommended that you verify their Tax Details using their TFN Declaration or Withholding Declaration to confirm that the details are correct.
4. Ensure correct set up of additions and deductions within your software.
Check Additions and Deductions maintenance to ensure assessable allowances (e.g. car allowance) and claimable deductions (e.g. union fees) are printed correctly on the payment summary. Relevant information can be found on the ATO website.
5. Check reportable super maintenance in your software to ensure that reportable super values print correctly on the payment summary.
It is important to verify that superannuation deductions made before tax and employer contributions which are reportable to the ATO are included in Payment Summaries. The components that need to be verified are:
Superannuation Payments made before tax in Additions and Deductions.
Employer Superannuation Contributions need to be checked to see if they are reportable to the ATO.
Further information can be found in the ATO Reportable Employer Superannuation Contribution Guide online.
6. Enter reportable fringe benefits and exempt foreign income amounts into your software.
Do you have any reportable fringe benefits for employees or working directors/proprietors?
If an employee has a fringe benefits amount with a taxable value in excess of $2000, the grossed up taxable value must appear on their payment summary.
In Meridian, the grossed up taxable value is entered into the Tax Details screen of Employee Records.
7. Run the EOY Validation Report.
Before producing Payment Summaries, the EOY Validation should be run to confirm employee data such as addresses and transaction values. This is especially important if any changes have been made to Company, Payroll Company or Employee information.
8. Balance the YTD Reports.
Ensure that YTD values on the Payroll and Costing Reports balance prior to balancing the Reconciliation Report. The Reconciliation Report should always balance to your Payroll Report. While reconciling figures, also verify earnings information from your company point of view. What has been entered into your software needs to be verified according to your company’s internal accounting procedures.
9. Prepare how you will transfer your files to the ATO.
If you will be submitting the EMPDUPE file to the ATO electronically by using Electronic Commerce Interface (ECI) software, make sure that you have everything ready by checking the requirements on the ATO ECI website.
If you plan to send the data to the ATO using an electronic storage media, ensure you have appropriate removable device e.g. USB/Flash drive, DAT, Zip disk, CD, DVD. Visit the ATO website for further details.
We recommend using the ECI method as it enables the file to be immediately verified and errors to be quickly identified and rectified.
EOY is a very busy and important time of year for any payroll professional. To ensure you remain ahead of the game, be sure to attend a Sage MicrOpay EOY Training session. EOY Training dates are now available on our website.